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Ford are planning to increase the car prices by on average 4% by the end of June. This is the third time that Ford has rose their car prices in the UK. The first rise was in February by 4.7%, Ford then rose prices again in April by 3.75%.
Ford admitted that is was strange to raise prices during a recession, however, they said “there is no choice if we are to maintain a viable business”.
Ford said that at the end of 2007 the pound had been stable against the euro for 10 years at 1.43 euros, however, over the past 2 years during the recession, the pound has fallen to 1.16 euros.
Ford had now other choice but to raise prices because the majority of the UK cars are constructed in Germany and Spain. 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.
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 all Fords cars, including the Ka, Fiesta and Focus, rising by around £600 - £750. When buying a new Ford, customers will feel less effect of 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. This is some slight good news for leasing customers, however, new car buyers will feel the full effect of the price rises.

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