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Tuesday, 21 April 2015

Price discrimination in the new car market

Are car brands illegally giving better deals to business users? asked Auto Express, in August last year when clearly I wasn't paying enough attention. Illegally? Really? How?

I was surprised to see that it came down to the old Supply of New Cars Order 2000 (SI No 2088), which became law in the wake of the last Monopolies and Mergers Commission report on the car market. One of the bad practices identified by the MMC was selling at greater discounts to fleet purchasers than to dealers, a practice which Article 2 prohibited, making due allowance (although it really is a very woolly piece of legislation) for the fact that one important driver of prices is volume.

The Auto Express article focuses on leasing customers being charged different amounts, depending on their occupation, which seems to me to be a very different matter. I don't quite understand how this is supposed to fit within the Article, nor how the magazine (or the BBC's You and Yours show) can say that the doctor to whom they refer, or anyone else, is paying more 'than they should'. I'm not sure myself how a doctor could be a worse risk than a self-employed person (and incidentally are not many doctors self-employed?), which presumably is why they should have to pay more, but surely that is for the leasing company to work out.

I am however grateful for the reminder that the Order remains in force!

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