Measures to cut the average price of a car by #1,100 and save private car buyers around #1 billion a year will come into force from next month, Trade and Industry Secretary Stephen Byers announced 1/8/00.

A new legal Order being tabled 1/8/00 will bring about greater competition in the supply and sale of cars.

All the provisions of the Order will come into force on 1 September, the date of the next number plate change. Suppliers must make their first offer of volume-related discounts to dealers within three months of that date.

Mr Byers said:

"These moves will mean a better deal for car buyers.

"A new car is the second most expensive purchase for most private buyers. In their report the Competition Commission found that buyers are paying about 10% - or #1,100 - too much for their cars. The Director General of Fair Trading estimated that private car buyers could be paying around #1 billion a year too much.

"We could not ignore this clear and unequivocal finding and have taken quick and decisive action which will ensure that consumers get a fair deal when they buy a new car.

"The Order that I am publishing today will establish a fair framework for supply to dealers and more effective competition in the new car market including measures to enable dealers to buy cars outright at cheaper prices.

"It is up to suppliers and dealers to deliver more competitive prices to consumers and to convince them that they are offering good value for money. This is the way to restore consumer confidence.

"I have set the industry a demanding timetable. All the provisions of the Order will come into force on 1 September.

"While I appreciate that the car manufacturers need time to prepare so that they can comply with the Order, I believe it is more important for the industry to bring prices down quickly and give consumers the confidence to buy.

"I am pleased that prices have fallen recently and a number of special offers are available. But I believe we need to make sure that prices come down and stay down across the board.

"It was clear that the car market was not operating effectively. Greater competition will also bring about a healthier industry."

The Order will:

* Require suppliers to offer dealers who buy cars outright similar volume discounts to those offered to fleet buyers;

* stop suppliers from discriminating in respect of discounts when supplying cars to a contract hire company according to whether the end-user is a private or fleet buyer;

* stop suppliers from discriminating against or refusing to supply dealers because of the dealer's advertised resale prices;

* stop suppliers from agreeing to pay bonuses or give preferences to dealers on the grounds of the number of cars pre-registered by the dealer;

* require suppliers to publish information about the number of cars they have pre-registered; and

* ensure that sales of cars obtained from authorised dealers in other EU Member States count towards dealers' annual sales targets, performance against which can affect whether a dealer keeps it's franchise.

The Director General of Fair Trading will continue to monitor the market and compliance with the Order. If it is found that the measures in the Order need to be reinforced, the Secretary of State will consider what changes, if any, are necessary, including a ban on recommended retail prices.