The vicious circle
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HANS TAUSCHER, managing director of Mercedes Benz (UK), did well last week to remind his colleagues in the manufacturing sector that heavy discounting was a suicidal practice. What he was unable to do was tell them how to avoid the practice.
Under pressure from potential customers, the temptation to offer inflated discounts is undoubtedly too great for many in what is, today, a buyers' market. We have heard of discounts in excess of 25 per cent.
The chassis manufacturers who offer such discounts are either pricing the product unrealistically in the first instance or are failing to trade profitably.
There is another possibility of course, the after-sales service could be suffering and that has a knock-on effect which presents problems to the operator, the very person who created the situation in the first place. Justice is therefore being done.
However, this is a situation which will sooner rather than later have an effect on the efficiency of the entire road transport industry.
Let the manufacturers get down to a system of realistic pricing and discounting and introduce a degree of self-discipline before the industry falls into a state of disarray. This is a matter which the Society of Motor Manufacturers and Traders should treat firmly and with urgency.