Cut-price petrol firms warned of financial risk

SMALL businesses will go broke by lowering their petrol prices. Guernsey Motor Trades Association chairman Dave Beausire gave the warning yesterday following an announcement by Trev's Motorcycles that it was cutting prices by more than 10%.

Owner Trevor Hockey acted as Vale-based Direct4Cars, which also sells cheap fuel, seemed poised to go out of business after problems for its UK-based parent company, although the forecourt lease looks likely to be taken up by another company today.

Other retailers, particularly those linked to big chains, are introducing special deals and offers, though few are cutting pump prices directly.

Mr Beausire said that smaller garages, some of which still employed pump attendants, were battling against bigger traders.

'Obviously that's his 'Mr Hockey's' personal decision, but in the wake of Direct4Cars going out of business after subsidising its fuel costs, if I was him I don't think I would do it,' he said.

However, Direct4Cars local managers told the Guernsey Press that the policy had worked for them and sales had quadrupled from 130,000 litres to 750,000.

It was only the firm's national failure that saw them close.

Mr Beausire said that people wanted the personal touch and would pay higher prices for forecourt service, so smaller businesses did not need to make such drastic price cuts.

'People like to be served at the pump and given personal attention. They don't want to have to do it themselves. It's all down to what level of service you provide. If the public want to serve themselves and pay less, then it will go that way, but at the moment people want that personal service.

Mr Hockey said his move would attract more customers.

'People are much more aware of prices these days and with increasing prices, people look for the best around. We are likely to take a lot of stick from motor traders, but it's a dog eat dog situation out there.

'We now have to sell more petrol per week to make the same amount of money we did before the price reduction, at about 10.5% discount, but it will be worth it and I am confident it will work for us. When we started doing petrol cuts in 1991 it worked for us,' he said.

The garage will be selling Total unleaded at 51.9p a litre and Shell diesel at 46.9p.