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Dealers rebel over Ford prices policy

Top Ford dealer bosses are putting pressure on the company to cut list prices in an unprecedented show of retail strength.

They say the strategy of offering cashbacks on selected models is not attracting customers. One boss said: "We're dying in the showroom."

The conflict comes as Ford announces the new Mondeo, its crucial D-sector model, on sale from November.

Trevor Finn, Pendragon chief executive, said a clear division was emerging between carmakers cutting prices and those which continued to make selective offers. His Ford dealerships - in which Ford has a 49% stake - had performed "poorly" in the first eight months of the year.

Mr Finn said: "Ford needs to take some action. It must adopt the new method of trading and give dealers a better opportunity to make a profit - whatever it takes. Cashbacks are of absolutely no benefit at all to the dealer.

Ford needs to put dealers in a position where we have a price appealing to customers so we can trade."

He was supported by Richard Barber, chief executive of Quicks, the UK's largest independent Ford dealer group. The company does 64% of its business with Ford.

"Ford's pricing policy is unnecessarily opaque and, because of that, customers are not coming into the showroom," he said. "Customers want a clear and transparent message. They want a percentage off. Carmakers which have cut prices have seen their showrooms buzzing the next day."

Michael Moore, Quicks' chairman, said new Ford margins on which the group was heavily dependent, fell compared to last year. Customers were expecting to pay lower prices and anticipating further falls.

Peter Whale, chairman of Ryland Group (left), which has just completed its Ford market area, said: "The outlook for this franchise will remain challenging for the remainder of the year."

Ford defended its cashback policy in the face of repeated newspaper reports last week that price cuts were on the way.

The company said its programme was "providing significant enhanced value to retail customers" and it had no plans to change "a winning formula".

But the company statement stopped short of denying genuine price cuts were coming.

The calls came as Volvo, a Ford Motor Company subsidiary, joined the roll-call of companies which have cut list prices. The move was widely viewed as a reaction to similar action by rivals Audi, BMW, Honda, Jaguar and Mercedes-Benz.

Volume carmakers have so far resisted cuts in recommended retail prices. It is believed they are unable to renegotiate hundreds of fleet sales contracts which specify volume discounts based on list price.

A Ford spokesman said: "An across the board reduction in list price would not reduce the gap between retail and fleet customers."

A Vauxhall spokesman said: "Whatever Ford does will have a significant impact. If they make any move on pricing we will have to respond in some way."

Ford is seen as the key player but it is believed a loss of fleet revenue would hit new fleet market entrants such as Renault and Nissan hardest. Confidential figures obtained by Automotive Management revealed Renault dealers were already making a loss of £64 on every new car sold at the end of last year.

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