motoring guide

New cars - how will the manufacturers tempt you back into the showroom?

IT'S the automotive industry's biggest challenge yet. As car sales slump to their lowest level in twelve years and continued economic uncertainty makes a new car the last thing on consumer's minds, how do manufacturers tempt us to spend money on motoring?

With great difficulty, say leading manufacturers – and according to the Society of Motor Manufacturers and Traders, this month's budget has done little to assuage manufacturer's fears.

"Overall, the budget contained little to boots competitiveness in automotive manufacturing," commented SMMT Chief Executive, Christopher Macgowan. "Sustained rises in costs, particularly for component suppliers, and red tape concerns, will not have been assuaged by the Chancellor's speech. The Chancellor will have done little to persuade the industry that the government is serious about supporting this value-add sector."

If the new car market is in crisis, though, it seems determined to fight back on two fronts: price and desirability.

Price, of course, remains the biggest factor for most motorists. In an uncertain economy, it seems safer to keep the old car for one more year rather than splash out on a new one, and the automotive industry have responded to that very natural response with a slew of 0% finance offers designed to take the sting out of a new purchase. 

Free insurance and other incentives are also being offered by garages desperate to boost sales. Chrysler, for example, have cut prices across the range, offering up to £2000 off on selected models from the Tacuma, Lacetti, Kalos and Matiz ranges, and Mercedes-Benz are running a series of discounted finance deals on their A and B class ranges.

At Seat, meanwhile, a range of special finance deals are on offer for the Ibiza model, with 0% finance for three years available on the 1.4 and 1.9 TDI Sport models. The Ibiza FR, meanwhile, is available at £189 per month, while electric windows, twin airbags, ABS and CD player are all included in the basic Reference model, priced at £6995.
 
In other Spring offers, Hyundai have reduced the price of their Matrix 1.6 by £1000, while Chevrolet are cutting costs on car maintenance with a fixed price servicing deal costing £145 for all work over three years or 30,000 miles. Ford offer a similar deal, priced at £168.95 over three years/62,500 miles.

Alongside price, however, comes the desirability factor, with manufactures keen to add value to their vehicles, creating demand which perhaps wasn't there before. The thinking here is that if the regular buyers want to sit out the current uncertainty brought about by last year's rising interest rates, then attracting new buyers may well be the answer. Female drivers are amongst the first to be targeted here, with a range of female-friendly designs and colours being launched.

At Nissan, for example, the bright pink limited-edition Micra C+C convertible has been produced in response to consumer demand. Following a high-profile campaign in which a fleet of pink Micras toured UK cities in bid to raise money for the charity Breakthrough Breast Cancer, the company claimed to be inundated with requests for the bright pink convertible to be made available for sale.

Nissan duly obliged – but only just. With only 100 pink Micras being made, the company may not make a significant dent in the car market slump. By marketing exclusivity and attempting to win the vote of female motorists, however, will they reawaken interest in cars as a "must have" item, rather than just a boring necessity?

It's a question that MG may be interested in, too, as they prepare to relaunch their famous Midget, taking their inspiration from the past, and the now obsolete Smart Roadster, and perhaps hoping that nostalgia for the old design, combined with enthusiasm for its updated appearance, will be enough to drive sales. It's a tactic also being used across the Atlantic, where Ford are preparing to launch a "retro-look" Mustang, with looks coming straight out of 1966.

Do these moves herald a return to the golden age of motoring, with the new car trade aiming to boost sales figures by convincing us once again that cars are there to be enjoyed, not just to get us from A to B? Perhaps.  At Vauxhall, the new Astra Twintop, complete with metal folding roof, is set to go on sale this May, aiming at the sportier end of the market. Vauxhall aren't leaving anything to chance though, and buyers who placed their orders before March 31st are being rewarded with a free Launch Pack worth £500, which includes 16" alloy wheels and automatic rollover hoops.

If there is hope for the UK car market, however, perhaps it lies with the humble diesel rather than with the added extras on offer from the luxury market. While diesels have always enjoyed a reputation as the more economical option in terms of fuel consumption, the relatively higher tax on diesel vehicles has served as a deterrent to buyers. Despite this, however, the diesel alone saw a rise in sales in 2005, particularly towards the end of the year, and in early 2006.

Subaru have just announced plans to launch their first-ever diesel engine in 2007, and expect up to 50% of all sales to be diesel by 2010. A taste of things to come?  While it's too early to say whether the diesel trend will continue, could it be that the motoring public are choosing economy over other factors when it comes to buying cars? The move from one new registration release per year to two was made with the intent of helping spread demand for new vehicles throughout the year, rather than concentrating it in September, when the new registrations were traditionally released.

We now see this happen in March too, of course, making this month something of a crunch time for the new car market. The industry retains high hopes that the usual spike in sales which happens as a result of the new registration release will be repeated in 2006 as in other years. As to whether those hopes will be realised, only time will tell.

28 March 06

28 Mar 2006