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Price gap closes between prestige and volume

The gap between the average list price of comparable models from volume and prestige models has narrowed over the past ten years, according to Glass’s Market Intelligence Service.

The Glass's research compared the changing prices of entry-level, petrol-powered saloon cars, such as the Ford Mondeo and the BMW 3 Series.

In 1995, the difference in list price between these particular two cars was 31%, but today the gap has fallen to 26%.

"As prestige-brand cars have become more affordable, they have predictably attracted interest from a much wider pool of potential customers," says Alan Cole, editorial consultant for Glass's Market Intelligence Service.

During the last 10 years the total market share of the mass-market brands (such Ford, Renault, Vauxhall) has reduced by some 12%, while the prestige brands (BMW, Audi, Mercedes) have grown their share by 9%.

"It is also apparent that growing numbers of fleet buyers are migrating to prestige brands, partly due to the importance of badge status for company car drivers, but also because of the advantageous contract hire rates that now result from the better residual value performance of prestige-badge vehicles," adds Cole.

The fact that a number of prestige manufacturers have diversified into several compact car segments - where the entry price is lower - only increases the challenge faced by the mass-market brands in remaining competitive.

"When prices are comparable, some sales will inevitably shift from high specification versions of the best selling volume-brand family hatchbacks - including the Ford Focus and Vauxhall Astra - to compact-sized prestige rivals such as the BMW 1 Series.

"To rub salt in the wounds for volume carmakers, the prestige marques are now increasingly willing to negotiate on price to tempt buyers away from mass-market competitors."

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