Car Prices in Small and Medium Segments - Essay Example

Let’s have a review of the Ford Fiesta, a small car whose recommended price in Great Britain Pounds (GBP) including taxes was 14,102 while excluding taxes it was 12,001. Prices shown herein are based on recommended retail price adjusted for equipment difference effective on Jan 1, 2010. Ford Focus, a Medium segment car, carried a recommended price including taxes, which was 20,247 while excluding taxes it was 17,231. Ford Mondeo’s recommended price inclusive of taxes was 24,309 while excluding taxes it was 20,688 GBP (European Commission, 2010).

These car prices have been provided by the car manufacturers themselves through their associations (ACEA) and (JAMA). It should be noted that actual car prices may not be the same as recommended prices, as it depends on dealers to offer reduced prices and extra monetary benefits to their customers seeing the market trends (European Commission, 2010).

Considering the Eurostat figures indicating the reduced effect of inflation on the car market in comparison to other products, the year-on-year change in actual car prices from January 2009 to January 2010 for the United Kingdom in % was 11.2 in nominal car price and 7.7 in actual car price (European Commission, 2010).

In Small segment areas A & B, Ford Fiesta has been one of the best-selling cars whose prices for the three consecutive years from 2008 to 2010 are given below in percentages of prices in euro before taxes (European Commission, 2010).

On 1/01/2008, Fords Fiesta commanded 21.4%, which came down to 17.9% on 1/01/2009 and 24.3% on 1/01/2010. This indicates the eurozone market price differentials.

In the Medium C category, Ford Focus has been one of the best-selling cars. It commanded 27.4% on 1/01/2008, which increased to 28.7% on 1/01/2009 and came down to 27.9% on 1/01/2010.

Table 1

Small Segments A&B:          1/01/2010                    1/01/2009                    1/01/2008

Peugeot 206/207                       39.7%                           32.7%                           32.6%

Renault Clio                             32.3%                           44.9%                           23.4%

Fiat Grande Punto/Punto           29.2%                           30.4%                           21.4%

VW Polo                                  28.1%                           26.8%                           25.0%

Ford Fiesta                               24.3%                           17.9%                          21.4%

Incidentally, it would be interesting to compare the small segment price behavior of Ford Fiesta with other cars like the Peugeot 206/207, Renault Clio, Fiat Grande Punto/Punto, and VW Polo. On 1/01/2008, Peugeot 206/207 price difference was 32.6%, which showed only a little increase of 32.7% on 1/01/2009 while in the next year i.e. 1/01/2010, Peugeot's price difference was 39.7%.

As we note down from table 1, coming down from Peugeot to Renault Clio, to Fiat Grande Punto to VW Polo to Ford Fiesta, all cars have not shown an increase in price difference from 2009 to 2010, as we see that Renault Clio and Fiat Grande showed a downward trend in a price increase from the previous year 2009 but Peugeot 206/207 has registered maximum price increase of 39.7% and Ford Fiesta the minimum of 24.3% in 2010.