Target Price Market Report – May 2021
Discounts are up as more buyers return to showrooms, with some manufacturers offering savings of as much as 13.4% off list price
Half of the vehicle segments in our Target Price inventory are reporting increases of up to 15.8%, in relative terms, in the average cash Target Price discount. Four segments have remained constant, with three segments showing a decrease in typically achievable transaction price savings.
This means that consumers can currently expect to haggle an average 7.3%, or £2864 per car, cash Target Price discount when buying a new car.
After four consecutive months of no significant change to the average cash Target Price saving, it is interesting to note what could be the start of an upward trend in discounting.
With the re-opening of car showrooms and significant increases in car production reported, the additional pressure to sell cars will undoubtedly force discounts higher.
But dealers have become used to trading more on their terms over the last year, and with many dealer groups reporting sizable increases in profitability, consumers might find that the more generous pre-Covid levels of discounting take longer than expected to materialise.
However, while global semiconductor supply problems are forcing some manufacturers to temporarily cut back on car production, we believe that overall vehicle supply will soon ramp up considerably and that dealers will be unable to resist the pressure to increase in-showroom savings to meet sales targets.
Manufacturer-backed finance support is broadly stable at a typical 4.1% PCP APR and an average £1611 finance deposit contribution. After adjusting the average cash Target Price saving to allow for mandatory dealer margin contributions towards manufacturer’s finance offers, the total (cash and finance) average Target Price discount per car is £3846.
Jeep 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 14.1% to 18.6%.
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