Ford are planning to increase the car prices by on average 4% by the end of June. This is the third time since 2007 that they have rose their car prices. They rose in February by 4.7%, and once again in April by 3.75%.
Ford stated that it does sound strange to raise car prices during a recession, but they also said that they had no choice because of the weak pound, “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, over the past 2 years during the recession, the pound has 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 these prices rises occurred, Ford had to absorb the losses from the weak pound, however, they cannot continue doing this during a recession if they wish to be a stable business.
These price rises will have a negative affect on the car scrappage scheme because the money added onto the price will take a large chunk out of the £2000 government grant. With the prices of a Ford S-Max and Galaxy rising by around £750, and other makes like Ka, Fiesta and Focus rising by £600. Car buyers will be feeling less benefit of the car scrappage scheme 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. So this isn’t so much good news for new car buyers, but it’s not as bad for leasing customers.
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