Ford deal `warns buyers to hold off'

IF YOU don't want to be "ripped off", don't buy a new car for the next three months. That is the blunt advice from Britain's main consumer watchdog after Ford took the unprecedented step yesterday of launching an advertising campaign in which it declared its refusal to reduce prices.

Ford's move follows industry suggestions that the company was about to cut the cost of its cars by as much as pounds 5,000. The full page adverts say the company will reimburse customers if it changes its mind and readuces prices before January 1.

The "price promise" campaign is thought to be in response to a dip in sales over the past week or so as motorists asked dealers how long they would have to wait before big discounts would be available.

The Consumers' Association say the adverts constitute an "admission of guilt" at a time when the Competition Commission is preparing a report on alleged price-fixing by the motor industry. The association is calling for the boycott until the document is published in three months. Earlier this year, a European Union report found that new cars can cost up to 90 per cent more in Britain, the most expensive country in which to buy 62 out of the 75 bestselling models.

Phil Evans of the Consumers' Association said that buyers should hold off until "rip-off prices come down". The call for a boycott is a highly unusual tactic, which the association last used in a campaign against private pension products. Mr Evans said pressure from consumers would force the industry to change its ways. "Ford is admitting it is overcharging by saying it might reduce prices." He was sceptical about the reimbursement scheme and advised consumers to scrutinise the small print.

Ian McAllister, chairman and managing director of Ford Britain, said media speculation had "unsettled and confused" customers. Although there were no plans to reduce prices, the money back guarantee enabled motorists to buy new V-plate cars, available since 1 September, "with complete peace of mind". He left open the possibility of a price drop through competition.

Industry insiders had heard reports that Ford might lead the way with price reductions, cutting the cost by 10 to 15 per cent. That would have meant pounds 1,000 off a new Fiesta, pounds 1,500 off a Focus and pounds 3,000 to pounds 5,000 off a top-of-the-range Mondeo.

Alan Pulham of the National Franchised Dealers Association said it was the most honest decision Ford could take. "One of the great fears at the moment for most customers is not to buy now."

An AA spokesman said there was disquiet among consumers. "I think motorists will welcome any move to drop prices. We have been paying too much for cars."

Edmund King of the RAC said: "What will be interesting is if Ford's competitors cut their prices, Ford will have to follow suit. Really it can only be good news for the consumer."