New car doldrums

May has been a quiet month overall, but used car sales have stood out as the main success story for many dealers. That said, sourcing replacement stock at the right price to maintain healthy margins remains a constant challenge. This is why any uplift in the new car market would be hugely beneficial – it would increase the volume of part-exchanges, feeding more quality stock into the used market.

The issue, however, is that manufacturers still seem reluctant to tackle the elephant in the room: affordability. A prime example is the new vehicle excise duty (VED) tax regime for cars with a recommended retail price (RRP) over £40,000. For context, a vehicle that would usually incur a £195 annual VED now faces an additional £425 per year from years two to six if it’s priced above the threshold. That’s £620 per year or £3,100 over six years. You’d expect manufacturers to respond by adjusting their list prices – but they haven’t.

A quick look on AutoTrader shows several new models just over the £40,000 mark:

• Ford Kuga: RRP £41,450
• Peugeot 5008: RRP £43,035
• Kia EV3: RRP £43,590
• Skoda Kodiaq: RRP £42,100
• Skoda Elroq: RRP £41,910

Interestingly, all are being discounted to try and bring the price down to £40,000. But here’s the question: why would a buyer still take the hit on the extra tax, even with a perceived discount?

If the retail new car market is going to gain any traction, manufacturers need to take a serious look at their RRPs and bring them in line with what buyers are willing – and able – to pay. Finance deals (also known as manufacturer contributions) help to an extent, but more meaningful and transparent pricing is needed to stimulate real demand.

Here’s hoping they start to see sense and act accordingly.