Ford and Vauxhall have introduced major model and pricing changes.
After months of raising its prices – by 20% in the last 18 months - Ford has now introduced a policy of cutting list prices, but also cutting fleet discounts by a corresponding amount. Meanwhile, Vauxhall has launched two new low-priced model ranges – the Expression and ES.
“Manufacturers need to do something now to stimulate sales, because everyone is expecting trading conditions to deteriorate in the second half of the year,” said Adrian Rushmore, managing editor at Glass’s.
Ford’s large cars – Mondeo, S-Max and Galaxy – have had their list prices cut by up to 12%, which typically means £2,500 to £3,500 off.
However, fleets will not see this saving, as any manufacturer discount they currently enjoy will also be cut.
“This is not price slashing,” said Kevin Griffin, Ford’s fleet operations director. “We are leaving transaction prices where they have been.”
But fleets will still benefit from lower national insurance, road tax and fuel bills thanks to the new cars’ improved emissions. “With the introduction of our highly efficient engine range, fleets can benefit from both improved fuel economy and lower CO2 emissions,” said Griffin.
Drivers will also pay less benefit in kind. Using the new Mondeo 2.0 TDCi 140PS as an example, because of its lower list price and lower BIK tax band - from 23% to 19% - a 20% tax payer will save £288 a year.
Ford’s smaller cars will be sold under the new policy when new or face-lifted models are launched.
The risk of such a dramatic change of policy, if done badly, is harming RVs.
But because Ford is cutting fleet discounts, transaction prices remain unchanged.
“This has reassured CAP and Glass’s that RVs are not hit,” said Ford UK’s managing director Nigel Sharp.
“Provided we do what we say we will do, we will reaffirm RVs.”
A CAP spokesman said: "Provided transaction prices are unaltered this is a win win for Ford and its customers. As well as reducing the BIK user choosers will pay on the P11D price, the gap between list prices and used market values is already sufficient for there to be no reason for any negative impact on residual values. "
Rushmore agrees saying the strategy is sound. “Anything that they do to close the gap between list and transaction price is a positive move,” he said.
By making this move, Ford is rejecting the idea of launching new lower-price entry models - the tactic favoured by Vauxhall.
“Low specification variants of fleet cars – especially those in the lower-medium and upper-medium segments – have limited popularity on the new and used market,” warned Rushmore.
“The best strategy, therefore, will be for manufacturers to stress the low cost of ownership, advantageous company car tax position and the ‘green’ credentials of these new models.”
So in introducing its new entry-level Expression models on the Corsa, Astra and Zafira and ES models on the Insignia and Astra ranges, Vauxhall is stressing that company car users will reap benefits via reduced BIK tax.
List price savings can be as high as £3,675, with an entry-level Insignia now £17,120, which Vauxhall says is better equipped than the outgoing model.