'It's good news for us, and good for our customers'

News of the Mercedes price cut made it hard for Laurence Vaughan, chief executive of one of the biggest chains of luxury car dealerships in Britain, to contain his excitement.

News of the Mercedes price cut made it hard for Laurence Vaughan, chief executive of one of the biggest chains of luxury car dealerships in Britain, to contain his excitement.

"This is absolutely enormous news," he enthused, "it is the start of the domino effect. All manufacturers have to price their products with at least one eye on what the competition is doing. They cannot ignore a 20 per cent reduction in the list price of the [Mercedes] E class. I am quite sure it will lead to further reductions. It's great news for us and great news for our customers."

Despite previous cuts in the prices of quality cars he believes yesterday's reductions were more significant: "This will mean a vast improvement. Porsche cut their prices quite significantly earlier in the year and that absolutely revolutionised our Porsche business. Our orders more than doubled. Mercedes is a much much bigger manufacturer, and much less specialist than Porsche. The effects of this will be far more widespread."

Mr Vaughan's company, Sytner Group Plc, runs around 40 dealerships selling cars including Mercedes, BMW, Jaguar, Land Rover and Chrysler Jeep. He believes the "domino effect" will improve the showrooms' profitability: "There are lots of people who have spent the last year thinking 'I'm not going to buy a car now because prices are going to fall.' They've needed a headline that says 'Prices have fallen', and hopefully that's what'll happen now.

"If customers come in and say 'I'd like a car but they're a bit too much' we can do something. What we haven't been able to do is get people into the dealership in the first place. That will start to change now."