New Car Prices – We’re Back To Rip-Off Britain
Friday, 22. July 2011
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I am often asked how the lease rates on some cars can be so low compared to the cost of the car? Take for example the deal we had last year on the VW Passat CC (their new 4 door coupe). If you had taken the car on a 2 year lease you would have paid the equivalent of 26 payments x £229.99 + VAT. That’s a total of £7,175 on a car that cost around £27,000. You pay about 27% of the cost and the lease also includes the road fund licence for the term. Close to half the lease cost would equate to interest charges alone, so how is it done?
Well, as I’ve pointed out in the past, manufacturers provide bonuses and when you combine the bonus with the dealer discount this can equate to a staggering 45% off the list price.
Whenever I say that there are disbelievers that smile and wink at each other in the belief that old Graham has been hitting the herbal tea again! But it’s true and to prove the point that cars can have their prices slashed and still make them viable Renault have announced a 43% drop in the price of certain Clios.
But only in France. That is a huge drop but kinda proves the point that there is that much fat in the price in the first place. Over here in rip off Britain Auto Express has announced that Renault are slashing the price of just one model of the Clio by a massive 17.8%. Hmmm, who said this is rip off Britain – oh I did!
Citroen have also dropped the prices of some models by 30%. The point is that normally the manufacturers will only provide the extra bonuses to the leasing companies who will tuck the discounts away in the monthly lease rates, you never get to see the level of discount being provided which therefore doesn’t affect the prices dealers will charge for their used cars.
I’ll bet the Renault dealers in France were delighted with the huge price cuts from 14,100 Euros to 7,990 Euros, must have knocked thousands of Euros off the selling price of their used car stock!
But there you have it, absolute proof that there is a lot of profit in new cars that manufacturers retain. Now where did I put that peppermint tea bag? Any views? Please share. By Graham Hill
