Cut-price rivals killing off traditional car dealer

The days of traditional car dealers seemed numbered on Wednesday as the public shunned W-registration vehicles on forecourts all over Britain and an internet company offered savings of up to 41 per cent on new purchases.

The days of traditional car dealers seemed numbered on Wednesday as the public shunned W-registration vehicles on forecourts all over Britain and an internet company offered savings of up to 41 per cent on new purchases.

Research showed that two-thirds of motorists who had bought new cars from dealers in Britain would refuse to do so again because of "rip-off" prices.

Oneswoop.com, a company which went online yesterday, offered a range of bargains, including the Land Rover Freelander at £13,989 - £9,826 less than the UK list price.

Backed by companies such as Marks & Spencer and Andersen Consulting, Oneswoop believes it can offer the lowest prices because it has struck agreements direct with dealers in Germany, Belgium, Ireland, Spain and the Netherlands. Customers will pay around £7,922 for a Vauxhall Astra 1.6 - a saving of 32 per cent on the UK recommended retail price of £11,700. A Volkswagen Golf 2.3 will retail for £12,926, down by 31 per cent on the £18,889 list price.

It was expected that Oneswoop.com would provoke a price war with other internet agents such as Sir Richard Branson's Virgin Cars, although Virgin says it will not aim to be the cheapest on every model.

The Consumers' Association has also set up an internet importing scheme to be launched later this month. The association, which led the charge last year against "rip-offs" in Britain, urged motorists not to pay forecourt prices. "As far as we are concerned, the letter W stands for wait. Prices will have to come down," said Nick Stace, the association's senior publicaffairs officer.

The website retailers are able to buy cars cheaper because manufacturers reduce their prices to compensate for higher sales taxes, and those importing cars into Britain are exempt from the local taxes. It is now estimated that there are around 50 agents buying cheap in this way and selling via the internet in the UK.

Forecourt sales of new vehicles have slumped recently amid hopes that prices would fall once the Government publishes a Competition Commission report on dealerships. European Commission figures show that UK consumers are paying more for popular models than any other European buyers. Although overall new car sales rose 1.8 per cent in January, private sales fell 10.6 per cent.

To add to the woes of traditional car retailers, Volvo dealers in London and the home counties came under fire yesterday after the Office of Fair Trading found them guilty of price fixing. The secret cartel operated among 17 independent dealers between 1994 and 1996. The OFT accepted that the manufacturer was not involved in the agreement.

The investigation was completed before much tougher laws came into force yesterday, carrying stiff penalties for companies involved in cartels.

And the Advertising Standards Authority is investigating a complaint from the Department of Trade and Industry about Ford, which took out full-page media advertisements promising not to cut prices, to discourage buyers from waiting for future reductions. However, it is alleged that Ford has since offered some price cuts.

Consumer resistance to "rip-off"prices is confirmed in a survey by Abbey National Direct Motor Insurance, which found that 66 per cent of those who had bought a new car off a forecourt in Britain would never do so again. Nearly four out of ten would buy direct from a continental dealer. The rest, in equal proportions, would pay a company to source a car abroad, buy on the internet or buy from a supermarket.

However, finding a continental seller can prove difficult. Some dealers claim manufacturers would take action against them if they sold to British purchasers at continental prices because they would undermine the UK market.

Dealers conceded yesterday that things were not looking good for them. "The delayed Competition Commission report will certainly impact on March sales as more people are delaying their purchase decision in the belief that prices may come down," said Alan Pulham, director of the Retail Motor Industry Federation's franchised dealers section.

Links for online car sales: OneSwoop car import service | Vauxhall's Buypower site | What Car? online | Autobytel | Auto Trader Interactive | Yahoo Cars, for new car info