Car prices rise

The sustained weakness of sterling against the euro has forced Ford to announce price increases across its UK range from the start of July 2009. The price increase, an average of four per cent, will apply to all orders received after 30 June.

'In common with most of the UK auto industry, Ford is reacting to the sustained weakness of the pound against the euro,' said Nigel Sharp, managing director of Ford.

'Raising prices in difficult times, and when a scrappage scheme has been introduced, may seem counter intuitive, but with so many of our costs priced in euros, there is no choice if we are to maintain a viable business.'
 
'The exchange rate through to the end of 2007 had been stable for around 10 years with the pound worth around €1.43; recent exchange rates have been about €1.16,' he added.

'The cost impact of this drop, on a car priced at £15,000, is close to £3,500, which has to be absorbed by the business. The total revenue impact has been huge - well into nine figures - on Ford's UK business.' 
 
Even with the recent strengthening of the pound, he warned that the need to recover this accumulated revenue loss could lead to further price increases. Price-inflationary pressure would continue to be an issue for all UK-based businesses whose costs were incurred in euros.