UK: Ford plots new lower pricing plan
Author: Tristan Young | 19 March 2010
Ford plans to recapture buyers and market share here in the UK by introducing models with new trim/equipment levels at significantly lower prices than current specifications.
The move, which just-auto has learned will be officially announced on Friday 26 March, avoids Ford having to label the strategy as a price cut.
Over the past year the automaker has imposed four separate price increases to counter the fall in the value of the pound sterling against the euro.
The 'blue oval' this month came under fire from respected consumer magazine What Car? which found that, on average, Ford prices had increased 9% in the past year – well ahead of inflation. Prices of some models actually increased by over 30%.
While retail buyers have been hit by the increases, it’s the fleet market, which makes up the majority of Ford’s business in the UK. Because businesses buy cars on a continual basis (rather than every three years or so in a retail buyer’s case) they notice price increases more easily.
The price restructuring will follow Vauxhall’s recent changes which see the introduction of Expression and ES trim levels which undercut existing models by more than GBP3500, according to just-auto’s sources.
While the Ford changes may not see an alteration in transaction pricing, it means the taxable P11D price for company car drivers is higher than rival vehicles, putting them off choosing Fords and giving an advantage to brands which operate outside the eurozone.
One such automaker, Hyundai, claims Ford and other traditionally high-volume brands have been forced into the move to stop a collapse in sales.
"I think the big players expected the rest of the industry to follow them with these massive prices increases,” said Hyundai UK managing director Tony Whitehorn.
“But we didn't. In fact we saw rival's price rises as an opportunity to take even more customers - both private buyers and especially company car drivers who have to pay tax based on list price.
“These big manufacturers now can't ignore the impact Hyundai's sensible pricing and excellent new product is having on the market. They will have to find a way of cutting prices in the near future if they want to stem the tide of buyers defecting to brands such as Hyundai."
Ford’s plan comes on the back of a widely advertised money-off campaign which started mid-February and is understood to have kept retail sales buoyant after a slow start to the year.
A Ford spokesman said the firm did not comment on future pricing plans.
Sectors: Retailing, marketing & distribution, Vehicle manufacturers, Vehicle markets
Companies: Ford, Hyundai, Vauxhall
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Quote: This is how you move the metal when it isn't moving fast enough.
Maybe if they were moving light metal… it would move faster… It is time to rethink the automobile… Scrappage is direct taxpayer’s subsidy to “move the metal,” any metal… There is no coincidence…
Mark Kmicikiewicz said at 5:25 pm, March 23, 2010
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