New Cars: "On The Road" Charges (Hansard, 12 July 1994)

§ Viscount Goschen
My Lords, the Government see no need for any inquiry on this matter.

§ Lord Ewing of Kirkford
My Lords, to say the least, I am disappointed. Is the Minister aware that over the past two years the on-the-road charges to which I refer in my Question have in some cases doubled and in most cases more than trebled? We are now seeing a situation where someone purchasing a new vehicle, as millions of people will do in two weeks' time, are being asked for sums ranging from £600 to £1,000 for on-the-road charges. How can the Minister say that there is no need for an inquiry when vehicle excise duty is only £130 and a pair of plates will come to no more than £30? The Government removed the car tax to help the car industry but all that has happened since is that the dealers have added it in to inflate their profits. In a fortnight's time, millions of motorists in this country will be ripped off by the on-the-road charges.

§ Viscount Goschen
My Lords, the view of the Retail Motor Industry Federation is that typical "on-the-road" charges have stabilised at about £300 to £450. The important point is that the consumer is already protected under existing legislation. The Price Marking Order 1991 requires that where a purchase is subject to payment for ancillary goods or services such as a delivery charge, the extra charge should be included in the price quoted, or, if quoted separately, shown with equal prominence to that of the stated price.

§ Lord Palmer
My Lords, will the noble Viscount explain why it is usually cheaper to buy a British made car abroad?

§ Viscount Goschen
My Lords, the important consideration is that direct comparisons are often difficult to make. Cross-border list price comparisons 1637 are frequently misleading and the situation is complicated by differences in model specifications, marketing support and credit terms.

§ Lord Peston
My Lords, I hear what the Minister says, but is he not puzzled by the prevalence of this phenomenon? It is extraordinarily irritating that compared with almost every other product one buys the price of a car is not quoted in terms of what it costs to buy. Does not the Minister believe that there is a degree of restrictive practice? Are not too many dealers doing this kind of thing, which suggests that, covertly at least, it is something they are doing in order to exploit the consumer?

§ Viscount Goschen
My Lords, these are long-established practices in the motor retail trade. The important point is that cars are subject to the same legislation on price indication as any other goods.

§ Lord Peston
My Lords, that is exactly my point. I was hoping that the Minister would say that the Government will réflect upon it. Car dealers are subject to the same legislation as everyone else but no one else quotes delivery charges. Perhaps I may take as an obvious example Sainsbury's. One is not told, "In addition to the prices you see, each item has three or four pence added to it for delivery charges". In respect of almost everything else we buy, the price is quoted clearly and markets depend on that in order that the consumer can behave rationally. Would not the Minister at least reflect upon what is a peculiar phenomenon and agree with my noble friend that there should be an inquiry into the matter?

§ Viscount Goschen
My Lords, the important point is that where a retailer chooses to show a basic price plus on-the-road charges, as long as the consumer is made properly aware of the extra charges and hence the final selling price of the car it is a commercial decision for the retailer as to how he arrives at that final price.

§ Lord Boardman
My Lords, are not motor dealers subject to the same rules of competition that apply elsewhere? Should not that, together with government controls, provide sufficient protection?

§ Viscount Goschen
My Lords, precisely. Where the consumer is already protected, as in this case, the retailer should be allowed to choose the way in which he carries out his business.

§ Lord Bonham-Carter
My Lords, is it not the case that during the course of these questions it has been made abundantly clear that the consumer is not sufficiently protected? Will the noble Viscount please address himself to that point?

§ Viscount Goschen
My Lords, no, I take issue with the noble Lord. The Government take the issue of consumer protection very seriously indeed. But neither the Government nor the Director General of Fair Trading are aware of any particular public concern about the inclusion of on-the-road charges in new car pricing.

§ Lord Molloy
My Lords, while acknowledging and being grateful for the points the Minister makes, ask him whether he will be kind enough to read in Hansard tomorrow the detailed submission made by my noble friend Lord Ewing. Will he ensure that British motorists get the square deal they deserve and respond to my noble friend's call for an examination of the matter?

§ Viscount Goschen
My Lords, we shall consider most carefully what has been said on this issue. However, the view of the Government is that the consumer is already adequately protected and that the retailer must be given the opportunity to operate his business in the way he chooses within the constraints of the consumer protection legislation.

§ Lord Richard
My Lords, I do not share my noble friend's view of the quality of the answers that the Minister has given. I have found them profoundly disappointing and consider that they do not give a great deal of information—

Noble Lords
Oh!

§ Lord Richard
Will the Minister help the House to this extent: what are on-the-road charges, what are they meant to be charges for, and who assesses what the charges are?

§ Viscount Goschen
My Lords, the short answer to the noble Lord's question is the market. But the position exactly is that the law—

Noble Lords
What?

§ Viscount Goschen
My Lords, yes. The law requires buyers to be given in writing the selling price, which indicates the basic cost of the car, and all charges for other goods and services that must be paid for in order to obtain the car. The price must include VAT but not road tax, which is not part of the purchase price.

§ Lord Richard
My Lords, what are on-the-road charges, please?

§ Viscount Goschen
My Lords, I believe that I have already fully explained what on-the-road charges are. It is, within the constraints of the consumer protection legislation, for the dealer to charge as he sees fit—

Noble Lords
For what?

§ Viscount Goschen
My Lords, for the car and for the additional services. Delivery charges and number plates are two of the most commonly quoted. I believe that the noble Lord the Leader of the Opposition is having a problem differentiating between the charges that must be paid to obtain the car, which, if shown separately, must be shown with equal prominence to the basic price, and optional extras such as an extended warranty.

§ Lord Orr-Ewing
My Lords, is the Minister aware that before the war friends of mine travelled to Dagenham and collected a baby Ford for nothing? It could be bought for £97 if one went to Dagenham to collect it; it cost £100 if delivered to your home. Is there not something wrong with the huge escalation in delivery charges that has taken place since that time?

§ Viscount Goschen
My Lords, essentially, two questions are at issue. The first is whether the consumer has been misled and the second is the total price to be paid in the end. If the trader has acted properly, the outstanding question is what the final bill will be and not, in those circumstances, how it is arrived at.