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Manufacturers may have to slash prices to overcome impact of US terrorist attacks

Car-buying activity fell by 50% in the aftermath of the terrorist attacks in the US on September 11, despite the attempts of UK dealers to rally consumer confidence with a year high average price cut of 3.6% on leading models, according to independent price monitor, CarPriceCheck (www.carpricecheck.com).

Transaction price movement for the volume car manufacturers was marked by a considerable number of reductions during September - including 62% of all Ford models, 45% for Renault and 74% for Citroen.

Rover and Volkswagen dealers even saw an increase in transaction prices on 34% and 30% of their total range respectively.

The volatility in the market was felt by importers also. An average 2.4% increase in transaction price was recorded on 84% of the 1,745 models that displayed a price movement during the month from this month.

According to statistics analysed by CarPriceCheck, buying activity stands at 60% of the levels seen before the World Trade Center attacks.

Steve Evans, CEO of CarPriceCheck said: "In traditionally the busiest month on the car-buying calendar, consumer confidence has been visibly dented, with stories reaching us of BMW and Mercedes customers surrendering their deposits just so that they can cancel their orders."

Of the 864 models, which displayed noteable transaction price cuts, 68% of them occurred during the final two weeks of the month. The raft of reactive price cuts in September proved to be a reversal of the trend of decreasing levels of dealer price activity seen over the summer (price discounting was down 40% in June compared to February).

Mr Evans believes that if this current buying trait continues beyond being the understandable short-term aberration, manufacturers might have no alternative but either to try and support the market with heavy discounting in an effort to attract buyers, or simply re-adjust the end of year target of 2.3m unit sales.

For transactions up to September 30, CarPriceCheck says prices from UK franchised dealers for all makes and models rose by just over 2% as the average fell from 9.1% to 7.02%. During the same period, average market discounts from import channels fell from 11.7% in June to 10.6% in September.

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