NEW car prices will collapse by 15% in the next year, sending shock waves through the nearly-new and used car market, the First National Vehicle Contracts conference, Agenda for Action, heard. Peter Cooke, professor of automotive studies at Nottingham Trent University, told delegates at the First National Vehicle Contracts conference the price cuts would cost the industry at least £3 billion in lost revenue.

Taking into account the knock-on effect of lost production and the management work needed to manage demand, Cooke said: 'The loss, in reality, is likely to be much greater.' But the combined effect of the Competition Commission investigation into new car prices and a vigorous campaign by the Consumers' Association to actively discourage car buying until prices drop will not benefit car buyers, Cooke insisted.

He told the audience: 'Any such price harmonisation would create lower car prices and an increase in sales - when Government policy is to reduce the car population. It would therefore probably be accompanied by a rise in car tax, or higher taxes on car use, or taxes on operating costs. We are in a lose-lose situation as Government departments pursue their own agendas.'