After the end of June, Ford are raising their prices by on average 4% for new car buyers. This is the third time that Ford has rose their car prices in the UK. The price increases started back in February with a rise by 4.7%, Ford then rose prices again in 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 stated that the pound had been stable for the last 10 years until the end of 2007 at 1.43 euros, however, more recently the the pound had fallen to 1.16 euros.
Because most of cars that Ford sell in the UK are built in Spain and Germany, they had no option other than to increase the price of their cars. Before Ford rose their prices, they had been absorbing the average £3,500 that they were losing on every car sale. This has now stopped as if they wish to stay stable, they cannot keep losing money, particuarly during a recession.
Not only are these price hikes a problem during the recession but they also have an affect on the governments car scrappage scheme because these price rises will take a huge chunk out of the money that would have been saved. With the prices of a Ford Ka, Fiesta and Focus rising by around £600 and the price of an S-Max and Galaxy rising by around £750. The car scrappage scheme will be having less of an affect on the price now.
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. This news appears to be weakened slightly for leasing customers, compared to the big effect it will have on new car buyers.
