Ford car price rise cancels out tax THER write errorcuts

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The Independent Online
FORD, Britain's biggest car seller, was yesterday accused of pocketing reductions in car tax after announcing that prices are to rise across its model range by as much as pounds 2,000 in the new year.

The increases, ranging from 4.5 per cent to 10 per cent, will wipe out the effect of the Chancellor's abolition of special car tax in the Autumn Statement. That move was designed to revive car sales, which are expected to end this year one-third down on 1989.

But Ford's increases will push up the price of a Fiesta 1.1 from pounds 6,215 to pounds 6,495, and the price of an Escort Cosworth from pounds 22,555 to pounds 24,810. Foreign-built Sierra and Granada models will increase by an average of 7.5 per cent.

Nigel Griffiths, Labour's consumer affairs spokesman, said: 'The real losers are consumers who face high prices. The Chancellor is being walked over by the manufacturers. He is allowing companies to pocket the tax reduction - he must take action to force them to pass it on.'

Ford rejected Labour's claims, saying that it had been forced to raise prices because of the devaluation of the pound. Sterling had fallen in value against the German mark by 11 per cent since Black Wednesday, making it more expensive to import cars from Ford's European factories.

A spokesman said: 'I categorically refute that we are trying to take advantage of price reductions as a result of the abolition of the car tax. Our costs have risen far more than the increases we have put forward as a result of the devaluation.'

Concern is also mounting that Ford's move may stall the modest recovery in the car market. New-car sales rose by 8 per cent in October and 6.3 per cent last month.

But John Spellar, Labour MP for Warley West, said: 'These rises put at risk the fragile recovery in the car industry. They are gambling with car workers' jobs.'