A survey done in the UK shows that most UK consumers are dissatisfied with the current price of cars, and are not convinced that manufacturers are trying to reduce prices.

Although the soon to be implemented amendments to block exemption are meant to change this, there is a danger than manufacturers may instead increase prices across Europe.

According to a survey of 3,500 UK car buyers, two-thirds think that manufacturers are 'greedy'. Only 2% of those surveyed believe that the disparity between prices in Europe and the UK is due to different tax rates.

Two years ago, manufacturers where forced to reduce list prices by about 10% across all models. This was in part caused by a massive consumer campaign, which aimed at 'harmonising' UK and European prices which, in some cases, were 30% higher than on the continent. Carpricecheck's latest data shows that new car transaction prices in the UK fell by only 0.3% in the first six months of 2002. This is an equivalent of saving £36 on a £12,000 family hatchback.

The survey also states that 61% of customers were getting a better deal this time round, but all agreed that the price of new vehicles was still too high. About 84% of those surveyed agreed that prices were still too high, whilst 14% considered that dealers were keeping process artificially high.

From October onwards, rules of block exemption will change drastically, with the aim of improving customer choice and reducing prices. Dealers will be able to sell models from different manufacturers in their showrooms, with the aim of creating greater transparency.

Block exemption changes and mounting consumer pressure may force manufacturers to reduce prices, but it seems unlikely. Manufacturers are going to have to invest much more money in incentivising dealers, if they want to maintain a one-brand-showroom and therefore, if anything, prices might even increase across Europe.

In countries with lower car prices, such as Denmark, manufacturers have already begun to increase prices as a means to control cross-border sales. Where else manufacturers increase prices as a means to combat change is yet to be seen.

SOURCE: DATAMONITOR COMMENTWIRE

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