Target Price Market Report – January 2021

The average all-segment cash Target Price discount is currently 6.9% or £2726 per car. This is more than 23% lower (in relative terms) than the corresponding period 12 months ago, and it is the first time for more five years that the typically achievable transaction price cash saving has dipped below 7%.

During the period after the first lockdown, many dealers have been able to exert more control over sales conversations with consumers thanks to reduced pressure to meet manufacturer sales targets, reduced supply of many models and a consistent level of customer demand.

Any pushback from more determined hagglers has usually been met with reference to the levels of manufacturer-backed finance-based support that have remained at historically high levels throughout 2020.

This currently adds £1564 per car to give a total average Target Price saving of £4290 per car across our Target Price inventory.

While an average £4290 per car saving is not insignificant, it is worth noting that £412 of the £2726 average cash Target Price discount element is also directly manufacturer sourced.

This means that £1976 (or 46%) of the £4290 total average Target Price saving is directly controlled by the car manufacturers.

If the market environment continues to allow dealers to restrict their share of trading discount availability there is a danger of manufacturers being able to exert more control over market discounts and establish a controlled transaction price strategy for their cars.

This could be bad news for consumers, who have historically been able to find and leverage significant Target Price discounts between competing car models and dealers.

However, for this scenario to be able to unfold, the car manufacturers will have to resist the urge to scale car production back up to pre-Pandemic levels.

Seat dealers are currently the most generous when offering an average cash Target Price discount across a model range at 11.6%, followed by Nissan and Volkswagen at 10.1% and 9% respectively.

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