New car discounts shrink as sales boom continues

Average discounts negotiated by consumers are smaller now than they were 12 months ago; down from a typical markdown of 10.14 to 8.9%.

In cash terms, that’s a price increase of £204 across all models.

The analysis by Britain’s biggest car buyer’s guide represents the strongest evidence yet that heavy discounting will continue to subside, especially if new car sales remain buoyant.

The analysis was carried out by What Car?’s Target Price team, which provides buyers with anticipated discounts available across hundreds of new models up to the end of May 2015.

Instead of holding all the aces, consumers could soon be at the mercy of dealers keen to retain satisfactory margins while demand is strong.

What Car? editor Jim Holder said: "Dealers need to turn a profit and, while demand remains high due to strong consumer confidence, they feel able to stand firm.

"A reduction in average discounts from £2564 to £2360 might not sound a lot, but it’s been a steady trend for a number of months now and consumers will have to get used to it.

"Our advice, as always, is to shop around and negotiate the best discount possible, not only in cash but in terms of options, too."

The price rises have arrived even though UK inflation fell below zero last month.

Despite fewer discounts, markdowns topping 20% can be negotiated on some models. The largest reductions are negotiable on estate, executive and luxury models; attracting discounts of 10.5, 11.14, and 12.67% respectively.