FORD is embarking on a monumental change in its pricing strategy.
After 30 years of pricing for an expected discount, the company is reducing prices to ensure company car drivers feel the benefit in company car taxation levels.
The new, lower pricing has been labelled ‘Blue Tag’ pricing by Ford. It commences with the large car range, starting with the new model changes on the Ford S-MAX and Ford Galaxy people movers.
The Ford Mondeo, with new low-CO2 direct-injection petrol and diesel engines and Powershift transmissions, will follow immediately.
“Ford’s traditional high recommended list price, high discount approach was causing some confusion and incurred a disadvantage for company car drivers,” said Nigel Sharp, managing director, Ford.
The Ford pricing strategy was firmly rooted in the seventies when company cars were offered as a way of circumventing a wage freeze. However, while companies benefited from buying a Ford at a discount, the driver has always been taxed on the P11D value of the car – not the price paid.
“You can’t discount your way out of the P11D value,” added Mr Sharp. “So last summer we looked at ways to alter the equation with a lower list price and a lower level of discount.
“We were also aware that, with the Ford price rises last year, a Ford Mondeo was £50 the wrong side of an Audi A4 on P11D; now that’s been addressed – it’s £50 the other way.”
The taxation on the list price, rather than the price paid for the car, is the fundamental driver behind this
The company car tax savings
The company car tax savings are not to be ignored under the new Blue Tag pricing structure.
For example the Ford S-MAX Zetec 2.0 TDCi 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.
The Ford Mondeo Titanium 2.0 TDCi 140PS auto had a P11D value of £25,262; under the new Blue Tag pricing, the same car will have a P11D value of £22,515. Ford has calculated the company car tax saving over three years to be £1559 for a 20% tax payer; and £3117 for a 40% tax payer.
“The taxation on the list price, rather than the price paid for the car, is the fundamental driver behind this,” confirmed Ford fleet director, Kevin Griffin. “Because company car taxes are only going to go one way. And we need to address this.”
Mr Griffin said that Ford had consulted with its major fleet buyers, the residual value experts, the leasing companies and its dealers over the new pricing offer. “I think it will be a win for all of us,” said Mr Griffin. “The residual values have gone up by around 4% as a result of the new pricing, while that should also follow through into lower cost contract hire rentals.”
Mr Griffin said that company car drivers would not be the only beneficiaries of the new Ford Blue Tag pricing. There were benefits for businesses in lower prices, lower running costs and lower National Insurance contributions.
Ford MD Nigel Sharp confirmed that the company hoped to introduce Blue Tag pricing to the rest of the range – “it remains our ambition”, he said.
The new Ford Focus C-MAX would be the most likely new model to benefit from the pricing strategy. Mr Sharp also said that he hoped commercial vehicles would also be covered eventually by lower Blue Tag pricing.
Blue Tag price savings over three 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.
