Car discounts rise as sales fall

MOTOR dealers are offering huge discounts in an attempt to entice disappearing customers into showrooms.

As doubts grow over the state of the economy, sales of new vehicles are plummeting. This has led to dealers knocking thousands of pounds off list prices. And there are even bigger bargains available for those prepared to haggle.

Cars are traditionally the second most expensive item that families purchase after their homes. As well as economic uncertainty, dealers blame the drop in sales on high interest rates and a lack of confidence in the housing market.

Despite a healthy market in recent years, overall sales fell by 3.4% in May and are down 6% since January, according to the Society of Motor Manufacturers and Traders.

Showroom sales fell by 5% in May and have dropped by 12% this year. Figures for June out tomorrow are expected to show little improvement. A spokesman for the society said: 'It is a very tough and competitive market. Prices are being cut.

'The recent interest rate rises are kicking in as people come to the end of their mortgage deals. There's less slack for other things.' The scale of the discounts on offer was revealed in a survey by What Car? magazine. It found Citroen has cut £3,400 from the price of its Xsara Picasso 1.6 LX people carrier, while Ford is offering up to £4,000 off the old version of its Mondeo.

During the survey, 'mystery shoppers' were sent out to record the best prices available. As well as the advertised discounts, they found they were able to reduce prices even further by haggling. The best example was 21% off the cost of a Renault Laguna Estate, originally valued at £24,480.

Ford is expected to launch an 'aggressive' price-cutting programme over the next few days. Paul Thomas, managing director of Ford of Britain, said: 'You are seeing a more price-conscious market. If you look at the High Street you see very good offers and the same is happening in the car market.'

Trevor Finn, chief executive of the Pendragon dealership chain, said: 'Discounting has intensified. It is likely that it will reach fever pitch as we reach the third quarter.' The magazine said the best time to haggle is near the end of the month, when dealers are desperate to hit their sales targets.

Its editor, David Motton, said: 'If you are buying a new car, you shouldn't expect to pay the full asking price. Make clear to the salesman that you expect a discount.'