Car scrappage scheme a smokescreen for price rises


Ford Fiesta, originally uploaded by sixate.

Car companies have inflated forecourt prices by up to a third to claw back scrappage discounts, an undercover investigation has found.

Motor manufacturers are accused of using the Government-sponsored “cash-for-bangers” scheme as a smokescreen to usher in inflation-busting increases.

‘What Car?’ magazine sent a team of secret shoppers check on prices at hundreds of car dealers around the country. They found that retail prices overall jumped by an average of nine per cent in the past 12 months.

Ford hit buyers of its Fiesta 1.25 60 Studio with the highest rise of more than 36 per cent. The firm’s Mondeo 1.6 110 Edge, which went up by 19 per cent, also appears in a league table listing the five biggest price rises along with its Focus 1.6 Zetec that jumped 17.6 per cent.

The increases have in many cases wiped out the £2,000 discount given buyers trading in ten-year-old vehicles under the terms of Lord Mandelson’s £400 million scrappage initiative.

The US car giant claimed that price rises in the UK were essential to offset the effect of the weak pound which make foreign-made goods more expensive to import to Britain.

But Peter Lawto, deputy editor of ‘What Car?’, said manufacturers are “hiding price increases” in scrappage scheme deals.

“Some of the price rises take your breath away. We have some sympathy for car manufacturers but this is opportunist so we shouldn’t feel too sorry for them,” he said.

“There is certainly an element of clawing back cash. They are making a killing off those people paying the list price.”

“We are seeing a pinch at both ends with prices going up and discounts falling.”

The secret shoppers also found that hagglers are now offered smaller discounts – around £200 less than a year ago.

They were able to negotiate an average £1,699 off the windscreen price aside from any scrappage discount.

Renault is currently the most generous manufacturer with a typical £2,009 off – 13 per cent on average – while Mini is the stingiest with savings of just £125 or 1 per cent off its cars.

Ford refuted the accusation that it has taken advantage of the scheme to usher in price increases.

A company spokesman said Sterling has devalued by more than 30 per cent in the last 18 months and claimed that price rises were kept below that figure by cutting production costs to “limit the impact.”

“The weakness of the Pound has had a huge negative impact on Ford’s UK business,” he said.

“The sustained and severe weakness of Sterling against the euro since the end of 2007 has forced the majority of the UK auto industry to raise prices.”

“Price increases are driven by the need to maintain a viable business and to recover relative cost increases caused by the weakness of the Pound over an extended period.”

The Society of Motor Manufacturers and Traders said the pound was worth 23 per cent less last year against the euro than in 2007 and also insists that this is to blame for the majority of increases.

“The exchange rate has been the main driver on price changes,” said a spokesman.

Source: Telegraph.co.uk

Speak Your Mind

*