Last year they went up: now they’re coming down. Ford has just refreshed its S-Max and Galaxy MPVs – but these new cars will sell for 12% less than the models they replace.
The company drew criticism at the end of 2009 after it raised prices four times in just over a year, bringing the list price of a mid-range Fiesta up to £14,000 and, for a Focus, up to £20,000. At the time, the company blamed the rises on rising raw material prices and the weakness of the £ against other major currencies. Other manufacturers raised their prices also but not all by as much as Ford. As a result, a mid-level Volkswagen Golf is currently priced at around £1000 below the equivalent Focus.
Now Ford’s head of marketing, Mark Simpson, heralds a change of approach. Aware that steep prices have forced dealers to discount, he says that the company is now cutting its prices.
‘The weakness of the pound has been a big problem for us,’ said Mr Simpson, ‘ forcing up our costs. But discounting prices dsn’t work in fleet markets because Benefit in Kind tax is based on CO2 and the list price. About 65% of Galaxy sales and half of S-Max sales are to business customers.’
He said that the transaction price – what most customers pay when they ask for a discount – will become the sticker price or ‘Blue Tag’ as Ford will now call it.
The lower prices come as Ford cuts into dealer profit margins and showroom discounts. The savings available average £2500-£3000. As well as the new models, Ford has already cut prices for Mondeos and is running its rule over other models.
However, Mr Simpson assured buyers of cars yet to see ‘official’ reductions that they wouldn’t lose out because of future price-cuts. ‘If you buy a Fiesta or a Focus today, the discounted price you’ll pay will be the eventual ‘Blue Tag’ price.’
The S-Max now costs from £20,645, while the Galaxy begins at £22,945 and the Mondeo from £17,295.
May 18, 2010