New car pricing is one of the barriers to the market making some form of recovery, according to iVendi.
With list and invoice prices often 15-25% apart, even for retail buyers, it is often next to impossible for the public to know what a good deal looks like, said James Tew, chief executive officer.
“One of the things that the Internet has done in the used car market is to create almost complete market transparency. Simply by spending a few moments on any of the major car portals, you can see whether a deal you are being offered is competitive.
“This kind of transparency simply doesn’t apply to the new car market. Yes, there are some online services and tools that will help you to drive the best deal but the simple truth is that you can’t easily find out the real world average price for a new car. There is almost no other product of any kind where this applies.”
Tew said that even people who worked in the motor industry could often not easily discern whether a price they are being offered is a fair one.
“I’ve been shopping for a new car lately and have just been offered a 25% retail discount on a brand new, recently-introduced model from a major manufacturer.
“The problem is that the psychology of this deal is all wrong. A 25% discount is supposed to sound impressive but it is large enough that it raises its own questions. Why is there a 25% discount on a completely new car? Could I get more? Can I trust the dealer when the list price is so different?
“At a point in time when consumer confidence is taking a bit of a battering, the confusion that surrounds list prices is a further barrier for potential new car buyers who are already feeling unsure about being in the market at all.”
Tew said that the issue also had a direct impact on the success of new car online sales.
“The new car market remains the only sector that I know where you would potentially pay more for an identical product online than at your local dealer if you walked in off the street.
“Used car sales online have been a success because companies like iVendi have constructed online customer journeys with a huge degree of transparency. The new car market could not be further away from this.”