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Analyst warns of 'comfort zone folly' as strategic pricing comes into play

Internet retailers and importers launched an aggressive pricing strategy in June in an attempt to regain the upper hand in the changing new car sales market, according to CarPriceCheck.

The news comes as forecourt price rises outweighed improvements in available discounts for the first time in four months, latest figures from the new car price transaction analyst reveal. Franchised dealers delivered an average fall of 2.59% for 389 models during June, but the month also recorded a 2% average rise for a further 516 models, prompting a warning of “comfort zone folly”.

Importers were behind some of the widest-ranging price cuts monitored since August 2000, with many of the leading suppliers increasing discounts by an average of 2.6% on up to 80% of stock. The movements, said CarPriceCheck, were a complete reversal of the recent trend of price increases from Europe.

Steve Evans, chief executive officer of Autohit, which operates CarpPriceCheck, said: “Only time will tell whether June was an anomaly whereby importers found favourable economic circumstances to reassert their aggressive pricing or that UK dealers felt they could relax any pricing strategy because consumers had started to return to the showrooms.”

But he warned: “The adoption of a comfort zone would be absolute folly, as price remains the single most important factor in the car buyer's mind.”

Renault and Peugeot dominated the price movements during June with nearly a third of all recorded changes across all channels. Renault demonstrated the growing trend among internet retailers to “target market” with the Pendragon-owned Tins operation delivering a market-leading increase in average discounts of 3.2% for 100 models. This compared with a 0.75% fall in price on the home forecourt and an average fall of 1.56% from importers.

CarPriceCheck also noted JamJar's reversal in strategy as it withdrew an average 11% discount from 31 models.

“This is perhaps the clearest indication yet of the advantage larger dealer groups have when it comes to competing with Europe,” said Evans. “By taking advantage of the fleet discounts manufacturers are legally bound to offer for bulk orders, they can hold the trump card."

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