After 4 x pricerises in 12 mths Ford has cut list prices.
The market forces do work.............Ford tried it on and lost!
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Really just a marketing strategy as the list prices are not what the buyer pays (unless they are really dim!)
The list price will go down but so will the discount available
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>>Really just a marketing strategy....
No it's not really. Although 'list price' may mean little to the private buyer, the market Ford wants to major in is the company/fleet market. For any company car user who pays BIK the really important number is manufacturer's list price - this is what the BIK tax is based on.
The lower the list price, the lower the tax, the more attractive propositions they become to non-private drivers.
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Exactly - It's a marketing strategy - the price to the buyer be it private or company will not change
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>> Exactly - It's a marketing strategy - the price to the buyer be it private
>> or company will not change
>>
Not strictly a Marketing Strategy I'd contend, actually a strategy to address a segment (the largest segment as it happens) of their market. It's not the 'froth' of marketing, it's not about communication, it's about the fundamental attractiveness for their product to their biggest segment.
I've long since thought (and commented) that Ford's pricing strategy was self-defeating, I guess they were playing 'game theory' in the hope that others would follow (look up oligopolistic markets and hockey stick demand curves), their rivals didn't raise prices to the same extent so Ford's strategy failed as the demand curve predicts and they've had to change it. Quite a nice case study in economics actually.
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Sorry CGN, you're missing the point - the cost to the company car driver will decrease because less (BIK) tax is paid - so they are paying less in effect. The company car driver doesn't buy the car, but pays tax on list price - hope that's clearer.
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No I'm not missing the point. I agree that the end user i.e the Co car driver might find Ford cars more attractive when the nominal value used to establish tax is reduced. The actual buyer i.e. the Company will not benefit from lower prices because less discount will be available. There will be no reduction in price
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>> No I'm not missing the point. I agree that the end user i.e the Co
>> car driver might find Ford cars more attractive when the nominal value used to establish
>> tax is reduced. The actual buyer i.e. the Company will not benefit from lower prices
>> because less discount will be available. There will be no reduction in price
>>
You are correct, you are discussing transaction prices whereas I am describing the market attractiveness of the cars to their core market, obviously without end-users (company car drivers) choosing them Ford don't get a transaction at any price, the two are different but interrelated perhaps ?
Now Ford could have chosen a strategy to move away from the company market, this would lead to less second hand Fords (and volumes) and I certainly wondered whether this was their tactic at one point, but their model is volume related (cf Tesco) - geared to low margins on high volumes.
Anyhow, good news for me (as a company car driver who likes Fords) but probably bad news for the relatively fewer private buyers who choose a new Ford - although better for those who buy ex-company cars of course !
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>> Anyhow good news for me (as a company car driver who likes Fords) but probably
>> bad news for the relatively fewer private buyers who choose a new Ford - although
>> better for those who buy ex-company cars of course !
>>
Will it necessarily be "better for those who buy ex-company cars", though? (Genuine question)
Thinking out aloud..... isn't company car spec usually very good but not premium spec? (In Ford terms, "Zetec +" rather than "Titanium".) This would mean that the Private buyer has less chance of finding a top-of-the-range model if the proportion is skewed towards company cars.
OTOH, the contrary argument. This says that company spec cars tend to be BETTER than the average private purchase. This would say that having more second-hand ex company cars actually increases the specification of the average car.
Which of these is true? - I don't know, but I'd be interested in the answer, if anyone knows it.
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I did a quote on our company scheme last night for an A4 Saloon 136PS TDIe SE. Although list price is a lot higher than my Mazda6 the monthly BIK was significantly less and was about the same (within a few tens of pounds) for the monthly charge. Furthermore being less than 160g/km for CO2 means I'd get a lift to the next car category anyway.
So it would be cheaper than my car. And probably cheaper than a Mondeo. May have less toys etc but I know which I'd prefer.
... although an Octavia would save me loads and an A5 2.0T 180PS is achievable.
Unfortunately my car is due to be changed in October 2011! Plenty of time to save cash to buy my own nearly new A5 then and take the allowance maybe.
Last edited by: VxFan on Fri 26 Mar 10 at 18:40
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Interesting post FB, what I was referring to was the supply of good 2/3 year old well maintained Fords, as to the spec, I think that company cars have increased the standard spec over the years e.g. airbags, ABS, air-con (formerly sun-roofs), cruise control and decent stereos? All these are on the base Mondeo Edge.....
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The actual buyer i.e. the Company will not benefit from lower prices because less discount will be available. There will be no reduction in price
But you can't possibly know that. Are you saying that list price is totally unconnected to the price these cars can actually be bought for? I don't think so.
If a (private) punter reads that 'Ford reduce prices' , he or she will expect to see a corresponding drop in dealer or broker prices - that is, a drop from what is now being charged.
That *real* reduction will have to come from the manufacturer and/or dealer - otherwise it would pretty soon turn out to be a PR disaster - and I'm sure their marketing strategy is a lot more savvy than that.
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I wonder what percentage of companies actually buy their cars these days anyhow ? My own and all the (admittedly) large companies I work with lease their cars.
So, my barometer in choosing a car is the monthly lease cost over 2, 3 or 4 years (I invariably opt for 2) plus the BIK tax of course. What I see is that the lease cost quotes change frequently - maybe weekly and the main component of these is depreciation. I can't believe that residuals change that fast so it's the discounts to the leasing company which change. e.g. the quote for my current car went up by nearly £200pcm for a 2 year lease (fully funded) between Dec 2008 and Jan 2009 whilst the list price was unaltered, it's down again now to the 2008 level but I can only assume that the manufacturer support (lovely euphemism) changed ?
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>> ...I can only assume that the manufacturer support (lovely euphemism) changed
The "prestige" manufacturers heavily support lease deals when it suits them as they can shift cars without being seen to give big discounts which would affect residuals.
Last edited by: Bill Payer on Sat 27 Mar 10 at 21:53
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>> The "prestige" manufacturers heavily support lease deals when it suits them as they can shift
>> cars without being seen to give big discounts which would affect residuals.
>>
Yes, so I understand, I think BMW sales were in a parlous state at the end of 2008, Merc C Class SEs are very cheap to lease at the moment, guess they aren't selling many or are about to drop/change the model ?
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Well Ford have lost me, I ran a mile last time I was in their show room when I saw a special offer on a Fiesta for £11,995. Many buyers like me don't want to haggle and just go for the best advertised price they find.
I think Ford also need to up standard spec on the Ka and Fiesta too as the base models are pathetic. I don't think the standard Ka even has electric windows even though the Panda it is based on had them all as standard from day one.
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Ford - After 4 price rises in 12mths - Ford reduces price - CGNorwich
