The January hike in VAT to 2.5 per cent introduces problems for car dealers and customers alike. The obvious effect of the increase will be higher prices – expected to be an increase of hundreds of pound on some more expensive models.
Which is why Perrys welcomes the likes of Vauxhall introducing 20 per cent discounts for the first month of 2010 under the 20 per cent VAT rate.
It means buyers are not rushed into making a decision over the Christmas period and Vauxhall will get a healthy boost in January despite the higher VAT.
Now it is the turn of Ford to introduce their VAT plans, and they are certainly different from those of Vauxhall.
This year, Ford launched its ‘&’ campaign. The idea was to remove confusing discounts and special offers on its models and instead focus on lowering prices and offering more equipment for the money.
Keeping to this theme, the Blue Oval has introduced new 2011 prices for its car range, taking into account the increase in VAT.
The good news is the three-door Ka city car prices are unchanged in both the entry-level Studio and top-level Zetec trims, at £8,545 and £11,295 respectively.
It is the same story for the Ford Fiesta. The best-selling car in the UK in 2010 will still start from £9,995 despite the 2.5 per cent in VAT.
This is a big boost for small car fans, and as the cars are popular with newly qualified and younger drivers, it is pleasing to see prices frozen for the smallest cars in the Ford garage.
Unfortunately, there will be £100 and £200 increases for the 1.25-litre petrol 82PS and 1.4-litre diesel Fiesta however.
Some of the larger cars in Ford’s line-up will also go up in price, with the C-Max and Grand C-Max increasing by as much as £450 at £17,195 and £19,195 respectively.
However, both models are new, and feature more equipment, better quality interiors and above all else, more efficient engines to reduce ownership costs once the car is paid for.
In the same war, the new S-Max adds only £400 to the entry-level price of £21,485 despite now being offered with Ford’s lower-CO2 emitting and more efficient EcoBoost engine for the 2011 model year.
The new Mondeo and Focus are being updated for 2011, and any small increases in price will be swallowed by new technology and engines as well.
This leaves the Ford Galaxy at £24,195 and the Ford Kuga SUV at £20,995 as the other revised prices in the Ford range.
Luckily for Ford, many of the models affected have been recently refreshed or launched as new. This means customers will still get value for their money in terms of lower running costs from more efficient engines and CO2 emissions-based road tax, and in terms of the amount of equipment and luxury inside the cars.
It will be interesting to see how other manufacturers react to the differing approaches of Vauxhall and Ford.
All of the new Ford Focus prices will be introduced from 4 January in the UK.