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Dealers cut margins in fight for competitive edge

Dealer margins are being cut in the drive to remain competitive in the new car market.

According to the latest research by independent price monitor CarPriceCheck (www.carpricecheck.com), margins have been reduced by just over 8% on new cars. Sales may be up, its report says, but 'sales margins have been reduced'.

Steve Evans, CarPriceCheck CEO, said: “Car prices have yo-yoed all year. On average a fifth of all models available on UK forecourts go up or down every month. The net effect has been a small rise. However, dealers have been sharpening their pencils throughout the year offering competitive deals where and when they can. The big concern is the pinch dealers are feeling in order to remain competitive.”

CarPriceCheck says the average price of a new car has risen by £180 this year. Manufacturers' on-the-road prices have increased 1.94%. But transaction prices from franchised dealers increased by an average of 1.28%. The difference in the two is where dealers will be feeling the pinch. And the UK market as a whole – including dealers, internet operators and importers – has seen a 1% rise in the cost of new car purchasing - half the figure imposed by manufacturers.

Transaction prices from dealers rose in all segments except for MPVs and small hatchbacks, which fell 0.54% and 1.14% respectively. Executives and 4x4s saw the highest transaction price increases, of 3.28% and 2.3%.

Prices of imported cars from Europe were pushed up 1% by exchange rate pressures whereas those of internet retailers remained largely stable.

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