Motor industry in the UK

Many will still want to test drive a car before buying

The decision by one of the big car manufacturers to start selling vehicles via the Internet is long overdue.

But it does not spell the end of the "rip-off Britain" complaints about UK car prices quite yet.

Vauxhall is reported to be planning to knock hundreds of pounds off the cost of vehicles when it starts selling them online - but these are cars which can be bought thousands of pounds cheaper from the continent.

Other manufacturers, like Renault, are expanding Net activities

However Vauxhall's move has been welcomed as a step in the right direction. It is a lead likely to be followed by others.

Two weeks ago Ford and Microsoft announced a joint venture to sell its cars over the Internet in the US. It will not be long before Ford UK decides to do the same.

A Renault spokesman said Vauxhall and Ford had a great influence on the market in the UK: "Where they lead, others tend to follow," he said.

One of the reasons for not rushing ahead is that the current system is so lucrative. The UK is known as "treasure island" by car makers who can mark up their prices once they cross the channel.

Continental drift

Meanwhile the Competition Commission's interim report into the industry concluded that prices were artificially high. Government action is expected to follow.

More importantly for the car firms, there are growing signs that the UK consumer is waking up to the overcharging in the industry.

What was once a trickle of buyers of cars from the continent, has been accelerating in the past two years.

That threatens to become more of a torrent as third parties step into the fray to make the cross channel trade in new cars easier to understand.

Totalise, an Internet Service Provider, is launching a site offering savings running into the thousands of pounds on imported right hand cars.

Another significant move earlier this week was the Consumer's Association decision to start acting a middleman for buyers.

Little regional variation

The car companies now recognise, reluctantly, that action needs to be taken. They know that those who do nothing will lose out.

Because of their well-established - and controversial - system of dealerships around the country they already have a network capable of delivering the product to Internet buyers.

In the UK they tend to be tied to one particular firm - a system which has come under the spotlight in the recent price fixing investigations.

The claim has been that dealers have no option but to sell cars at a certain price.

That is why the price of most new cars does not change much across the whole UK.

House prices may be 67% higher in London than elsewhere, supermarket prices may differ between regions, but the same new Citroen will have the same price tag in London as in Liverpool - even to the extent of having exactly the same free insurance deal.

With such uniformity of pricing, selling direct to the customer seems a good option for the car makers.

Internet sales across Europe

However, car dealers are unlikely to be something of the past for a while yet.

Cars, unlike CDs or books, tend to be something which needs to be test driven, seen and even smelt before the purchase is decided upon.

The real test will come if and when Vauxhall decides to sell cars across Europe via the Internet.

The day when a car buyer is able to see at the push of a button the difference in prices across the continent is not far away.

And once that happens, prices may well fall in the UK by a rather more substantial amount than that reportedly being planned by Vauxhall.