Target Price analysis

Market insight

Target Price Top 10 highest % new car discounts this month

1	Volkswagen Passat 1.4 TSI S	24.6%
2	Vauxhall Mokka X 1.4T Ecotec Active	23.7%
3	Fiat Tipo 1.4 Easy Plus 5dr	23.2%
4	Vauxhall Astra 1.0T Ecotec SRi	23.1%
5	Citroën C4 Spacetourer	21.5%
6	Vauxhall Corsa 1.4 75 Energy 3dr	20.2%
7	Volkswagen Touran 1.6 TDI 115 S	18.9%
8	Mitsubishi Outlander 2.2 DI-D Juro	18.8%
9	Seat Leon 1.0 TSI SE EZ	17.6%
10	Ford C-Max 1.0 Ecoboost Titanium	16.8%

These are the largest discounts revealed by What Car?’s mystery shoppers over the past month.They typically highlight slow-selling and run-out models, or occasionally, models in which there is a fierce manufacturer-driven battle for market share.

Volkswagen introduced huge discounts on its executive saloon last month

Target Price Top 10 new car
discount reductions this month

These are the discounts that have reduced by the greatest amount over the past month, as found by What Car?’s mystery shoppers. Quite often they represent a reduction in incentives on a heavily discounted model, but they can also signal increased demand for that car.

1	Honda Civic Sport Line	-4.5%
2	Vauxhall Adam 1.2i Jam	-3.8%
3	Audi A4	-3.0%
4	Ford S-Max 1.5 Ecoboost 165 Zetec	-2.5%
5	Audi Q5	-1.8%
6	Volvo V40	-1.8%
7	Vauxhall Grandland X 2.0 Turbo D Ultimate auto	-1.5%
8	Nissan Micra	-1.3%
9	Nissan Qashqai	-1.3%
10	Seat Arona	-1.0%

Target Price this month
Analysis of new car incentives

During the course of 2018, dealers increased discounts to boost sales volume and hit their targets before reducing them to compensate for dwindling profits.

This reduced discounting inevitably dampened sales, but rather than insisting dealers do more to boost sales, the lack of vehicle availability and extended ordering lead time caused by the switchover to WLTP meant that many manufacturers actually lowered dealers’ targets for the final quarter of 2018.

With the manufacturers off their backs for once, many dealers adopted a policy of just doing profitable deals, irrespective of how many cars were sold.This has resulted in the average Target Price discount hitting a 12-month low of 7.4%, or £2383 per car.

Fearful of allowing the sales decline to accelerate, manufacturers have been forced to maintain generous finance-based support at a market- average PCP of 4.3% APR, backed by an average £1353 deposit contribution. The result is a £3736 average saving per car.

The early signs for 2019 are of dealers continuing to pick off profitable deals and hoping that better stock availability will release pent-up demand and therefore boost sales.

Uncertainty over Brexit, dealers loathe to sacrifice profit and manufacturers unwilling to further boost finance incentives are combining to mean that the current market inertia is likely to remain until at least the second quarter of this year.

Supply shortages as a result of WLTP have led to reduced sales pressure and thus smaller discounts

Target Price this month - Family Cars and small SUVs

Family cars

The average cash saving for family cars is currently £2027 (8%) per car, a drop of more than 21% over the past 12 months.

Only the hot hatch and sports cars segment has experienced larger reductions, of 21.6%.

Just seven models are available with double-digit discounts, including the Volkswagen Passat at 20.4% (£5509), the Vauxhall Astra at 17.4% (£4105) and the Seat Leon at 14.6% (£3347).

In what is generally a volume brand segment, BMW and Mercedes are hoping their brand appeal will limit discounts to 7.7% (£2100) and 7.6% (£2203) on the 1 Series and A-Class.

Manufacturer finance incentives continue, but while the PCP APR average has dipped from 4.8% to 4.5%, the average deposit contribution has fallen 7.7% from £1686 to £1556.

0% PCP deals are only available on the Toyota Auris and Volvo V40, with £1500 and £2000 deposit contributions respectively.

Small SUVs

After peaking at 7.1% (£2025) seven months ago, the average discount is currently at a 12-month low of 5.9% (£1760).
With such competition in this class, savings of 18.2% (£4757) are offered on the Vauxhall Mokka X and 12.6% (£2686) on the Suzuki SX4 S-Cross.
However, strong demand, such as for the Dacia Duster, Range Rover Evoque and Toyota C-HR, can easily peg discounts below 2%.