CAR sales are slipping as the credit crunch starts to bite but don’t expect prices to come down – if anything they could go up.
Car makers at the London Motor Show say a discount war to try and move the metal is unlikely. Profit margins are being squeezed by rising raw material costs and oil prices.
Simon Thomas, European sales chief for Nissan said he believes that the industry will see price inflation. ‘Manufacturers are under huge strain, the cost of materials is going up as are fuel and logistics prices and not everyone will be able to absorb this. The costs will have to be passed on to the customers,’ he says.
‘Putting up prices may seem an illogical thing to do when the industry is trying to encourage more sales, but I think it could happen.’
His views were echoed by Vauxhall chief Bill Parfitt who said: ‘There is a lot of pressure on the industry and while we may see some discounting on a small scale. Prices are more likely to move up as raw material costs increase.’
Better news for Vauxhall is that while UK car sales are going down overall, demand for the traditional five-seat family car is on the increase just in time for company which launched the Insignia at the London Show.
Parfitt says Vauxhall expects to sell 45,000 Insignias – which replaces the Vectra – in a full year. First out are the four-door saloon and five-door hatchback with an estate joining the line up next spring.