‘Price war madness will spell trouble for some’

By Joel de Woolfson

A GARAGE owner has branded the fuel price war ‘madness’. Ian Torode, who runs Les Landes Garage in Vale, made the claim after Trev’s Motorcycles dropped its prices and undercut its nearest rival by 2p a litre.

Trevor Hockey, boss at Trev’s, claimed his fuel was now the cheapest in the island.

Unleaded, at 61.9p per litre, is the cheapest and his diesel costs 51.9ppl.

But Mr Torode said his diesel was usually the cheapest - it is currently 50.9ppl.

‘The last major survey did not even include us in their comparisons,’ he said.

‘We sell diesel for only 3p more than we pay for it. If we put 20 litres into a car we make 60p and that’s before our costs. Do you not think it is madness to be selling a product at those margins?’

Mr Torode says he buys his petrol for about 58ppl and sells it at 71ppl.

‘I still sell my petrol at the normal 13p a litre mark-up and luckily my customers understand why I don’t drop it to compete,’ he said.

Braye Road Garage had widely been considered the cheapest in the island after it slashed prices to 63.9 for petrol and 53.5p for diesel and Mr Torode said their gamble had paid off.

‘I can understand why Braye Road did it because his volume has gone up and he is on a main road,’ he said.

‘But I’m surprised that Trev has lowered his by so much. This petrol price war is madness.

‘In 1999, when I took over this garage, petrol was about 39p a litre and my margin was 13p. I made £3 on a fill-up which is about 33%. In January, petrol will be about 85 to 90ppl. That’s less than 15% profit for me.

‘So fuel has more than doubled for the customer but my percentage has more than halved. Is that normal in retail?’

He said that garages used to assume they would make roughly 13ppl and adjust the price depending on what fuel suppliers were charging.

But he believes garages now feel under pressure to cut prices because of the impending duty rises that will come into effect next year.

‘I think people that lower their prices too much are not doing the industry any good and I think they could get themselves into serious trouble,’ he said.

‘My garage cannot continue as a petrol-selling garage when my lease is up because it cannot compete.

‘I don’t think any other retail business would work to those margins. I can’t imagine people selling their milk and bread for such tiny profits.’

However, Mr Hockey said he made 9ppl on his petrol before costs because of a rebate system with his fuel supplier.

‘In reply to people who say we are going to get ourselves into trouble, we have been retailing fuel since 1989. I think we know what we are doing by now,’ he said. ‘And the early indication is that we have had some fantastic support from the public, who really appreciate what we are trying to do.’