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Falling sales prevent price rises

Falling or slowing sales in Europe's five largest car markets caused manufacturers to hold down price increases in the third quarter of 2004 according to the latest ‘European Car Market Prices and Volumes’ report from pricing analyst eurocarprice.com.

Robin Goodyer, operations director of eurocarprice.com, says: "The level of price increases reported this quarter has fallen in every market. There is still pressure for all the manufacturers to increase prices to improve their returns, but the continuing reluctance of the market volumes to increase is forcing the manufacturers to compete heavily on price.

"In the UK, sales are likely to fall below last year’s total so opportunities for price rises are limited. The fall of the £ sterling in relation to the Euro over the last year has reduced the Euro revenue of the manufacturers, putting pressure on them to increase prices to improve revenue.

"Year on year sales volumes and prices increased less quickly in the 12 months to October than recorded in our previous quarter's report. The year’s sales volume to August 2004 was 1.09% ahead of the sales achieved in the previous 12 months, while the average price increase across the whole market was 1.69%.”

Fiat recorded the highest average price rise of 2.93%. Seat maintained its UK market share with an average price reduction over the year. Vauxhall increased prices by more than 1% above the market average, and gained sales volume and share, attributable to Meriva and Signum.

BMW increased sales volume and share (through Series 5, Series 6, X3 and Z4) whilst increasing average prices by 2.64%. Citroen increased prices by an average of 2.18% and lost significant volume and market share, spread across its range.

Ford recorded an average increase of 1.84% in the UK, whilst losing volume and market share despite the recent sales growth of Focus C-MAX.

Robin Goodyer added: "The report continues to demonstrate the correlation between sales volume movement and price increases. Within the 'Big Five' group of countries, the market with the highest volume growth (Spain) has seen the highest price rise and the market with the highest volume fall (Italy) has experienced the lowest price rise, with the other three markets falling into the pattern."

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