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Carmakers look to UK to recoup lost profits

Franchised dealers in the UK are set to come under increasing pressure as manufacturers seek to recoup losses on car sales in continental Europe, a leading industry expert is warning.

Kevin Gaskill, chief executive officer at EurotaxGlass's, claims the UK could become a virtual 'treasure island' – a term coined by the media during the 'rip-off Britain' campaign in 2000 – for carmakers after another year of record sales.

“UK dealers have been sheltered from the difficult times experienced by their European counterparts in terms of new car sales,” he says.

“Block exemption has encouraged manufacturers to review their distribution strategies and look very closely at European dealer margins. Manufacturers will be looking to the UK to generate profit.”

According to the latest figures, new car registrations in the UK were up 0.2 per cent year-on-year over the last 11 months, driving the 2003 total towards a historic finish. But latest sales figures for passenger cars in Western Europe show a fall of 4.53 per cent in October while the market is down 1.65 per cent for the year to date.

As sales continue to slow in Europe, global carmakers are increasing new car prices in the UK and Europe. Research shows UK car prices were up 3.9 per cent over the 12 months to October while European prices were up 4.3 per cent.

But Tony Hayes, managing director of JATO Automotive, says: “While carmakers have to look very closely at capitalising on a market that is bucking a negative trend, western European sales over the past six months are picking up.

“UK registrations reflect the fact prices have been brought into line with the rest of Europe. There may not be a disparity in performance many perceive.”

The movement reflects the effect of supply and demand, according to analysts PricewaterhouseCoopers.

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