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.

Dollar tipped to fall to US88c by FIFA World Cup 2014

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

[mr smith]

Yup, the perfect storm is brewing.
Lets hope the locals stick around long enough to enjoy their time in the sun.

My fear is with no local manufacturing we will be caught with high prices on many items and this will put further pressure on the economy.

[Lotte]

Let's hope gov co (the lot of em) realise it's time for a decent solution to our manufacturing woes. Heard today at work most electronics will rise 20% if it keeps dropping
Dunno how valid the claim is though.

[malazn mafia]

Originally Posted by lotski

Let's hope gov co (the lot of em) realise it's time for a decent solution to our manufacturing woes. Heard today at work most electronics will rise 20% if it keeps dropping
Dunno how valid the claim is though.

If the AUD crashes and burns below 0.50 USD surely Fordmeadows and Geelong may get a stay of execution

[joolz]

The reduced $AU will hurt Holden as most of the parts come from off shore and thats just for the VF not to mention the Cruise.. As for Ford the Pony has already bolted )(pardon the pun) and i cant see the drop on the $AU changing anything as in the end Ford US is looking after their own industry and will try to repace the Falcon with the Mustang with a price tag of almost double... Tell them they are dreamin'.....

[bobthebilda]

The Korean, European, US and Thai cars may be costing more to make in Australian dollars ( but that only works for costs originated in their own countries). Not taking into account price movements that have occurred over the last year, they are also paying 10% less for their steel compared to an aussie manufacturer and 10% less on alot of raw components that go into making a car.

Labour costs are the only real things that can't be shifted by car manufacturers in other countries, but unlike alot of other countries, labour costs don't make up the large percentage of car costs that it does in Australia.

And you got to remember the Japanese yen is down against the aussie dollar, and Japan makes up the largest percentage of our imports, everyone is still gonna compete against those imports, even if it means making smaller profits.

[Buntz]

This would be a great time to hit cars with tariffs. Drive people into locally made cars.

[Pepscobra]

But who can say how long and to what level the AUD will fall?

[mik]

If only the crystal ball was up and running, looking at different articles the last couple of days , most seem to be saying China's growth is slowing a little, i don't know whether that is because US is upping the ante to get their economy going again or just China's economy is running out of steam after such a good run,
i'm thinking these two countries might have the most impact on our economy either indirectly or directly ?

[EVLKNEVL]

Originally Posted by Buntz

This would be a great time to hit cars with tariffs. Drive people into locally made cars.

Two possible outcomes spring to mind:

1. People start buying more locally made cars

2. People stop buying so many brand new cars

[borough]

Originally Posted by Buntz

This would be a great time to hit cars with tariffs. Drive people into locally made cars.

Great idea. Push up the price of imports and the locals will follow suit. This would also push up inflation and interest rates.

Perhaps if the local manufactures built cars that people want with the same levels of tech as the imports they would sell. Nobody wants large sedans/wagons anymore. SUVs, 4x4 Utes and small cars is where the market is at now. I'll be in the market for a compact SUV to replace my Falcon in 2015, please tell me what locally manufactured vehicle there is I an purchase?

[FGII-XR6]

wouldn't it be ironic if falcon and terry sales go up now that they are to be killed off

[The G6ET Spot]

Originally Posted by mr smith

Yup, the perfect storm is brewing.

My fear is with no local manufacturing we will be caught with high prices on many items and this will put further pressure on the economy.

That is exactly what is happening and sooner than you think.

And to think that not all that long ago we were nearly a self sufficient country.

Thank goodness for so called Fair Trade Agreements.
Fair in the other countries favor usually

[supershifty]

Funny thing the dollar exchange rates, generally if the $AU goes down 5c and hovers there prices go up - if the $AU goes up 5c and stays there prices don't seem to go down.

Just my 92c worth.

[jpd80]

Capitulation would be switching the whole country to Left Hand Drive...

[In Focus]

Originally Posted by au3xr6

wouldn't it be ironic if falcon and terry sales go up now that they are to be killed off

Given petrol prices will rise significantly, and these cars are perceived (rightly or wrongly) as "gas guzzlers", I think that's unlikely. People would start buying more small cars or, possibly, Camry hybrids and the like.

[borough]

Originally Posted by In Focus

Given petrol prices will rise significantly, and these cars are perceived (rightly or wrongly) as "gas guzzlers", I think that's unlikely. People would start buying more small cars or, possibly, Camry hybrids and the like.

Petrol up to 157.9 in Melbourne today.. Didn't take them long

[Lotte]

Originally Posted by borough

Petrol up to 157.9 in Melbourne today.. Didn't take them long

Whereabouts, it's still in the dollar 30's this way out and closer in

[Nikked]

If our dollar goes down, will that force material prices up?