Ford cuts prices
26 March 2010
Author: Rupert Saunders
Ford is cutting the list price of its large cars in a bid to make them more attractive to business drivers. The list price of the new S-max, Galaxy and revised Mondeo ranges fall by between 10% and 12%, cutting P11D values on which a driver's benefit-in-kind tax is based.
The list price, and therefore the P11D price, of business best seller, the Ford Focus, is unchanged but a current retail advertising campaign which prices the Focus Zetec at £13,495 will continue. Last year Ford sold 68,916 Focus and 27,389 Mondeos to fleets.
The move comes after Ford faced criticism from both business and retail customers for five price rises in quick succession over the past two years. List price reductions of other models, including Focus, are likely to come when they are replaced - a new Focus is due for launch this time next year.
Kevin Griffin, Ford fleet operations director, admitted: "Our customers were saying to us 'you're the market leader, you've got some great cars but we're worried about your prices'. You can't discount your way out of the P11D value."
Griffin said he expected actual transaction prices to remain "roughly where they have been before". The price cuts will be paid for by a reduction in fleet discounts, in dealer margin and in Ford wholesale margin.
"The key for us is in the model change. These are cars we can identify in the market place," said Griffin. "The benefits to both drivers and employers are very significant. We can talk about lower P11D values, lower National Insurance contribution, lower CO2 and fuel consumption, and lower capital expenditure."
Residual value and whole-life cost experts have been briefed on the changes and are "fully supportive". Indeed figures released by Ford show actual residual values rising over outgoing models.
Griffin said Ford was not going to follow Vauxhall and introduce new entry-level trim models or business-special specifications, such as Astra ES.
"Personally, I don't see the benefit in that," he commented. "Our business is selling into a portfolio of cars and just offering a single model doesn't give us any strength or depth."