FORD’S NEW ‘Blue Tag’ pricing structure for its large cars – the Ford Mondeo, S-MAX and Galaxy – is not only reducing the list price of the cars, but lowering contract hire rates, too.
Latest contract hire prices suggest more than £13 a month can be saved on the monthly rental of a Ford Mondeo – a useful £468 over three years.
Blue Tag pricing has been targeted at company car drivers, by reducing the P11D list price of the cars on which benefit-in-kind company car tax is based. Ford’s previous pricing structure was to allow bigger corporate buyers a discount on the price. But while large companies benefited from the discounts, drivers had to pay benefit-in-kind company car tax on the pre-discount price.
Ford has now removed the disadvantage to the company car driver, but also provided businesses who use contract hire with a benefit: better rates thanks to improved residual values.
“The residual values have gone up by around 4% as a result of the new Blue Tag pricing structure, while that should also follow through into lower cost contract hire rentals,” said Kevin Griffin, fleet director of Ford, when announcing the new pricing structure last month. “That’s because the amount of money actually funded – between the list price and the residual value – has reduced.”
Blue Tag monthly contract hire savings
| Ford model | Old rental | New Rental | Monthly saving |
|---|---|---|---|
| Ford Mondeo 5dr 2.0 TDCi Zetec | £378.22 | £364.78 | £13.44 |
Source: Ford.
However, businesses shouldn’t expect to see immediate reductions in the contract hire rates, warned Paul Bulloch, managing director of Concept Vehicle Leasing, the company which supplies the contract hire quotations for Business Car Manager road tests.
“We’ve not seen lower rates,” said Mr Bulloch. “It’s not filtered through to us yet. That’s simply because the finance and leasing companies tend to adjust their residual value increases or decreases on a monthly basis.
“However, the price reductions are a good thing for business drivers,” continued Mr Bulloch. “The price reductions have an impact on the P11D value which will make Fords more desirable for company car drivers, while businesses will also pay less in National Insurance contributions on the benefit element.”
Typical examples of Ford Blue Tag pricing include the Ford S-MAX Zetec 2.0 TDCi, which had a P11D value of £24,153; under the new Blue Tag pricing, the same car will have a P11D value of £21,985. Ford has calculated the company car tax saving over three years to be £299 for a 20% tax payer; and £598 for a 40% tax payer.
Blue Tag company car tax savings over 3 years/60,000 miles
| Model | P11D | BIK 20% | BIK 40% |
|---|---|---|---|
| New S-MAX Zetec 2.0 TDCi 140 PS | £21,985 | £3034 | £6068 |
| S-MAX Zetec 2.0 TDCi 140 PS | £24,153 | £3333 | £6666 |
| New Mondeo Titanium 2.0 TDCi 140 PS Powershift auto | £22,515 | £2,837 | £5,674 |
| Mondeo Titanium 2.0 TDCi 140 PS auto | £25,262 | £4,396 | £8,791 |
Source: Ford.
New large car pricing structure impacts rental rates
