MOTORISTS have been warned not to expect instant price cuts on new cars despite an official report showing we pay about 1,100 more for new models than elsewhere in Europe, writes David Duffy.

The Government reacted to a Competition Commission report by announcing moves to bring greater competition and lower new car prices.

The report showed prices had been between ten per cent and 12 per cent higher in Britain than in Europe.

Leading UK car companies had benefited from a "complex monopoly situation" which together with limitations they had imposed on their dealers, had led to higher prices and had been against the public interest, said the commission.

Mr Byers said: "The report confirms what many people have thought was the case - that in Britain we are paying over the odds for new cars."

He said he was taking "immediate steps" to make the market more competitive, such as insisting that dealers were offered the same bulk discounts as fleet customers, which he said should make the market function more fairly and put downward pressure on prices.

Consumer discounts average about seven to eight per cent, while fleet discounts can be as high as 35 per cent.

However, the Society of Motor Manufacturers and Traders said there was "little scope" for significant price reductions.

The difference in car prices was because Britain remained a "high currency market", not a high price market, the SMMT said.

Industry analyst Mark Norman, of the CAP Motor Research company, said it was unlikely that prices would come down very much as UK consumers were already able to negotiate good discounts on the list price of vehicles.

But the Consumers' Association which had led the fight against what it described as the "rip-off" of car buyers, said it was delighted that the Government was taking action.

And the RAC's campaigning arm, the RAC Foundation, predicted the price of UK new cars would fall by ten per cent.

The Retail Motor Industry Federation said the report should end months of speculation and confusion in the minds of private buyers. Chief executive David Evans said: "Stephen Byers has clearly recognised the inordinate power of suppliers over retailers and this will go a long way to giving car dealers the power to deliver euro and dot-com prices at their dealerships."

The publication of the 737-page report and Mr Byers' reaction to it followed a series of European Commission statistics showing the UK was the most expensive place to buy nearly all the continent's top models.

Interested parties, who gave evidence to the commission, will have until May 19 to comment on the planned changes, which are expected to come into effect in two months' time.

Story date: Wednesday 12 April

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