UK: Consumer demand leads to price rises
Strong consumer demand has helped precipitate a rise in new car transaction prices for the second month in succession, according to data released today by independent price monitor Car Price Check.
With the number of transaction price increases overshadowing price cuts by a ratio of 2:1, the cost of buying a new car in April rose by 0.69 percent compared to March. The trend echoes research by industry analysts, CAP, who recently reported that manufacturer list prices had risen by 2.9 percent year on year to April.
Allied to this marginal rise is a sudden slowdown in forecourt pricing activity. Car Price Check has recorded a 62 percent fall in the number of price changes, either up or down, in April compared to February, and a 26 percent fall compared to March.
"At the start of the year, dealers and suppliers kept prices keen as they looked to sustain the record sales of 2001. Yet, with demand showing no signs of faltering, there is less pressure to compete by slashing prices month on month," said Car Price Check CEO Steve Evans.
"Buyers are still being offered reasonably good deals in the main, but the conditions are ideal for a cut in the size of those discounts as dealers look for improved profitability after a difficult few years."
Transaction prices for Britain's biggest selling segment - superminis like the Ford Fiesta and Renault Clio - rose by 0.55 percent during April compared to the previous month.
Prices at the executive end of the market, populated by BMW, Mercedes, Audi and Alfa Romeo, were a little more stable in April than previous months, registering only a 0.2 percent rise in transaction prices. This compared to a 1.3 percent hike during March.
Although discounts increased in the small family car sector (Fiat Stilo, Citroen Xsara and Toyota Corolla), leaving buyers better off by an average of 0.6 percent, it was fleet favourites like the Ford Mondeo, Renault Laguna and Honda Accord which pushed overall market prices up. Compared to March, retailers realigned their discounts following an aggressive period of pricing around the new '02' registration plate (out on March 1) with an average 1.4 percent hike.