Ford Great Britain is to increase its prices by an average of four per cent from 1 July.
The company blamed the weakness of the pound against the Euro for the rise, which will add around £600 to the list price of a Ford Fiesta and about £650 to a Focus and a Mondeo.
It is the second price hike by the company this year, following the 3.5 price average increase which took effect on 1 April.
"We don't like introducing price rises but we really don't have any alternative," said Ford of Britain managing director Nigel Sharp.
"Since 2007, the pound has dipped 25 per cent in value against the Euro and this is making a huge difference to our operations.
"Sadly, we had to introduce voluntary redundancies this year but there is only so much cost-cutting we can do.
"The cost impact of th pound's drop on a car priced at £15,000, is close to £3500, which has to be absorbed by the business. The total revenue impact has been huge – well into nine figures – on Ford's UK business. "Ford Europe has lost a lot of money in the first three months of this year and we cannot continue to operate the business unprofitably."
Sharp said the government's car scrappage scheme was proving a big success, with Ford selling around 1200 to 1500 vehicles a week under the initiative.
But he added that although car sales could be boosted over the next few months, 2010 could still be a difficult year.
"There could be a reduction in demand again," he said. "The reduced VAT rate is due to end at the end of this year and the car scrappage scheme will also finish. There are one or two clouds on the horizon."
Sharp also warned that there could be further price increases if the pound's value doesn't improve.