Posts Tagged ‘car scrappage scheme’
Ford Forced to Raise Car Prices by Another 4%
The prices of Ford cars will be rising after the end of June by on average 4%. This is the third time since 2007 that they have rose their car prices. Ford rose their prices back in February by 4.7%, Ford then rose prices again in April by 3.75%.
Ford stated that it does sound strange to raise car prices during a recession, but they also said that they had no choice because of the weak pound, “there is no choice if we are to maintain a viable business”.
Ford said that at the end of 2007 the pound had been stable against the euro for 10 years at 1.43 euros, however, due to the recession, over the past 2 years, the pound has dropped to 1.16 euros.
Because Ford build their UK cars in Spain and Germany, Euro countries, they had no choice but to increase prices. Before these price rises, Ford had been absorbing the losses which end up around £3,500 for every vehicle sold, however, they cannot sustain this if they plan to keep a stable business, especially during the recession.
Not only are these price hikes a problem during the recession but they also have an affect on the governments car scrappage scheme because these price rises will take a huge chunk out of the money that would have been saved. With prices of a Ford Fiesta, Focus and Ka increasing by around £600. New car buyers won’t be benefitting as much when buying a new Ford under the car scrappage scheme.
Although this is all bad news for new car buyers, people choosing car leasing over buying won’t see the price rises straight away. Even if you are not currently on a Ford lease, but you are looking, the leasing companies won’t pass on the price rises until they buy new vehicles, which, during the recession, won’t happen straight away. So this is some good news for the leasing customers, not so much for new car buyers.
UK Car Sales are no Affected by Car Scrappage Scheme
Last months new car sales figures have shown no effect of the Government’s £300m car scrappage scheme after it was announced that the market suffered a 24% drop in new car sales.
The Government’s car scrappage scheme provides the consumer with £2000 when they scrap their old car for a new model car. The scheme started in May and had problems after some manufacturers, one being Ford, held off on their involvement after there were arguements over costs.
The UK car market has now suffered 12 months of sale losses, even with the new car scrappage scheme being introduced. This doesn’t reflect the news that consumer confidence was recovering slightly.
The Society of Motor Manufacturers and Traders announced that a total of 35,000 new cars had been ordered through the new scheme, however it will take some time to transfer these sales into new registrations. They also used the excuse that a huge number of consumers are looking around to try and get the best offer before buying a new car, this could just be a way of giving the scheme some extra time to prove that it wasn’t a complete waste of money.
134,858 were sold in the UK last month with the Ford Fiesta coming out on top with the most amount of sales. 15,386 of those sales came from Vauxhall who have suffered after being hit by a 40% drop in sales.
The overall number of corporate sales during May has had a huge effect on the overall number of new sales for May. Car leasing companies that offer a range of makes, such as Vauxhall leasing and BMW leasing, are reducing the amount of cars they are buying because they are also suffering from the economic crash.
Many leasing companies are cutting jobs because when many people consider getting a new car, they forget about the leasing options that are open to them. Plus with the introduction of the car scrappage scheme, consumers are encouraged to buy a new car rather than consider other options.