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



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point

In Depth

On Air

Archive
Feedback
Low Graphics
Help

Tuesday, July 20, 1999 Published at 13:22 GMT 14:22 UK


Business: The Economy

Car makers 'fixing prices'

Many British-made cars can be bought much cheaper on the continent

Car buyers in the UK have no real ability to negotiate prices when they buy a new vehicle, the Consumers' Association (CA) told a Competition Commission hearing on Tuesday.

"You can't get a bargain because dealers are in no position to offer you one," said the CA's senior policy researcher Phil Evans.


Karen Bowerman reports: "Most of the car manufacturers refused to attend"
He was speaking at the Competition Commission's first ever public session - an all-day hearing which is part of a nine month investigation into the price and selling of new cars in the UK.

The inquiry was sparked by concern about the cost of new cars in the UK being so much higher than the same models sold elsewhere in Europe.

Before the hearing began Mr Evans said the CA was convinced that the motor industry was "operating as a monopoly and deliberately fixing new car prices, resulting in a £6bn a year rip-off of the UK consumer."

Alan Pulham, franchise dealer director of the Retail Motor Industry Federation, told the hearing that car dealerships had seen their margins halved since the early 1990s.

"Manufacturers have limited the ability of dealers to compete in the market place and the company car market has distorted the used car market," he said.

Refused to appear

The inquiry chairman Denise Kingsmill said it was "a great pity" that very few car companies had turned up at today's hearing despite their all being invited.


Phillip Evans of the Consumers' Association: "We don't want manufacturers dictating prices across Europe"
She added that the Commission would not draw any adverse inferences from absences.

Three of the UK's biggest manufacturers, Ford, Vauxhall and Nissan, have refused to appear at the hearing because of fears about revealing confidential information.

Companies said last week that they were happy to be represented at the hearing by their umbrella body, the Society of Motor Manufacturers and Traders. They will also be giving evidence in private to the inquiry team.

The hearing comes only a week after Volvo (UK) admitted supporting secret arrangements to keep its British car prices artificially high.

Volvo avoids fine

The company escaped a fine, with the Office of Fair Trading (OFT) accepting a promise of good behaviour in the future.

Car manufacturers claim the higher prices in the UK are a result of higher production costs - partly as a result of producing solely right-hand drive vehicles.


[ image:  ]
But consumer organisations say this does not explain why right-hand drive cars can be bought on the continent for several thousand pounds less than identical models in the UK.

One survey showed British consumers pay the highest price for 60 out of the 74 best-selling new models in Europe.

A Rover 414 costs about £11,000 in Britain, where it is made, compared with less than £8,000 in Portugal.

Manufacturers say the list price is irrelevant and point to the actual transaction price.

They say this can sometimes be higher in countries where list prices are lower than in the UK.

The Competition Commission, formerly the Monopolies and Mergers Commission, is looking into the workings of the franchise dealer network and the price of new cars, as well as dealer discounts and bonuses.

The franchise dealer system is excluded from normal European competition regulations but the commission could call for this exemption to be lifted.

Car companies will also be giving evidence in private.

The commission has been asked to make its report to Trade and Industry Secretary Stephen Byers by 16 December.



Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage | ©


The Economy Contents


Relevant Stories

09 Jul 99 | The Economy
Car industry under the spotlight

09 Jul 99 | The Company File
Volvo rapped for 'disgraceful' price fixing

30 Jun 99 | The Economy
The 'Great British car rip-off'

17 Mar 99 | Your Money
Car makers 'distorting' prices

28 Jan 99 | The Company File
Ford buys Volvo





Internet Links


Ford

Vauxhall

Nissan

Volvo

Rover


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