Falling Australian dollar threatens to push new car prices higher

[Brazen]

May help some of the local cars if the fall continues. Ford probably have the most to gain with so much local content in their locally built cars.

http://www.heraldsun.com.au/news/fal...-1226667459285

NEW-car buyers wanting to grab a bargain may want to get in quick as currency jitters threaten price rises across most models if there is no exchange-rate recovery by the end of the year.

After almost 12 months of a record high Australian dollar - which prompted unprecedented bargains on imported vehicles and drove a sales boom - rock bottom new-car prices may soon be behind us.

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The 9 per cent drop in the Australian dollar compared to the US dollar overnight is not the main problem - only about 5 per cent of imported cars sold in Australia are bought in US dollars.

The bigger issue is that, over the past 12 months, the Australian dollar has fallen by an average of 10 per cent compared with the main foreign currencies imported cars are bought with. Half of all imported vehicles sold in Australia last year came from Europe, Thailand and South Korea.

The exception is the Japanese Yen, which has been accused of being artificially weakened by the Japanese government. Today, $AUD1 buys 11 per cent more Japanese currency than it did at the same time last year. It is one of the main reasons Japanese car prices have been able to limbo to 20-year lows. About 40 per cent of imported cars sold in Australia come from Japan.

"If the Australian dollar continues to slide over the next few months we will see an impact on prices," says Tony Devers, the boss of Suzuki Australia, which specialises in the most price-sensitive segment of the new-car market.

"Most car companies buy currency many months in advance, so we're not likely to see any sudden reactions. Our prices will hold for now and I expect other brands will too, but these record low prices won't last forever."

Finding out which cars might be prone to a price hike is not as easy as looking at their badge.

For example, most Japanese-branded utes such as the top-selling Toyota HiLux come from Thailand. Although the Australian dollar has increased in value compared to the Japanese Yen, Toyota imports the Thai-built HiLux in US dollars, so it is susceptible to a price rise.

Most of fellow Japanese brand Honda's passenger cars come from Thailand. Whether Honda buys its cars in Thai baht or US dollars is academic: the Australian dollar is down by 9 and 10 per cent compared with both currencies 12 months ago.

Adding to the confusion: some Japanese cars such as the Suzuki Alto come from India - but the $11,990 city runabout, one of the cheapest cars on the market, is bought in US dollars.

Fiat-Chrysler Australia sources vehicles from North America and Europe and has enjoyed a sales surge over the past 12 months thanks to lower prices buoyed by the strong Australian dollar. Last week it slashed the price of the Fiat 500 by $10,000 to $14,000 drive-away.

Veronica Johns, the boss of Fiat-Chrylser Australia says the company hopes to hold pricing for now but concedes if the Australian dollar continues to fall then prices may go back up.

"We're OK for now but exchange rates are obviously critical to pricing," Johns said. "If the reduction in the value of the Australian dollar continues at this rate then I think you would see prices start to climb across the board."


Then and now: driving your dollar further



The value of $AUD1 on June 21, 2012 versus today:


US dollar: 1.01 versus 0.92 (down 8.9 per cent)

Euro: 0.80 versus 0.69 (down 13.75 per cent)

Japanese Yen: 80.6 versus 89.6 (up 11 per cent)

Thai Baht: 31.97 versus 28.67 (down 10 per cent)

South Korean Won: 1,172.74 versus 1,055.09 (down 8.8 per cent)

Source: Oanda and XE Currency


Where your imported car comes from

(percentage of all imported cars sold in 2012):

Japan: 40 per cent

Thailand: 17.5 per cent

South Korea: 15 per cent

Europe: 13.9 per cent

USA: 2.6 per cent

Other: 11 per cent

Source: VFACTS