Ford blames weak pound for third price hike

Ford has raised its new car prices for the third time this year blaming the weakness of sterling against the euro.

From the beginning of July prices will rise by an average of 4 per cent and will apply to all orders received after 30 June.

"In common with most of the UK auto industry, Ford is reacting to the sustained weakness of the pound against the euro," said Nigel Sharp, managing director Ford of Britain.

Inflationary pressure
Sharp said price-inflationary pressure would continue to be an issue for all UK-based businesses whose costs were incurred in euros.

"Raising prices in difficult times, and when a scrappage scheme has been introduced, may seem counter-intuitive but with so many of our costs priced in euros, there is no choice if we are to maintain a viable business."

"The exchange rate through to the end of 2007 had been stable for around ten years with the pound worth around €1.43, recent exchange rates have been about €1.16," he added.

"The cost impact of this drop, on a car priced at £15,000, is close to £3,500, which has to be absorbed by the business. The total revenue impact has been huge - well into nine figures - on Ford's UK business."
Even with the recent strengthening of the pound, Sharp warned that the need to recover this accumulated revenue loss could lead to further price increases.

Price rises
Prices for Ford cars will rise by an average of 4.0 per cent, meaning an extra £600-650 on the most popular models, Ka, Fiesta, Focus, C-MAX, Kuga and Mondeo; rising to £700 on a Ford S-MAX and £800 for a Ford Galaxy.

Ford blamed the falling value of the pound for a 3.75 average price rise in March and a 4.75 per cent increase in February.

Comments (1)

Show/Hide comments

John Mch said:

... The Launch price of the Ford Fiesta 1.25 82PS Zetec 3 Door in October 2008 was £10,995.00 at a VAT rate of 17.5%. The July 2009 price for the same Ford car is £12,895.00 at a VAT rate of 15%. Allowing for the VAT adjustment this represents a 20% increase since 9 months. In October 2008 £1 = 1.2888 Euros and today(30/06/2009) £1 = 1.1760. This represents a weakening of the pound of 6.5% since last October. Ford cannot blame the weak pound for the additional 13.5% price increase.

report abuse vote down vote up

June 30, 2009
Votes: +1

Show/Hide comment form