News: Car makers failing to pass savings onto buyers after euro weakens

CAR COMPANIES are failing to pass on savings from the weak euro, which should have reduced the prices of imported European vehicles by as much as 10%. British buyers are paying the same as — or more than — they did in April last year, even though the euro has fallen sharply against the pound in the past 12 months.

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In April last year Driving tested a Renault Captur costing £14,995 — then the equivalent of €18,124. A year on, the same model of car costs £15,375, a rise of 2.5%. It should have dropped in price by more than £1,000 to keep pace with the falling European currency.

“Manufacturers are keeping the money for themselves,” said Philip Nothard, retail and consumer specialist at CAP Automotive, which provides analysis of the car industry. “The euro exchange rate has been in the manufacturers’ favour for quite some time.”

Analysts say some of the additional profits are being used by car companies to build war chests that enable them to discount unpopular models and to offer incentives on some finance deals. This strategy means that customers who lease may be better off than those who pay upfront.

Car sales in Britain are approaching an all-time high. Almost 2.5m cars were sold last year, reflecting optimism among buyers.