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Carmakers hold margins at close to a record year

Carmakers are keeping their powder dry during December and there has been little change in the retail finance promotions available. Indeed, some schemes have been cut back while others due to end in November are rolled over.

The reasons are not hard to find. Most dealers are already well ahead of targets for 2001 and there is no need to give margin away during a traditionally slow month. Somewhat surprisingly, November new car sales were up once again in this record year, building on a strong recovery in the same month last year.

At the same time, there is a feeling that interest rates have bottomed out (see direct lenders story below) and carmakers do not want to be caught with over-generous offers on the table. For the moment, at least, customers do believe new cars are affordable and good value.

Finally, of course, all eyes are already on the first quarter of 2002 and the three-month selling period through the plate change in March. The industry will want to make a fast start to the year as demand is expected to ease during the second half.

This trend is best reflected by Citroen, usually a leader in finance promotion with a mix of low rate offers and cashbacks. The company has cut most of its cashback offers by around 50% for December and aims to keep those offers in place until March. In effect, that means a top seller such as Xsara Picasso will be around £700 to £800 more expensive than it was two months ago.

It remains to be seen whether Citroen can sustain that position, and probably see sales slip back to Renault, or whether it will come back into the market more strongly in January.

Meanwhile Fiat has relaunched 0% finance after a couple of months of trying a low rate APR. A three-year deal on Punto looks particularly good value while there is an exceptional four-year deal on Bravo/Brava during the runout period before the Stilo launch.

Loan Amount Lender APR Monthly Repayment
with PPP
Monthly Repayment
Without PPP
£2,000* Abbey National 16.9% £80.34 £70.03
Barclays 17.9% £82.70 £70.98
HSBC 17.9% £81.88% £70.89
Lloyds-TSB 19.8% £83.35 £72.16
NatWest 20.9% £84.09 £73.44
£5,000 Abbey National 10.9% £184.15 £162.25
Barclays 15.9% £201.07 £173.26
HSBC 13.9% £193.98 £168.68
Lloyds-TSB 15.9% £198.35 £173.03
NatWest 12.9% £190.68 £166.54
£10,000 Abbey National 10.0% £363.25 £320.25
Barclays 13.9% £390.71 £337.98
HSBC 9.9% £366.34 £320.22
Lloyds-TSB 15.9% £396.69 £346.07
NatWest 10.9% £371.56 £324.51
£15,000 Abbey National 10.0% £545.03 £480.98
Barclays 11.9% £568.98 £494.14
HSBC 8.9% £543.07 £473.90
Lloyds-TSB 15.9% £595.04 £519.10
NatWest 9.9% £549.98 £480.34
Source: Automotive Management**

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