Company's British boss explains why it has to raise all new car prices from 1 April
24 March 2009

Ford's British boss has defended the company's announcement of across-the-board price rises from 1 April by claiming that the firm is in a "battle of survival."

Nigel Sharp, Ford of Britain's Managing Director, claimed that the plummeting value of the pound against the euro has forced the move, telling Autocar that "the decline in the value of the pound has probably had as much impact on our business as the decline of the overall car industry."

Ford has been particularly hard hit by the relative strength of the euro, as almost all of the company's European assembly is carried out in the Euro-zone. The Euro has risen in value against the pound by 30 per cent in the last 18 months, effectively wiping out Ford's operating margin in the UK.

"Most of our costs are in Euros and our revenues are in pounds," said Sharp, "we still make engines in the UK and the labour costs for those engines are in pounds, but some of the material costs and the cost of ancilliary equipment are in euros too, or commodities in dollars. The net effect is a huge squeeze on margins, which have become non-existent."

This is the second round of price increases this year after an average 4.75 per cent rise last month.

On 1 April the price of UK models will go up by between £50 and £1000, with the increase averaging 3.75 per cent.

Despite being the company's best-selling car, the new Fiesta will be hit with a £600 price rise and Ford will also charge buyers an extra £200 for the three-door model. The Focus RS will go up by £750, while the slow-selling Focus C+C will cost an extra £1000 from the 1 April.

The company promises that cars already in the distribution system will not be effected by the price increase.

While acknowledging that the rises will be controversial, Nigel Sharp claims that Ford has no alternative.

“We tried to stave off some of the increases last year to protect the market and protect demand, and we have also worked very hard to reduce the costs that we could control... it's not something that we want to happen, but it's something that we have to do survive in business.”

Sharp also predicted that the rest of the industry will increase prices on the back of Ford's announcement.

Mike Duff

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