Low monthly payments attract retail customers

Dealers remain cautious about the prospects for March, though there is more optimism in the prestige sector than in the volume business. Fleets are still keeping a low profile and that means more emphasis on retail customers if targets are to be met.

The industry sees affordable finance as the key to success. Finance programmes for the first quarter have been designed to highlight low monthly payments or to help customers make the best use of their money.

Several manufacturers have low monthly payment PCP packages and they are bringing in the business. A Peugeot 206 1.4LX for £210 a month is good value and is recognised as such by customers. You could have a Citroen Picasso 1.6 for the same monthly payment, which explains why they are selling so well.

The alternative approach is to opt for 0% finance based on sensible deposits – a route which is paying dividends for both Fiat and Nissan. The latter had a storming first couple of months, based on good finance offers and well- priced special editions of Almera.

MG Rover is taking a more aggressive approach to finance. The latest special edition 25 range is available at £99 a month but it does not appear to have stirred the market yet. The APR of 9.9% is typical with Ford and Renault also operating in this range.

Renault is already offering finance packages on Laguna II which shows a determination to achieve a fast start for the new car – viewed by some dealers as too big and too fleet orientated to appeal to retail customers. The same concerns are expressed about new Mondeo.

Although most of the heat seems to have gone out of the pricing debate, cashbacks remain in the market as an unsubtle way of reducing RRPs. Citroen is playing this card successfully across its range and Vauxhall returned for March with up to £1,000 even on popular models such as Zafira and new Corsa.

These tactics may be effective in getting cars out the door but they remain politically dangerous because they reveal there could still be room for further price cuts. Perhaps not surprisingly, brands such as VW and Ford are steering clear – at least for the moment.