CONTRACT hire rates are set to rise following Ford's decision to slash recommended retail prices by up to 13.1%. Lex Vehicle Leasing claims it will have to pay an average of £250 more for a Ford car following the price cuts.

Ford admits its pricing action will not directly benefit fleets as transaction prices remain unchanged. Ford fleet operations director Mike Wear said there would be no renegotiation with companies as a result of the pricing actions. Although the margins available from dealers to fleets have been largely removed - it is understood they have been cut from 10% to 3% - that withdrawal, according to Ford, has been offset by the price reduction.

'We will continue to do business with fleets on the terms we already have in place with them. Those terms will come off the lower retail price so transaction prices will not change. Fleets will enjoy price stability,' Wear said. However, according to Gary Jennison, Lex Vehicle Leasing Business to Business managing director, the only winners are company car drivers who will see lower benefit-in-kind tax bills.

He said: 'There is a lot of smoke and mirrors going on at the moment but transaction prices have gone up. The average cost is £250 more for a Ford car. The impact will be an increase in contract hire rates across the board.'

Wear told Fleet NewsNet: 'I see no reason why contract hire companies should need to raise prices. The dealer margin has changed significantly, but there should not be a need for higher rates.'