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Ford Mustang pricing games

By Toby Hagon, 28 Apr 2016 News

Ford Mustang pricing games

Internal politics played a big role in $2500 Mustang price rise.

The Ford Mustang’s unexpected popularity in Australia is costing owners more.

Wheels has learnt the real reason the American muscle car was subjected to price increases of up to $2500 before it went on sale – and it has little to do with currency, as claimed by Ford.

Wheels understands the Ford Mustang’s price hike – diluting some of the “sharp pricing” spruiked in a March 2015 press release – was predominantly to improve profitability for the company’s head office in Detroit.

A person close to the positioning and pricing of the Mustang told Wheels Australian executives crunched “a really sweet deal on the price” when negotiating on Mustang two years ago.

Ford -Mustang -frontVolume targets were set with the factory and Ford went about collecting orders through a well-publicised media campaign a year before the car was due to arrive in dealerships.

But our insider says the popularity of the car caught Ford Australia executives out, with orders for 6000 cars by the time the Mustang arrived late in 2015.

When Ford Australia went back to head office to requesting more cars it met resistance – and all because that “sweet deal” meant the overstressed factory was better served supplying vehicles to markets that were paying more.

So the decision was made to increase prices – by $1000 on four-cylinder models and $2500 on V8 Mustangs – which suddenly opened more supply.

Ford Australia communications director Wes Sherwood refused to confirm whether Australia had increased its US dollar payments for the Mustang.

“It was currency related,” said Sherwood. “We’re not going to comment on speculation.”

Ford -Mustang -plaqueSherwood argues pricing negotiations were taking place long before the original March 2015 Mustang pricing announcement, when the dollar was at US0.78c. It was hovering around US0.73c in December when price increases were implemented, a level it returned to in April this year.

As such he said there are no plans to readjust pricing.

“We don’t have anything at the moment but we’re always watching the market,” said Sherwood. “We’re not out to be the biggest discounter but we think we’ve got a really good sweet spot for Mustang.

“At the end of the day we think the vehicles are very fairly priced; if anything people said they’re lower than they expected.”