New car sales are falling as cautious private buyers question the financial sense of sinking their money into fast-depreciating shiny new metal. Registrations were down by 5 per cent in 2005 - and the big slow-down was almost entirely due to a 10 per cent fall in private buyers.

Owning a new car is great. It's yours, and only yours. You've specified exactly how you want it - colour, equipment and extras. You're proud of it, and for many drivers, you find it puts some fun back into your motoring.

But with new car purchase comes depreciation. Many mainstream cars lose 30 per cent or even 40 per cent of their value in the first year. A modest medium saloon or hatchback such as a Mondeo tumbles from £15,000 to £10,000, and even superminis can shed £3,000.

So it makes sense not to pay full price in the first place. We've already looked at the huge savings on nearly-new cars in our "£1,000 to £7,500 off your next car" feature in our Feb and March issues of the magazine, and online in February. But if only new will do, you need to consider your options to get the best possible deal.

The traditional place to go for new cars is the franchised dealer. Smart showrooms, high standards, salespeople who generally know what they're talking about... and every chance of getting a healthy discount if the manufacturer is running a sales campaign, or if the dealership needs to achieve its monthly sales quotas. You'll get a test drive, and part-exchanging your old car won't be a problem. If you stick with a franchised dealer, always get three or four comparative prices from dealerships within a convenient distance, and use them to leverage a lower price.

But bargain hunters who are prepared to do some research and venture beyond the comfort zone of the franchised dealership can usually save useful money. The days of making savings via private imports have gone, but there's a second tier of vehicle suppliers who offer low prices on new cars. These are brokers (usually internet-based), car supermarkets, and an innovative process called the 'reverse auction'.

Car Brokers

Inefficiencies in the car distribution system mean that specialist independent car brokers can often bring potential buyers and sellers together to everyone's advantage. Very few brokers have access to all makes and models of cars, so you need to compare brokers' offerings carefully. A typical broker acts as an intermediary between buyer (you) and seller (usually a retailer). He doesn't charge you directly but takes a commission from the seller. Operating out of offices, not showrooms, brokers don't hold stock and don't have big overheads. The downside for buyers is that you don't get the chance of a test drive, so you need to do your research before you're ready to buy.

Many car brokers don't take your money. They simply process your purchase request and forward it to the dealership that will supply the car. You pay a deposit to the dealership, your contract is with them, and you pay them the balance before delivery. This gives you better consumer protection than dealing with a broker who holds your money. When you deal with brokers, the biggest savings are usually on cars that are already in dealer stock and need to find a buyer. However, most brokers will take orders for a car to be built to the buyer?s precise specification.

Car Supermarkets

There are big car supermarkets in most parts of the country. We picked Motorpoint for the sample cars in our table, because they're the UK's biggest player, with four sites in the Midlands, North, Scotland and Wales. Like a car dealership, supermarkets offer finance and will take your old car in part-exchange - although they don't offer the best trade-in prices as their profit margins are tight.

For the buyer, the advantage of a car supermarket is that you can see and drive the cars. And if you're not quite sure what you want, there's lots of stock at each outlet. But your choice is limited to what's in stock, so you'll be lucky to find a car with exactly the colour and kit you'd like. And stock changes all the time: when we looked at Motorpoint's stocklist, there were no new Vauxhalls at all, and very limited availability of some other popular models. And not all cars sold at supermarkets are current UK specification - so always check with the salesman that you're doing a deal on a UK car, and research current specifications on the manufacturer's own website to make sure you're buying this year's model!

The Reverse Auction

Reverse auctions are not new, but they have recently become popular for shifting consumer goods. In the UK car market, the leading innovator is AutoeBid www.autoebid.com who have sold over 2,000 cars since 2003. They are in contact with 600 suppliers on a regular basis and have links with many others. This puts them in a position to source almost any car to any specification - something that traditional brokers struggle to achieve. As with a traditionally brokered deal, your contract is with the supplying retailer. However, AutoeBid charges buyers fees (see Notes below the table for details).

The reverse auction process is straightforward if unconventional. The buyer specifies his requirements: the exact model, colour and equipment (including factory-fitted options); the maximum price you're prepared to pay (AutoeBid sets a target 'reserve price' for all the cars they offer); the date you wish to receive bids by; and the date you require delivery. Then it's up to the participating suppliers to decide if they can match your terms - and how low they are prepared to go to get your order.

AutoeBid's reserve prices don't always come out lowest in our table of sample deals, but there's every chance that a supplier keen to shift extra cars will bid lower to win your business. And if it's freedom of choice you require, AutoeBid has a clear advantage - so far, over 70 per cent of the cars supplied via AutoeBid have been built to their customers' orders.

Sample Deals

Notes:

* Figures for AutoeBid are Reserve Prices. Buyers pay this price OR LESS, depending on the lowest reverse auction bid. AutoeBid's fees are additional: £117.50 if the total saving is £1000 or less below list price; or £347 if the total price is less than £29,500; or 1% + VAT of the total transaction price if above £29,501.

Prices checked on 05.02.2006