Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point
On Air
Low Graphics

Tuesday, December 8, 1998 Published at 08:52 GMT

Business: The Economy

UK car prices 'too high'

Prices in the UK are a third more expensive

A study by a group of Members of Parliament released later on Tuesday is likely to find that UK consumers pay unacceptably high prices for cars.

John Moylan: retailers blame manufacturers for high prices
The report is expected to say that customers are getting a raw deal due to dominant manufacturers, poor quality garage servicing and the "feeble" existing powers of competition regulators.

A House of Commons Trade and Industry Committee is likely to call for a large shake up of the way cars are sold, with dealers or manufacturers found guilty of anti-competitive practices liable to fines.

MP's also want the "block exemption", which allows dealers to operate outside EU competition laws, to be scrapped.

[ image: Leading makes can cost UK consumers a pretty penny]
Leading makes can cost UK consumers a pretty penny
At the moment cars are sold through authorised dealers, with each dealer having a monopoly over a set geographical area. That restricts competition and could contribute to higher prices.

Rip off?

Leading makes of cars are on average up to 40% more expensive in the UK than in continental Europe according to a recent European Union (EU) report.

The largest discrepancy was found with the Ford Mondeo, which was 58.5% more expensive in the UK than in Spain.

In fact 61 of the 72 best-selling cars in the EU cost more in the UK.

Dealers dilemma

However car dealers lay the blame on the manufacturers.

They claim that prices are set by manufacturers, and that their own margins are extremely small.

Christopher MacGowan of the retail motor industry federation said: "Prices that are set by manufacturers do have undue influence over dealers. Margins are incredibly tight. We would like to see greater flexibility."

Unfair burden

Companies buying a fleet of cars tend to get a better deal from manufacturers.

However that means that private buyers are left to pick up the bill, effectively subsidising big companies by paying higher prices.

To make matters worse obstacles are being put in the way of UK purchasers buying their cars abroad and saving themselves thousands of pounds.

Manufacturers claim that varying tax levels across the EU have forced them to charge different prices.

Under close scrutiny

The report could influence the Office of Fair Trading, which is currently investigating possible monopolistic behaviour in the car market.

The UK Government has also requested that the European Commission investigate price disparities between European countries on a range of products and services, including cars.

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage |

The Economy Contents

Internet Links

Office of Fair Trading

House of Commons

The BBC is not responsible for the content of external internet sites.

In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree