Despite the downturn, Ford and Vauxhall decide that now is the time to increase their prices!

February 6th, 2009 by admin | Filed under Daily News, Recession, Retail, UK Small Business.

In a classic display of the “what me worry” marketing philosophy, UK car manufacturers Vauxhall and Ford announced yesterday their intentions to increase prices of new cars by as much as five percent. As consumers shuddered at the thought, UK government economist must have been scratching their heads in amazement . With their £1.3 billion liquidity package still in the works, and the £1.0 billion still to come from EU funding still awaiting approval, it would hardly be considered an opportune moment to increase prices as car manufacturers throughout the World are fighting hard for every sale, including slashing prices to the bone..

Ford and Vauxhall hastened to add that they have also been among those who considerably reduced their prices, and need this increase to earn some contribution to overheads, even if and when they receive their share of the anticipated cash injection.

To pour oil on already troubled waters, Ford UK have announced that they are cut up to 850 jobs at its UK operations with between 400 and 500 of the posts are to go at the Transit plant in Southampton. The redundancies, which hopefully will be voluntary, are due to be completed by May 2009.

The 850 jobs that are to be lost represent nearly seven percent of Ford’s UK workforce of 12,900 with almost half of the staff at the Southampton Transit production unit being laid off, with the remainder from Ford’s plants spread around the UK

One of the reasons for Ford’s layoffs may well be that according to experts in the car industry, US, Far East and European based car makers are receiving considerably larger “survival subsidies” than their UK counterparts. As is the case with the banks, there are many people that feel the if the Government wants to help car makers, it can do so also in a way that will help the ordinary motorist. This means cutting road tax and reducing taxation on fuel , thus allowing the man in the street to upgrade their car more often, which will eventually funnel through to car manufacturers, among them Ford UK and Vauxhall. However this may take a while, as predictions for 2009, with or without subsidies remain far from optimistic, with demand for new cars throughout Europe expected to fall by twelve percent, which is fair when compared to the US with demand there expected to fall by seventeen per cent.