Car prices: No need to drive a hard bargain in the showroom

Richard Headland, editor, Which? Car, says: "The internet is revolutionising the way people are shopping for cars, and we're all for it. Not only can buyers find bargain prices online, they have better legal rights. The web has thrown down the gauntlet to traditional car dealerships."

He says that on top of big discounts, car buyers going online get the benefit of distance-selling regulations. These apply if you complete your deal on the internet rather than in person, and give buyers a seven-day cooling-off period in which you can reject the car and get a complete refund. If a deal is done in a showroom, you have no chance to change your mind.

Richard Sanders, founder of Drive the Deal (drivethedeal.com), claims to have sold the first new car on the internet in 1998.

Since then, he says, there has been a 35% increase in people buying online year on year. "I saw building a website as a way of quoting large numbers of people at minimal cost, so that I could pass on to the consumer as much of the saving as possible. People like being able to get a quote without pressure to buy. Contrast this with going to a showroom – if the buyer doesn't know what discount to ask for, they may not get a good deal."

Brokers such as Drive the Deal have been joined online in recent years by independent and franchised dealers, and even reverse auction sites where traders bid for the chance to sell the consumer the car they want.

Drive the Deal and Broadspeed.com buy large numbers of cars from dealers, then pass on the bulk discount they negotiate to individuals. The car is ­supplied by a dealer with full UK warranty and is exactly the same as you would have got from your local dealership. Which? Car says only 5% of the consumer group's members bought their last car online, but 18% said they are likely to do so in future.

Simon Empson, managing director at Broadspeed, which has been selling cars via the web since 1996, says business has never been better.

"Buyers have now become used to buying cars online from trusted ­companies. We now have some ­customers who have bought three or four cars from us and say they would never go back to trailing around the dealers. The only problem we have is getting cars quickly enough.

"In the face of the recession manufacturers slashed production for the UK market, but demand has remained strong and the industry is struggling to get cars. The discounts are still there but now most bookings we are taking are factory orders."

He suggests that when "block ­exemption" rules on who can sell new cars are ended in March by the European Commission, it could have a big impact on prices .

"We'll be able to order new cars for customers direct from the factory," Empson says. "We've successfully trialled working directly with five manufacturers over the last 12 months, and estimate this buying method could knock 25% off a car's asking price."