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Bye-bye to $19,990

Small cars have to rise by $1000, warns Ford. But it's a case of who blinks first

1 Oct 2001

SMALL car pricing below $20,000 cannot last with Ford Australia predicting a $1000 boost.

It is just not sure when it will happen and who will trigger it.

"We're all there and it's a case of who blinks first," said Ford Australia president Geoff Polites.

"But the reality is this market segment has to move in price by at least $1000.

"I don't know how anybody makes money at $19,990 with these cars."Officially, only Daewoo and Kia offer small four and five-door cars under $20,00 but you only have to look in the classifieds to see thelatest $19,990 deals from Ford and the other major class contenders.

Hyundai upped the ante in August when it started offering the Elantra at $19,990 driveaway.

As a result of all this the C-category - as it is known - is booming.

Mr Polites said Laser sales were up 57 per cent year-on-year but its share had only climbed about 3 per cent.

He said the $19,990 price could not be sustained in the current climate where the dollar's decreasing value works against imported vehicles.

"I think these things represent a terrific value proposition - there are some pricepoints in this market that are pretty good," he said.

"In reality, this market probably needs to move but hasn't done it yet, but it's probably under-priced right now."Hyundai general marketing manager Peter Evans said his company would not be the first to blink on pricing.

"We're committed to our price for the rest of the year although the exchange rate doesn't help," he said.

"Our dealers are selling Elantra with good margins at $19,990 driveaway."Nissan Australia's passenger car marketing manager, Philip Brook, said the $19,990 pricepoint was being maintained for the moment by the runout of the current Toyota Corolla.

"Toyota are pretty aggressive at $19,990, as we have been in the past. But I think the way the Aussie dollar is at the moment it's very difficult to sustain $19,990," Mr Brook said.

"But then you have to weigh up the potential loss of volume versus the profitability concerns ... from Nissan's perspective we'll keep monitoring the market and we'll do what we need to do to remain competitive."Mr Polites said Ford's opportunity for further growth in the C-segment lay in developing more niche products like the SR and SR2 Lasers rather than in budget models. The 2.0-litre SR2 retails for $28,200.

"What we've found with SR and SR2 is some tremendous response to those this year, most of our growth comes out of those sort of things," Mr Polites said.

"So that's how you get more growth. We will look for other product opportunities within the segment."Mr Polites also reaffirmed his desire to sell the newly unveiled Fiesta in the Australian light car market.

But he admitted there was much work to be done on costings and availability before it could be approved for Australia.

Even if Fiesta came to Australia, Mr Polites said there was no way Ford Australia could return to the $14,990 pricepoint.

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