Mike Stevens | Feb 4, 2009

At a time when vehicle sales are in decline like never before, the last thing any company would contemplate is raising prices. For Ford and Vauxhall in the UK however, the weakness of the Pound means they are left with no other choice.

For both, the majority of their manufacturing is carried out in Europe. The weakness of the British Pound against the Euro means that sales in the UK are now worth less than previously. To counter this Ford has raised average prices by 4.7 percent and Vauxhall by just under five percent for all vehicles except the run-out Vectra and Australian built VXR8.

The timing of the price rise couldn’t be worse with December new car sales figures in the UK 21.2 percent below the same month for 2007. The UK government has just announced its plan to offer assistance to the UK motor industry including guarantees to unlock up to £1.3 billion in loans from the European Investment Bank as well as a further £1 billion from the government to encourage the development of green technology.

The US owned Ford and Vauxhall’s parent company, General Motors, also benefit from the USD $14 billion assistance package granted by US congress.

Price adjustments vary across individual models, a Ford Ka rises by only £138 while a Focus Coupe Cabriolet goes up £1,223. Ford has said in a statement that unless the Pound stabilizes against the Euro they could not rule out further increases in the future. Elsewhere in Europe prices remain stable however, with the exception of Russia where the falling Rouble has seen prices rise by an average of 4.5 percent.

"We have to increase our prices," said Simon Hucknall, spokesperson for Vauxhall. "It is essential - it is not desirable, but it is essential."

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