Britain's biggest-selling car company, Ford, is to increase the price of its new vehicles in the UK by an average of 4 per cent from 1 July.

The company blamed the weakness of the pound against the euro for the rise which will add around £600 to the list price of a Ford Fiesta and about £650 to a Focus and a Mondeo.

It is the second price hike by the company this year, following the 3.5 per cent average increase which took effect on 1 April.

"We don't like introducing price rises but we really don't have any alternative," said Ford of Britain managing director Nigel Sharp.

He went on: "Since 2007, the pound has dipped 25 per cent in value against the euro and this is making a huge difference to our operations. Sadly, we had to introduce voluntary redundancies this year but there is only so much cost-cutting we can do.

"Ford Europe has lost a lot of money in the first three months of this year and we cannot continue to operate the business unprofitably."

Mr Sharp said the Government's "cash-for-bangers" car scrappage scheme was proving a big success, with Ford selling around 1,200 to 1,500 vehicles a week under the initiative.

But he added that although car sales could be boosted over the next few months, 2010 could still be a difficult year.

Mr Sharp said: "There could be a reduction in demand again. The reduced VAT rate is due to end at the end of this year and the car scrappage scheme will also finish. There are one or two clouds on the horizon."

Ford said customers who had booked new cars before today's announcement would pay the old price for their vehicles.

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