August 19th, 2009

The prices of Ford cars will be rising after the end of June by on average 4%. This is the third time since 2007 that they have rose their car prices. The price increases started back in February with a rise by 4.7%, and then again during April by 3.75%.

Ford admitted that it “may seem counter-intuitive” to raise prices during a recession, but due to the current weakness of the pound against the Euro, they said “there is no choice if we are to maintain a viable business”.

Ford said that the pound against the Euro had been stable for around 10 years at the end of 2007 at 1.43 euros, however, due to the recession, over the past 2 years, the pound has dropped to 1.16 euros.

Because the majority of Fords cars for the UK are made in Germany and Spain, they had no other option to raise prices. Ford has been absorbing their losses prior to these price hikes, however, because they were losing on average £3,500 on every car sale, they can’t sustain that during a recession.

These price rises will not just be a problem during the recession, they will also have a negative effect on the car scrappage scheme which will seem less of a benefit when buying a new car. With prices of a Ford Fiesta, Focus and Ka increasing by around £600. New car buyers won’t be benefitting as much when buying a new Ford under the car scrappage scheme.

Although this is all bad news for new car buyers, people choosing car leasing over buying won’t see the price rises straight away. Even if you are not currently on a Ford lease, but you are looking, the leasing companies won’t pass on the price rises until they buy new vehicles, which, during the recession, won’t happen straight away. So this is some good news for the leasing customers, not so much for new car buyers.

 

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