The Not So Good News From Ford

Sunday, 16. May 2010

There have been a lot of hurrah’s and yippees as Ford have dropped their list prices by up to 12% on many models in their range. Obviously it passed everyone by that in fact they increased their prices by 15.1% last year when inflation was bouncing along at a little over 0%. In fact the actual increase imposed by Ford was higher than 15.1% as the increases took place in 4 chunks and I’ve disregarded the compound interest effect. So to bang the drum about the drops in price is a bit of a con and we all know why this happened as I pointed out in a recent article in my weekly newsletter, see: www.thebestcarfinanceblog.co.uk/graham-hill-car-finance-expert-asks-whether-the-4-price-rises-imposed-by-ford-last-year-compensated-for-scrappage-costs We have a major problem in this country and it’s one of dishonesty in the motor industry (surprise there then). In America they are much more upfront. You go into a dealer and negotiate a price, then you feed that price into the various finance schemes to see which comes out best for the customer. As that little rodent on the TV adverts says ‘Simples.’ But here in the UK we are provided with a list price which is massive compared to what the car can be sold for but as we are about as good at negotiating as most of us are at sheep shearing dealers sell cars for vastly over inflated prices to daft retail buyers. On the other hand the corporate buyers are a little more savvy and negotiate discounts and bonuses that can be as high as 45% off the retail price because there is that much fat in many cars. However, whilst this is great news for dealers who can simply point to the price on the windscreen whilst the customer reaches for his chequebook it’s disastrous news for the employee who has his benefit in kind tax based on the vastly over inflated list price of the car that he drives which actually cost his employer or leasing company as much as 45% less. We therefore need to put pressure on the manufacturers to stop this culture of discounting and get real with their list prices but whilst we are wimps and like to subsidise the world with the high prices we are prepared to pay in this country we will continue to lose out compared with our friends across the pond. Oh and before I get inundated with enquiries for Fords they had priced themselves so far out of the market last year that even after the drop in list price I can still provide a Mercedes for less than a Mondeo! By Graham Hill