Emergency stop.

AuthorMargolis, Adrienne
PositionAutomobile lease and rental companies - Statistical Data Included

Last year's fuel crisis may have brought Britain's drivers to a standstill but, writes Adrienne Margolis, the episode was short-lived compared with the effects of a government report on pricing

"The past 18 months have been hellish." This is the response of a spokesman from a car-leasing company, asked about the impact of uncertainty over car prices on his business.

When the government decided that UK prices were too high, it commissioned a report from the Competition Commission. The investigation related to the retail sector and was intended to bring prices closer to those on offer in the fleet market. But fleet managers believed that any reduction in prices would apply to them too. As a result, they delayed decisions to renew contracts or do new deals, and the fleet sector has suffered.

Ford sells the two most popular company cars -- the Focus and the Mondeo. John Rogers, the manufacturer's fleet marketing manager, says the company responded to the Competition Commission's recommendation to lower prices last October. He shares the view of many in the industry that fleet buyers were confused by media headlines which led them to expect a reduction in car prices.

Vauxhall has also reduced its prices. But the government measures have made little difference to the amount a retail buyer actually pays, according to Keith Michaels, the firm's sales operations manager. "It is just a matter of exchanging one method of reducing prices for another," he argues, explaining that Vauxhall has had to stop the cash-back offers and interest-free finance deals that effectively lowered prices before.

Not everyone has cut car prices in response to the report. Peugeot, which is among the top 10 brands bought for fleet purposes, is not planning to cut prices at the moment. Instead, it has run campaigns showing how much money customers can "save" on Peugeot cars in other ways. "Ford and Vauxhall have reduced list prices and we are monitoring the potential effects of these changes," according to a Peugeot spokesman.

At the beginning of December, car manufacturers were required by the Department of Trade and Industry to issue "discount matrices" to dealers. And these figures will now be updated every quarter. The Office of Fair Trading has the right to scrutinise any manufacturer's figures and to see evidence of how its prices have been calculated.

While some fleet operators have been expecting discounts, others have been concerned that cutting retail prices could...

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