Analysis of new car incentives – February 2020
Target Price February – Analysis of new car incentives
• Early indications have signalled the industry’s intent to get 2020 off to a flying start. The average cash Target Price discount is up by more than 12% compared with the last quarter of 2019, to 9.1%, or £3200 per car.
• Seven of our featured segments are reporting corresponding double-digit increases, with coupés, convertibles and estate cars leading the way at 24.7%, 21.8% and 19.7% respectively. Only small cars (-0.32%) and city cars (-7.8%) are bucking this trend.
• While this is good news for car buyers, we have also noted a dip in the finance Target Price support, with the average finance deposit contribution (FDC) down by 7.5%, from £1856 per car to £1717. The average PCP APR linked to the FDC remains unchanged at 4.5%. This means customers can currently take advantage of an average cash and finance Target Price saving of £4917 per car.
• With an improving political and economic climate, higher Target Price discounts and dealers under pressure to meet sales targets now could be the best time of the year to buy a new car.
• Citroën dealers are currently the most generous when offering an average cash Target Price discount across a model range, at 16.5%, followed by Seat at 15.7% and Nissan with a typical 14.1% average transaction price saving.
• Skoda has recorded the highest month-on-month increase in the average cash Target Price saving, with the typically achievable showroom discount across the model range up by 6% to 12.1%.
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• Intense December trading activity and a positive industry attitude towards securing a strong start to 2020 have resulted in an increase of more than 19% in the average cash Target Price discount in the first quarter of 2020, compared with the last quarter of 2019.
• This means customers can expect to negotiate a typical 7.8%, or £2308 per car, transaction price saving when buying small SUVs.
• This saving can be boosted by an average extra £1389 per car if buyers choose to purchase using a manufacturer-backed PCP finance deal. This level of finance Target Price support has been enhanced for the start of 2020, with the average PCP APR down from 5.3% to 4.9%.
• Around a fifth of the models within the segment can be purchased with a double-digit cash Target Price discount. Citroën and Suzuki lead this group with a typical 17.1% saving on the C3 Aircross and 17% on Vitara variants respectively.
• The average cash Target Price discount across this segment is 11.2%, or £3581 per car. This places MPVs third in our league table, behind estates and luxury cars.
• While transaction price savings have increased by 6.8% compared with the previous quarter, this lags behind the corresponding 12.4% all-segment average increase.
• Manufacturer-backed support is unchanged at an average of £1207 per car when PCP finance is used at a typical 4.2% APR.
• Citroën, Volkswagen and Peugeot are offering the biggest cash savings, with an average discount of 21.8% (£6503 per car) on the Grand C4 Spacetourer, 19.1% (£5805) on the Touran and 18.5% (£7457) on the Traveller respectively.
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