UK: Price hikes reduce scrappage discount - consumer group
Author: just-auto.com editorial team | 31 July 2009
A British consumer group has claimed that some car makers have hiked prices, offsetting the benefits to buyers of the government's car scrappage scheme, and suggested some buyers may be better off avoiding the scheme altogether by buying a 'nearly-new' vehicle.
Which? Car found some automakers had raised their list prices by as much as 14% so buyers were often no better off.
It said the price of a mid-range Ford Fiesta 1.25 petrol Zetec five-door had jumped from GBP11,570 in October 2008 when the car was launched to GBP13,195 in July 2009 - a "massive" 14% increase.
Vauxhall's new Insignia 1.8SE petrol five-door had also risen 14% from its January launch price of GBP17,981 but was listed at GBP20,430 in July 2009.
An 11% price hike for the Nissan Micra 1.4 petrol Tekna give-door from GBP11,200 last September to GBP12,395 was partially accounted for by improved equipment, Which? (the former Consumer Association) said.
It provided several other examples of price hikes ranging from 9% to 14%.
"It appears manufacturers are inflating prices just when the scrappage scheme requires them to chip in at least GBP1,000 worth of discount on a new car," the organisation said.
"The reality is more complicated - global economic conditions have forced a rethink of UK car prices. But some manufacturers have managed to resist price increases despite the rising costs of raw materials and spiralling exchange rates."
As an example, it cited Hyundai's i30 which had risen just 0.3% to GBP35 since September 2008 while Volvo had dropped prices since last year on some models - one XC90 version was GBP970 (-2.5%) cheaper in July 2009 than it was in September 2008.
Hyundai claimed recently its scrappage scheme sales of small cars - which mostly now come from India rather than Korea - had led to a shortage of some models while Nissan earlier this month told just-auto the scheme had given sales of its small cars in particular, including the Micra, a welcome boost.
"Which? Car recommends that buyers should consider nearly new cars that take advantage of earlier, cheaper prices - and offset some of the depreciation on a new car," the consumer group said.
Which? Car editor Richard Headland added: "Most buyers are being attracted by the GBP2,000 discount on a new car, and the scrappage scheme can offer some good deals. But with new car prices being hiked up, the scheme can be a false economy.
He suggested potential buyers did their "homework, as a pre-registered or one-year-old car may offer an even better deal".
Sectors: Retailing, marketing & distribution, Vehicle manufacturers
Companies: Nissan, Ford, Vauxhall, Hyundai, Volvo
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