Car buyers move online

Customers have stayed away from car showrooms

The new 'W' registration cars have gone on sale in the UK amid dealers' fears that private buyers are continuing to stay away.

The introduction of two new number plates a year was intended to lure more buyers into showrooms.

But car sales in the UK have been depressed by consumer hopes that car prices will fall, or that they can buy many cars cheaper abroad.

Their hopes have been boosted by the imminent publication of a government report into car prices that is expected to say that they are far too high.

The Competition Commission report was delivered to Stephen Byers, the Trade and Industry Secretary, in January, and he is expected to publish it shortly.

Even the retail motor industry admits that sales are likely to be depressed after January sales, excluding fleet sales to companies, fell 10.6%.

"The delayed competition commission report will certainly impact on March sales as more people are delaying their purchase decisions in the belief that prices will come down," said Alan Pulham of the Retail Motor Industry Federation.

Oneswoop moves in

The problems of UK car dealers could be exacerbated by the launch of a new Europe-wide car buying service on the internet.

The new company, Oneswoop.com, plans to offer discounts of up to 40% on new cars purchased over the internet from its network of dealers in Europe.

It plans a consumer-friendly service that arranges all the paperwork and transports the car selected by the customer to his doorstep.

Oneswoop chief operating office Suki Kalirai says that within a few years between 10% and 20% of all new cars will be sold online.

He adds that internet car shopping will become attractive not just because of price, but also because of convenience and increased choice.

Oneswoop plans an advertising blitz to popularise its site, spending between £35m and £50m in Europe over the next few years.

It is backed by private venture capital groups, BP Amoco, Anderson Consulting, and Credit Suisse First Boston. It will offer a complete package, including car loans through Marks & Spencer and car insurance through AutoDirect, a subsidiary of HSBC.

Threat to dealers and manufacturers

Oneswoop claims that it will be able to sign up UK dealer networks to provide servicing for the cars it sells more cheaply from abroad.

But it admits that there are too many dealerships in Europe, 60,000 compared to 23,000 in the United States selling roughly the same number of cars annually.

And some manufacturers may also be vulnerable, losing the higher profit margins they receive in the UK where average prices are about £3,000 higher than in continental Europe.

It admits that it will take some years for prices to become more equal throughout Europe, with perhaps an average fall of about 10-15%, as the single market begins to bite.

UK rush to the continent

But in the UK, there is already a rush to launch internet companies that offer car buyers cheaper prices from the Continent.

Both the Consumers Association, which has been campaigning against high car prices for years, and Sir Richard Branson's Virgin Group, plan to launch websites devoted to cheap car buying in the next month.

And websites like Totaliser's Eurekar and carimporting.co.uk already provide a limited internet-based car buying service in Europe.

Whether Oneswoop can dominate the internet car market remains to be seen. But there is little doubt that, whoever wins the internet car battle, the consumer is likely to see lower prices in the future.