Ford raises prices for third time

The price rises will take effect from 30 June

Ford is to raise its UK prices by an average of 4%, blaming the move on the weakness of the pound against the euro.

It is the third time this year that Ford has raised prices. They rose by 4.7% in February and by 3.75% in April.

The list price of Ka, Fiesta, Focus and Mondeo models will rise by between £600 and £650 while an S-Max will cost £700 more and a Galaxy will go up by £800.

Ford conceded that raising prices, in a recession with a scrappage scheme in place, "may seem counter-intuitive".

The price rises will apply to orders received after 30 June.

"With so many of our costs priced in euros, there is no choice if we are to maintain a viable business," said Nigel Sharp, managing director of Ford in the UK.

Many of the Ford cars sold in the UK are assembled in Germany and Spain.

'Huge impact'

Mr Sharp said that sterling had been stable at about 1.43 euros for about 10 years up until the end of 2007, but that the pound had recently fallen to about 1.16 euros.

"The cost impact of this drop, on a car priced at £15,000, is close to £3,500, which has to be absorbed by the business," he said.

"The total revenue impact has been huge - well into nine figures - on Ford's UK business."

The three price rises will cancel out most of the savings from the government's scrappage scheme, which gives customers £2,000 off a new car if they trade in a vehicle that is more than 10 years old.

Weak demand

Separately, car dealership firm Inchcape said the scrappage scheme appeared to be having a positive impact so far.

"When the scrappage scheme was introduced, we saw an increase in traffic," Inchcape chief executive Andre Lacroix told the Reuters news agency.

"It is looking promising."

But the company said that customer demand for new vehicles was still weak.

For the first five months of 2009, it reported like-for-like sales down 21%, compared with falls of 27.9% for the whole of the market.