With manufacturers under pressure to cut prices following a critical Competition Commission report, Ford's decision to end production of the Fiesta at Dagenham could have massive repercussions. As the manufacturer starts importing all its best-selling vehicles into the UK - the Fiesta, Focus and Mondeo - it could use the strength of Sterling to spark a UK price war.
Professor Garel Rhys, head of the economic section at Cardiff University Business School, said: 'Ford's decision means the company is free of the British cost base and it becomes a volume car importer. Ford could set off a price war in the UK because it could import cars, priced in euros, use the strength of the pound in reverse and pass on the savings in the form of lower prices in the UK and make some profits.' With Ford leading the UK new car sales market, it has been the main target of 'Rip-off Britain' campaigners and Rhys said: 'Ford is fed up with being sniped at over pricing. It could reduce prices by perhaps 15% and that would impact dramatically, particularly on other UK-based manufacturers such as Vauxhall, Peugeot, Rover and the Japanese makers. Ford has the most retail outlets in the UK and the largest hold on the fleet market. It would be a move everyone would have to follow.'