The latest reports on the Competition Authority's investigation into price-fixing cartels in the motor industry will cause concern amongst the 180,000 new car buyers due to make a purchase in the coming year.
Several major car dealers have been accused of price-fixing that may have added as much as 30 per cent to the price of new cars, according to an RTÉ Prime Time investigation.
So, while the investigation is underway, what can car buyers do to protect themselves? Speaking on RTÉ yesterday, broadcaster Eddie Hobbs said customers should look to brands not mentioned in the current investigation when buying new cars.
The programme claimed to have seen documents revealing that some Volvo, Mitsubishi, Hyundai and Citroën dealers had set prices, with one of the dealer groups allegedly imposing fines of up to €1,000 on dealers who undercut prices agreed at private meetings.
Minutes from a Hyundai dealer meeting noted one dealer saying that no one wanted to revert to the "open warfare" of competition. Speaking on the Prime Time programme, Ted Henneberry of the Competition Authority, said they have forwarded a file on the practice to the DPP. He described the cartel system as "a hardcore criminal offence" that amounted to theft. Under competition law, those found guilty can face five years in jail, a €4 million fine, or be forced to give up 10 per cent of their turnover.
The minutes of the dealer meetings showed that there were calls for Volvo dealers to be fined if they did not keep within set prices. The programme also reported on an alleged agreement between Volvo dealers on both sides of the border to prevent cross-border sales of new C70s. If proven, this would be contrary to EU free trade rules.
The RTÉ probe alleged that Citroën dealers operated a price-fixing cartel for 10 years. If there is any comfort for potential buyers, it's in the area of trade-ins - a feature in 90 per cent of sales.
While there have been claims that these could also be part of a price-fixing operation, the sheer logistics of fixing a price for every possible make, model and mileage would suggest that even if you do find little difference in the price of your new purchase, there should be substantial differences in the trade-in prices offered.
Buyers should always look to the net result of any deal - price of new car less the trade-in offered - known as the cost of change. If, for example, you are trading in a two-year-old Audi A4, a dealer that already has two on his used car list is unlikely to give you as good a price as one that doesn't.
In the case of a straight cash purchase, check dealer prices for the new car outside your locality. If you are concerned about a lack of difference in prices, contact the director of consumer affairs and at all times, if you feel the deal is not good enough, there's always another car from another brand.
There has been no suggestion that dealers are fixing prices across brands, so if you are unhappy with the offer, go somewhere else and choose another car. If you are determined to buy a particular model, there is always the option of researching the cost of importing from Britain.
For years, consumers were both loyal to brands and more importantly to dealers. This is changing as buyers become more price conscious and consumer savvy. It's time for consumers to use their buying clout.
