Graham Hill, Car Finance Expert Asks Whether The 4 Price Rises Imposed By Ford Last Year Compensated For Scrappage Costs?

Tuesday, 30. March 2010

Great news, Ford are dropping their prices! Hopefully this is just the start and we will see other manufacturers joining the party and we will start to see some lease rate drops! But hang on a minute, whilst they have dropped the price of some models by 10% – 12% isn’t this coinciding with the end of the scrappage scheme? I noticed a trend last year of manufacturers increasing their prices at a time of virtually zero inflation and I rather cynically suggested that whilst the Government was chucking £1,000 into the kitty the £1,000 provided by the manufacturers was simply being recovered through price increases. How very very dare I make such a suggestion. I then made matters worse by suggesting that as the government was receiving VAT on the new cars that they wouldn’t have received otherwise that this huge shot in the arm to the motor industry was at zero cost! A £7,000 car returned the Government £1,050 in VAT. Hmmmm. As for Ford it turns out that some cars increased by 30% last year. They had 4 price rises in 2009 increasing prices on average as follows:

January 4.7%

April 3.75%

July 4.0%

December 2.7%

So why were prices increased? According to Ford it was because of the weak Euro. Strange that it seems to have affected Ford more than any other manufacturer or am I being cynical again? A bottom of the range Fiesta cost £8,695 at the end of 2008, by the end of 2009 it had increased to £11,295 compared to say a Polo costing £9,435 or a Corsa £10,255. Entry Focus 5 doors are now £17,495. The cheapest Golf is £14,075 and Astra is £15,675. Now wonder Fords are still so expensive to lease. By Graham Hill