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Ford and Vauxhall cut car costs by selling online in renewed price war

Michael Harrison,Business Editor
Wednesday 18 October 2000 00:00 BST
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Britain's two biggest car retailers, Ford and Vauxhall, announced plans yesterday to cut prices further by selling their models direct to customers through the internet.

Britain's two biggest car retailers, Ford and Vauxhall, announced plans yesterday to cut prices further by selling their models direct to customers through the internet.

Ford said the move would reduce prices by a further 5 to 8 per cent on top of the 13 to 15 per cent price cuts unveiled this month. Vauxhall said prices online would come down by an average of 3.5 per cent, between £300 and £800, depending on the model.

The companies sell 700,000 cars a year in the UK - three in every 10 cars bought - and their move is bound to increase pressure on other manufacturers to follow.

Ian McAllister, chairman of Ford in the UK, said on the opening day of the British International Motor Show in Birmingham that the motor industry was witnessing the start of a "revolution" in the way cars were sold. He said the internet would probably appeal to only a minority of buyers. In America, only 3 per cent of new cars are bought online. Ford also announced further discounts for its new Mondeo model, a move likely to set off a renewed price war in the executive segment of the car market. Vauxhall is expected to follow, with price reductions on the Vectra.

The price of the Ford Mondeo is being cut by 9 per cent. The on-the-road price of the 1.8 litre LX model will be £14,595, a saving of £1,405. With £825 of extra equipment now fitted as standard, Ford said the price reduction was worth £2,230, or 14 per cent to customers.

MG Rover, rescued from closure five months ago, has stunned the motor industry by deciding not to appear at the Birmingham Show. This has helped to make the event a low-key affair with only a handful of new models on display for the first time.

Lotus is showing off a version of its Elise sports car, which starts at £22,995. The car is made from a glass composite body fitted to an aluminium chassis, and went from concept to production in 12 months. The company, based in Hethel, Norwich and owned by Proton of Malaysia, plans to build 3,000 a year. The previous model sold 10,000.

Also on show in the UK for the first time is the new Mini, on sale in a year at £10,000. BMW, which is building the car at Oxford, plans to produce 100,000 a year.

DaimlerChrysler has also launched the first UK sales of its Smart two-seater city runaround. Prices will start at £5,400. There is only one slight snag - right-hand-drive versions of the car will not be available until early 2002.

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