Ford Increases UK Prices. Again.

Ford has just announced a new price increase in the United Kingdom for most of its models from the start of July 2009, mostly due to the "sustained weakness of Sterling against the Euro," as the American manufacturer mentioned in a press release. Prices will be increased by an average of 4 percent, which translates into an extra 600 to 650 pounds for Ka, Fiesta, Focus, C-MAX, Kuga and Mondeo, 700 pounds for S-MAX and 800 pounds for Galaxy.

"In common with most of the UK auto industry, Ford is reacting to the sustained weakness of the £ against the Euro," said Nigel Sharp, managing director Ford of Britain. "Raising prices in difficult times, and when a scrappage scheme has been introduced, may seem counter-intuitive but with so many of our costs priced in Euros, there is no choice if we are to maintain a viable business."

"The exchange rate through to the end of 2007 had been stable for around ten years with the £ worth around €1.43, recent exchange rates have been about €1.16," he added. "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. The total revenue impact has been huge – well into nine figures – on Ford's UK business."

This is the second time this year when Ford decides to increase prices in the United Kingdom. The company announced in March that starting Apri,l prices will be raised by 3.75 percent, citing the same weakness of the pound versus the euro as the reason.

"The Euro has strengthened 30 per cent in the past 18 months and 18 per cent in last 12 months alone," Sharp said at that time. "The weakness of the £ had a huge negative impact – well into nine figures – on Ford's UK business in 2008."