New car prices have fallen by 8% in real terms in last 10 years

Motorpoint, UK¡¯s car supermarket group¡¯s tenth anniversary is two weeks away, and its founders have issued a news release reflecting on the changes in car retailing over the past decade since the ¡°Rip-Off Britain¡± campaign, during which the company became the first supermarket to import cars from continental Europe with savings as high as 50% of UK list prices.
 
It quotes in its support, at length, Professor Garel Rhys, President of Cardiff Business School¡¯s Centre for Automotive Industry Research: ¡°Although we live in an era of low inflation, the Retail Price Index has nevertheless increased by over 20% since 1998. However, the growth in new car prices has been 12% over this period, and even less when quality adjustment is included. That is more specifications at no or little extra cost to the car buyer. This fall in real prices of circa 8% is testimony to the ultra-competitive conditions in the UK new car market.
 
Professor Rhys added: ¡°Most cars are still sold through traditional outlets, but the growth of additional factors such as price comparisons on the Internet and professionalism of the front rank car supermarkets bringing the expertise in the British retail sector to the car industry has helped force vehicle makers to pass on most of their production efficiencies to the consumer.
 
¡°At last, the boundary of power between the vehicle manufacturer and retail sector is shifting in favour of the consumer. Even so, the very existence of a block exemption means that still there is not a true ¡°free¡± market in the vehicle sales, service and repair industry as the manufacturers can still impose standards that have to be met and thereby retain some control over the number of outlets, and it is not straightforward for non-authorised outlets to obtain supplies. However, the move is strongly in the right direction."
 
Sales at Motorpoint have risen from just over 100 cars per week in 1998 to over 30,000 cars a year in 2007 when its customers are claimed to have saved £144 million compared to manufacturer recommended retail prices. Cars are still cheaper in Europe, however, says Motorpoint.
From: auto industry.uk/news

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