BRITISH CONSUMERS pay the highest prices in the European Community for 60 of the top 74 models on sale - up to 50 percent more in some cases.
Yet almost no one agrees why the gap exists. Manufacturers blame exchange rates and taxes. Consumer groups blame Block Exemption, together with dealer and manufacturer profiteering. And dealers blame highly discounted fleet deals which hike up the retail price to private buyers.
Now the UK government has launched another investigation into the issue - just six years after the previous pricing probe.
This earlier investigation concluded that the system did need changing, and decided to give more power to dealers. It allowed them to take on extra franchises on a single site, and curtailed the powers of manufacturers to dictate exactly how the dealers did business. The intention was to cut prices, improve value for money, and stimulate brand competition. It has succeeded in achieving exactly the opposite.
Why? As soon as the recommendations of the previous investigation were published, the major manufacturers began forming much closer relations with the biggest, best, and most ambitious retailers in the UK.
The deal was this: If the retailers promised to work with the manufacturers by maintaining single franchise sites, by refusing to offer major discounts, and by pledging allegiance to the car brand, then the automakers would make it worth their while. They would receive bigger territories and better bonus schemes.
Extreme examples of this strategy have seen single retailing groups being offered markets of several million people. For example, top dealer group Pendragon now controls the Fiat franchise for the whole of the Greater London area. Cynics may suggest such a policy discourages discounting, and a customer's ability to shop around for a good deal. Suddenly, the interests of the manufacturer and dealer are the same. No one can blame either party for taking this route - it's a sign that the industry understands far more of the complex issues behind car retailing than the trading authorities.