Ten years on - Motorpoint still beating “rip-off Britain”

Motorpoint, the UK’s leading car supermarket group, characterises its operation as ‘car buying evolved’. And with the company’s tenth anniversary just two weeks away, the founders have been reflecting on the changes in car retailing over the past decade.

So too has one of the country’s most respected motor industry commentators, Prof Garel Rhys, President of Cardiff Business School’s Centre for Automotive Industry Research. He’s convinced the car supermarket has played a pivotal role in getting a better deal for UK car buyers.

During the last decade, Motorpoint has revolutionised the way consumers buy new cars. In 1998 the motoring public were paying over the odds for new models compared with prices in Europe. A major campaign by consumer organisations and the media against what became known as “Rip-Off Britain” put Motorpoint in the spotlight as the company became the first to import cars from continental Europe to offer consumers in Britain lower prices with savings as high as 50%

This changed the face of car buying in this country forever and has seen sales at Motorpoint rise from just over 100 cars per week in 1998 to over 30,000 cars a year in 2007 when customers saved a staggering £144 million compared to manufacturer recommended retail prices. Cars are still cheaper in Europe but the excessive prices “Rip-Off Britain” continue to be made a thing of the past.

With a more transparent UK market for new cars, greater choice, and more savvy buyers looking to make sure that they have the best price before making a purchase, there is little place for manufacturers and their franchised retailers to hide.

An increasing number of people are also turning to buying a car online, clearly demonstrated by the fact that more than 25% of Motorpoint customers used the retailer’s award-winning website to make their purchase in 2007.

Acknowledging the impact of the car supermarket sector on the changing face of the automotive retail market during the last 10 years, Professor Garel Rhys CBE, President of the Centre for Automotive Industry Research, Cardiff University Business School, explains: “Although we live in an era of low inflation, the Retail Price Index has nevertheless increased by over 20% since 1998. However, the growth in new car prices has been 12% over this period, and even less when quality adjustment is included. That is more specifications at no or little extra cost to the car buyer. This fall in real prices of circa 8% is testimony to the ultra-competitive conditions in the UK new car market.

He added: “Most cars are still sold through traditional outlets, but the growth of additional factors such as price comparisons on the Internet and professionalism of the front rank car supermarkets bringing the expertise in the British retail sector to the car industry has helped force vehicle makers to pass on most of their production efficiencies to the consumer.

At last, the boundary of power between the vehicle manufacturer and retail sector is shifting in favour of the consumer. Even so, the very existence of a block exemption means that still there is not a true “free” market in the vehicle sales, service and repair industry as the manufacturers can still impose standards that have to be met and thereby retain some control over the number of outlets, and it is not straightforward for non-authorised outlets to obtain supplies. However, the move is strongly in the right direction."

With five sites across the UK in 2008, ten years on, Motorpoint is able to provide customers with a choice of the same competitively priced cars ranging from city run-arounds to stylish cabriolets on a national level, whereas a “North-South” divide continues to exist within the franchise dealer network. Therefore there is a discrepancy in the level of savings which are passed on to the car buyer highlighting the increasing desire by motorists turn to a car supermarket to get a fairer deal when buying a new car, and not to be penalised because of location.

Motorpoint will play a key role going forward to ensure that the consumer continues to benefit from lower prices and value for money as the car supermarket sector continues to put pressure on the block exemption for a higher degree of liberalisation in the marketplace, and the availability of even greater choice for the car buyer.

For the latest deals at Motorpoint, visit motorpoint.co.uk