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Private buyers haggle £660m discounts

UK buyers are currently enjoying some of the biggest new car discounts in motoring history, according to new research – but there are signs that manufacturers will soon be insisting on higher deal prices to boost their flagging margins.

Figures from CarPriceCheck show private buyers haggled their way to £660m worth of discounts on vehicles between January 1 and June 30 this year – up more than £206m on the same period in 2002.

Further research from Carbuyer magazine reveals that the average discount achieved by new car buyers has risen above £2000 for the first time in a year. Although franchised dealers are only giving an average discount of £895 (4.4 per cent of the value of the average car), other sources – including car supermarkets, brokers and internet traders – are giving significantly more.

The exceptional value of UK deals has been boosted by the ongoing strength of the euro against the pound, which makes imports from the continent far less attractive.

“The number of cut-price imports has been subdued since the start of 2003 with the euro dramatically sucking away the advantage from continental dealers and brokers,” says a spokesman for CarPrice- Check. During the first half of 2002, almost two-thirds of models on sale in the UK were cheaper to import. Now that figure is just one in four.

Ford, BMW and Mercedes-Benz have all increased list prices recently, and several other manufacturers are set to follow. One senior manufacturer executive claims the current level of discounts could not continue, as many volume makers were making no money from the market.

The problem facing some sections is the difference between list and transaction price. If list prices continue to rise, but transaction prices remain the same – or even fall – it's the company car driver that is hit, as they pay tax on the list price.

But British motorists in general are on course to make a saving of £1.4bn on new cars this year, despite the lack of cheap imports.

Steve Evans, managing director of CarPriceCheck.com believes the current levels of discounting will continue as banks, leasing companies and finance houses exert greater control on the market.

“They are spearheading the next wave of opportunity for the customer,” he says. “They have low distribution and marketing costs, the capacity to negotiate and buy in bulk, and the ability to deliver a finance deal to match.”

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