Citroen is to reduce its prices by 17.5% in the UK. Although it could already claim to offer the best value when it comes to buying a new car in the UK, it seems this isn’t enough for the French firm.

But while these price cuts may not be as generous as they at first seem, they could help the company to fend off a decline in sales.

Citroen, part of the French carmaker PSA Peugeot Citroen, has announced that it will reduce the prices of new cars in the UK by 17.5% – equivalent to the current rate of VAT, for the month of October. The company is widely regarded as having one of the most keenly priced model line-ups in the industry, so much so that praise has been passed its way from consumer groups and the press.

Such competitive model positioning has seen the entry-level Saxo maintain its sales levels as young buyers take advantage of the free insurance, 0% financing and low sticker price. Citroen has also made in-roads in the small-MPV sector, once dominated by Renault’s Megane.

The introduction of the Xsara Picasso once again saw Citroen’s low prices quickly gain market share against its older rival.

It would seem, therefore, that Citroen has no reason to lower its prices, let alone by 17.5%. However, there are two likely explanations for the price cuts. Firstly, no doubt the existing offers will be removed, which when totaled could easily reach 10%.

Secondly, and most importantly, the company is expecting its sales to flag.

The UK has so far managed to buck the trend as the success story of Europe this year, with record sales of new cars. However, this increase cannot continue indefinitely and no doubt some manufacturers are already beginning to feel the pinch.

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