November 16, 1998. Copyright 1998. Graphic News. All rights reserved.

UK CAR MARKET RIP OFF

LONDON, November 16, Graphic News: BRITISH car buyers are being ripped off, according to an all-party report to be published by MPs next month.
The parliamentary trade and industry committee which has nearly completed its inquiry into the price of new cars in Britain is expected to condemn manufacturers, dealers and importers for a variety of anti-competitiveÊpractices Ð in particular the exclusive franchise system which gives the car manufacturers dictatorial powers over their dealer networks.
BritainÕs competition watchdog, the Office of Fair Trading (OFT), is set to rule on whether to trigger a full-blown inquiry into price rigging in BritainÕs £24 billion-a-year car market by year end.
Recent European Union research showed drivers in Britain pay 10-60 percent more than elsewhere in Europe for 60 of the 74 top-selling vehicles.
A Ford Mondeo saloon can cost an extra £6,500 Ð 58 percent Ð in Britain compared to Spain and certain Fiat models are 50 percent more expensive in the UK than in the Republic of Ireland.
BritainÕs Consumers Association said its recent investigation into car dealer networks found many were unwilling to discount, claiming it was against the manufacturerÕs policy. This is seen as an illegal restrictive practice.
If buyers try to import models from the continent they are met with repeated refusals from European dealers. Most claim they are not allowed to supply right-hand-drive cars.
British dealers claim increased costs are due to the high value of the pound, the additional costs of making right-hand drive cars, differences in specification and the dominance of the company car market. But when questioned off the record some admit that manufacturers have threatened to take away their franchises if they offer discounts.
Andrew McIlwraith, editor of Which Car magazine, published by the Consumers Association, said: ÔThere is a definite problem with car price fixing. In our investigation, we found a particular problem with Volvo and I understand the OFT is looking at Volvo in particular.Õ
The Consumers Association said the real breakthrough lies in the hands of EuropeÕs bureaucrats. It is calling on the EC to scrap its Ôblock exemption rulesÕ, which allow carmakers to set up exclusive dealer networks.
A new Competition Act Ð which passed into law on November 9 Ð gives British authorities powers to impose fines of up to 10 percent of turnover and mount dawn raids on businesses to stop illegal agreements.
One infuriated member of the commission went as far as saying that Britain should take a lead from the Americans and introduce mandatory prison sentences for the directors off all companies caught price fixing.
/ENDS
Sources: The Economist, Reuters, Sunday Times