Analysis of new car incentives – March 2020

Target Price March – Analysis of new car incentives

• Our industry contacts tell us that the anticipated post-Brexit sales surge is yet to happen. This might be due to buyers waiting to see what emerges from the UK’s breakaway, as well as because they’re just used to haggling and holding out for better deals.

• Despite this, the all-segment average cash Target Price discount is broadly unchanged from last month, at 9%, or £3204 per car. However, this still represents a 25% increase in relative terms over the past 12 months, highlighting the ongoing struggle that dealers have had to close deals and what customers have grown accustomed to over that period.

• The usual trade optimism that surrounds the March registration plate change has also been dampened by the emissions-linked vehicle exise duty (VED) tax changes coming in April. Even in a best-case scenario, it is feared that customers will delay their new car purchase until the effects of these VED tax changes sink in, while at worst, it might result in people completely rethinking their decision to buy a new car.

• Manufacturers are also maintaining high levels of finance-based campaign support in a bid to boost pre-April orders.This means that on average, across all segments, buyers can currently benefit from a combined cash and finance Target Price saving of £4923 per car.

• The average PCP APR offered via manufacturer-backed deals is up slightly at 4.6%, with seven car makers – including Ford, MG and Mazda – all providing sub-4% APR finance plans.

• Citroën dealers remain the most generous when offering an average cash discount across a model range at 16.4%, while Vauxhall has recorded the highest month-on-month increase in the average cash saving, with the typically achievable discount across a model range up by 0.7% to 10.3%.

Target Price is researched by What Car?’s team of mystery shoppers. To find out more, please contact insights@haymarket.com

Executive cars

• The average cash Target Price discount across the executive car segment has increased to 11.4% (£4374 per car). This represents a rise of more than 29%, in relative terms, over the past six months.

• While some of this increase is down to the pressure to sell more cars, manufacturers such as BMW and Mercedes-Benz have deployed some campaign money that was previously ring-frenced for finance deposit contributions and are using it to boost transaction price discounts for cash buyers instead. This is a bold move for prestige car makers, who don’t like to be seen to be overtly discounting their cars, because it can erode brand value.

• These additional Target Price savings might also be intended to build healthy sales order books ahead of the April 2020 VED tax changes, which mean non-RDE2-compliant diesels will be harder to shift due to significant tax rises on these models.

• Finance Target Price support from manufacturers has remained constant with an average finance deposit contribution of £2487 per car at an average PCP APR of 4.7%. This means buyers can typically take advantage of a combined saving of £6861 per car.

• Half of the cars featured in the executive car segment can be purchased with a double-digit cash Target Price discount. Volkswagen leads the way with a typical 20.2% (£6003) saving on Passat models, followed by Mercedes-Benz with an 18.5% (£7245) reduction on C-Class variants and BMW with an average of 12.4% (£4761) off the 3 Series.

To learn more about What Car?’s Target Price analysis data, please contact insights@haymarket.com