locals are bypassing the local agents and buying direct from overseas suppliers.

Mr. Jeff Stirling, manager of Continental Motors, distributors of Peugeots, said the European-made cars were currently in demand from a wide range of residents.

"The complete cross-section are buying Peugeots, which range in price from $20,000 to $50,000. I have sold cars to everyone ranging from executives at exempted companies, and retired people, to the man who lives across the hill,'' he said.

The model 405, a large saloon by Bermuda standards, according Mr. Stirling, features electric leather seats, and wood treatment.

His father, Mr. Herbert Stirling, established the Peugeot dealership in Bermuda in the Seventies.

"There are many new models on the roads, which, in my opinion, reflects that business is becoming more competitive,'' said Mr. Stirling.

Mr. James Pearman, manager of Masters Marine and head of automotive sales, said: "The main problem is people go to Europe and the US and get cars themselves.'' Masters distributes Volkswagens.

"There are a number of new VWs on the road, but all are imported by the individuals. There is definitely an upturn in interest in cars, but this has not been reflected in sales.

"We get ten to 15 calls a day because people are inspired by the new cars they see on the road.

"People are prepared to go to great lengths for a few thousand dollars savings, but they should realise that they don't have a warranty and may have trouble getting parts for their cars,'' said Mr. Pearman.

The recently introduced second-hand car market also appears to be wholeheartedly welcomed by local dealers.

One reported that locals often traded in their old cars, raising on average between $7,000-$9,000 and used the cash as down payment for a more expensive vehicle.

"We have seen people upgrading their cars in recent months, but there also others who have been trading in bigger cars for a smaller vehicle,'' said Mr.

Tim Astley, manager at Serpentine Motors, the local Renault agent.

However, locals also are taking more care of their cars and investing in servicing to extend their car's life.

"Rather than running them into the ground, people are keeping their cars running, and spending more on repairs,'' said Mr. Astley.

But one dealer disputed that larger, more expensive cars are more sought after. He doubted whether the Island's most luxurious models, such as Mercedes and BMWs were seeing increased sales.

In fact, Mr. Alex Hunter, sales manager at PWs Motor Centre said more small cars are being sold.

"The car market is seeing greater activity as a result of the second hand car market,'' he said.