LEADING car dealer in Oxford this week hit back at claims that UK dealers were 'ripping off' motorists with inflated prices on cars.

Alf Middleton, Motorworld group general manager, said: "We're not in the business of ripping customers off. If we were, we'd never see them again.

"As dealers we agree that the prices are too high, but it's not our fault. The manufacturers fix the basic prices and as dealers we must then work within our profit margins which are certainly not excessive."

He added: "The problems are caused by a host of things, all of which are outside of the dealers' control. By way of example, the UK's unique fleet and business market has distorted the picture, with discounts and deals, which means that the retail buyer inevitably pays a premium."

An EU report this week said that car prices in Britain remained the highest in the European Union partly because the pound's strength against the euro has offset price cuts by some manufacturers.

On average, pre-tax car prices in Britain are 35 per cent more expensive than in the cheapest EU nations, Finland and the Netherlands, said the report.

The high prices have become a controversial issue in Britain where consumer groups have accused car manufacturers of rigging the market. Since a campaign launched by the Consumers' Association to boycott showrooms until prices of new cars come down, many dealers have been facing a tough time.

The difficulties were highlighted by latest car sales figures from the Society of Motor Manufacturers Traders, which showed that while the number of new cars sold overall increased by 1.8 per cent in January, private sales were down 10.6 per cent - the fourth successive month this sector has experienced a fall.

The reduction was described as "disappointing" by Alan Pulham, the franchised dealer director of the Retail Motor Industry Federation.

But SMMT chief executive Christopher Macgowan put a brave face on the figures, saying they reflected "a surge of interest now that the new Millennium has begun".

Meanwhile, the Government is considering a report from the Competition Commission on the way new cars are priced and sold in the UK.

The EC report said some manufacturers did lower prices last year in Britain, but added that the effect was mitigated by a 2.4 per cent increase in the pound's value against the euro, which was adopted as the common currency of 11 of the 15 EU nations on January 1, 1999.

Although recognising the impact of the pound's strength and the added costs adapting models for the right-hand drive specification used in Britain, the EU said it was continuing to investigate complaints that manufacturers used restrictive practices to keep prices high and prevent customers buying from other EU nations.

Mr Middleton, who heads a network of Motorworld franchises including Volkswagen, Audi, Mitsubishi, Volvo and Hyundai, added: "It's an emotive subject.

"As a consumer, I personally get angry over the price of things - especially fashion goods, sportswear, perfumes and - the biggest example of all - pharmaceuticals and drugs.

"But who makes the headlines? It's the car dealers who are being branded as the main 'rip-off' merchants. It simply isn't true.

"The margins in the motor trade work on a very small percentage. They are between one and 3 per cent bottom line.

"They are very slim margins on a massive turnover. Yes, the current problems are stopping people walking into the showrooms, but we do not believe that the sudden crashing of prices will solve the problem.

"And manufacturers are boosting equipment levels without increasing prices," he added.

Story date: Wednesday 16 February

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