FORD'S new Mondeo will cost up to £1,405 less than the outgoing model when it goes on sale next month - a pricing policy set to force chief rival Vauxhall to slash the price of its Vectra.

Ford announced the prices at the British International Motor Show at the NEC, Birmingham, on Tuesday and immediately sparked speculation that within days Vauxhall would reveal head-to-head pricing on its key fleet contender, the Vectra - which was unaffected by price cuts announced by the Luton manufacturer on Thursday.

New Mondeo enters service with fleets with a list price starting at £14,595 for the 1.8-litre LX, and Ford claims the 'total added customer value' on the model adds up to an equivalent £2,230 discount on the old model.

By comparison, the Vauxhall Vectra LS 1.8-litre costs £15,990 on the road, a £1,395 price premium against the LX Mondeo. Furthermore, experts believe the new Mondeo will see its predicted residual values over three years/60,000 miles rocket to more than 30% from the current level of 25%, although some models could reach 33% of retained value.

According to CAP Motor Research, a standard 1.8LX Mondeo would be worth £4,750 after the three- year benchmark, up from £3,800 for the run-out model, and compared to £3,850 (25%) for the equivalent

Vectra.

Mark Norman, editor of CAP Monitor, the residual value forecasting product, said: 'November is traditionally a poor time of year for residual values, but Ford seems to be doing everything right at the moment.'

Emmox Carcost says the new Ford Mondeo's new engines and improved ride and handling all contribute to greater fuel economy, reduced maintenance schedules and less wear and tear on components and tyres.

Sales director Andrew Wright said: 'Lower service, maintenance and repair costs, low insurance ratings and lower prices will impact positively on the car's wholelife costs. Other manufacturers will have to respond. It's the most competitive segment and a move by the biggest supplier means everybody has to follow suit.'

Ian McAllister, chairman and managing director of Ford said: 'With new engines and a class-leading level of standard specification, new Mondeo represents outstanding value and a no-compromise choice in the heart of a competitive market.'

The 51 model line-up features standard ABS with electronic brake force distribution, driver, passenger and side airbags, four electric windows and a CD player. The firm estimates the 1.8-litre LX is the equivalent of £2,230, or 14% cheaper than the outgoing model if all the changes are taken into account.

  • The full line-up with prices is: LX - four door/five door: 1.8 £14,595, 2.0 £15,095, 2.0 auto £16,095, 2.0 diesel £16,095; estate: 1.8 £15,595, 2.0 £16,095 2.0 auto £17,095, 2.0 diesel £17,095.

    Zetec - four door/five door: 1.8 £15,595, 2.0 £16,095, 2.0 auto £17,095, 2.0 diesel £17,095; estate: 1.8 £16,595, 2.0 £17,095, 2.0 auto £18,095, 2.0 diesel £18,095.

    Ghia - four door/five door: 2.0 £17,195, 2.0 auto £18,195, 2.0 diesel £18,195; estate: 2.0 £18,195, 2.0 auto £19,195, 2.0 diesel £19,195.

    Ghia X - four door/five door: 2.0 £19,395, 2.0 auto £20,395, 2.0 diesel £20,395, 2.5 V6 £19,895; estate: 2.0 £20,395, 2.0 auto £21,395, 2.0 diesel £21,395, 2.5 V6 £20,895.