Driving: Carmakers accused in price-fixing investigation

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Ever had a problem getting a car dealer to drop the price of new cars? The Consumers' Association has and it claims that some ruthless carmakers keep prices high. Randeep Ramesh, Transport Correspondent, examines the allegations.

Volvo, the Scandinavian motor manufacturer, was accused yesterday of "price-fixing" under European law by discouraging dealers from offering customers discounts.

An undercover researcher from Which? magazine posed as an interested buyer at 12 Volvo dealerships but could only get a "very small" discount on a car worth pounds 16,675.

In fact some dealers allegedly went further telling the researcher that Volvo told them not to offer discounts. According to this month's Which? report, one Volvo dealer in Farnham allegedly told the researcher that the car maker would "rap the knuckles" of dealers caught discounting and another in Croydon said it would lose its franchise.

Any attempt to fix prices would breach European competition law. The Consumers' Association say it will present the evidence to the European Commission. Volvo deny the claims. A spokeswoman for Volvo said that dealers have a margin of 7 per cent to "play with".

In a statement, the company said it "does not restrict in any way the price at which dealers may sell cars ... it is incorrect to suggest that we have the ability to either terminate a dealer's agreement or penalise them in any way for discounting".

The report also highlights that all 12 Fiat dealers inside the M25 are owned by the same company and offer the same models at the same prices - which, according to the Consumers' Association, would "discourage competition".

Not all the companies contacted refused to give discounts. All four Ford dealers Which? visited offered "substantial discounts of up to pounds 1,000".

However, the industry said motor manufacturers did not have the power to fix the price of cars. "There are guideline prices but there are other considerations which dictate a retail price," said Christopher Macgowan, chief executive of the Retail Motor Industry Federation, the body which represents the country's 4,800 franchised dealerships.

Mr Macgowan added that when cars were in short supply very often customers would find themselves with no discount or even paying a premium. "For example there are some shortages of popular Audi and VW cars and people cannot expect to haggle and get savings."

Which? also questioned whether it was possible to import a car into Britain and claimed manufacturers were deliberately putting obstacles in the way of customers prepared to go abroad for a bargain.

When the researcher asked an Opel (Vauxhall) dealership in Holland for a right-hand drive Corsa, two salesman said Opel "would not allow them to sell cars to foreigners".

The report claims that when the researcher tried to order an import version of a Nissan Almera from the Continent - saving pounds 4,000 on a car worth pounds 11,000 - the investigator was told it was impossible to order.

According to the Commission last year, Britain joined the ranks of the most expensive places in which to buy a car. The Commission says this is due to price hikes by manufacturers and the rise in sterling's value.

Fifteen of the 75 models considered were most expensive in the UK including the Opel Corsa and Astra, and the Peugeot 106 and 306. Britain was cheapest for only three models: the BMW 730i and Volvo's 850 and 960.

Buyers will find no bargains in Germany or France which had the highest prices in the EU. Both had 30 of the dearest models. By contrast, the Netherlands and Portugal are the cheapest countries for cars.