MOTORSECONOMY:Ford and General Motors – the owner of the Opel/Vauxhall, Saab and Chevrolet brands – plan to raise prices in Britain to counter a recent fall in sterling, a strategy that could drive away buyers and accelerate the plunge in British car sales.
Ford says it will raise sticker prices in the UK by an average of 4.7 per cent today, including a 5.2 per cent increase for the bestselling Ford Focus.
Vauxhall, whose sister brand Opel has cut prices and offered improved financing in Germany, will release details of a planned UK increase later this month, according to Simon Hucknall, a Vauxhall spokesman.
“Additional price increases are likely unless there is a strengthening in the value of the pound against the euro,” says Brian Bennett, a Ford spokesman in England.
UK car sales fell 11 per cent last year, with the decline gathering pace in December when vehicle deliveries dropped 21 per cent.
Meanwhile, Ford has started to approach potential buyers for Volvo, even though the terrible economic climate is taking a heavy toll on the global motor industry.
The US car giant is keen to sell off its premium Swedish sub-brand as it fights to stay afloat in the midst of the global financial downturn and the collapsing US auto market.
Ford reported a 40.2 per cent drop in US sales in January as plunging SUV sales led declines across all major segments under the recession. It said its sales fell to 93,506 vehicles in the month, from 156,391 a year earlier.
Ford last week reported that its European unit swung into a fourth-quarter pre-tax loss of $330 million, compared with a $223 million profit a year ago.
The producer blamed the decline in Europe – traditionally one of its stronger divisions – on lower sales, unfavourable net pricing and unfavourable exchange rates.
Its fourth-quarter European sales were down 109,000 units from a year ago. Its sales declined in both established west European markets and Russia.
Bankers acting on behalf of Ford’s effort to sell on Volvo are now contacting western, Chinese and Asian car-makers, as well as private equity groups, to gauge interest in buying Volvo, according to reports.
Any deal for the struggling Swedish brand will be difficult to nail down. Ford paid $6.45 billion for Volvo in 1999 but few industry analysts believe it will fetch that much in today’s climate.
Most car firms have slashed spending as they focus on surviving one of the motor industry’s deepest ever downturns.
–Reuters/Bloomberg