When will AM put new car prices up to reflect Brexit?

When will AM put new car prices up to reflect Brexit?

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RobDown

Original Poster:

3,803 posts

127 months

Saturday 25th June 2016
quotequote all
I don't know how much of each car comes from overseas but guessing it must be fairly material (engine, gearbox, brakes?)

So presumably they will need to put prices up at some point to reflect the weak pound? Guessing they won't apply retrospectively to existing orders. But presumably if you were thinking of buying a new car sooner might be better than later

On the plus-side if new car prices go up the value of used ones might be more resilient too smile

Jon39

12,782 posts

142 months

Saturday 25th June 2016
quotequote all

Engine, gearbox, brakes are the obvious majors from abroad, but many UK components.

With about 80% of production being exported, of course the exchange rate movement might boost those sales.

Sometimes car buyers have to pay more after the order. I suppose it depends upon the contract.







Edited by Jon39 on Saturday 25th June 10:19

Bobajobbob

1,408 posts

95 months

Saturday 25th June 2016
quotequote all
Demand will fall. Prices will fall.

RobDown

Original Poster:

3,803 posts

127 months

Saturday 25th June 2016
quotequote all
True demand will fall (domestically). I guess AM might accept lower UK margins

kipv12

109 posts

103 months

Saturday 25th June 2016
quotequote all
Don't see where this is coming from, do AM put the prices up and down depending on the state of the pound?
To start with the value of imported parts will be small compared to sales price.
And why are sales falling, could easily go up as domestic demand increases due to new increased confidence in our expanding worldwide economy, stay positive ☺

12pack

1,533 posts

167 months

Saturday 25th June 2016
quotequote all
kipv12 said:
....increased confidence in our expanding worldwide economy, stay positive ?
Is that the confidence that's causing the pound to fall in the first place? wink

montecristo

1,043 posts

176 months

Saturday 25th June 2016
quotequote all
12pack said:
Is that the confidence that's causing the pound to fall in the first place? wink
The pound has been falling against the dollar since 1776.

RobDown

Original Poster:

3,803 posts

127 months

Saturday 25th June 2016
quotequote all
kipv12 said:
Don't see where this is coming from, do AM put the prices up and down depending on the state of the pound?
To start with the value of imported parts will be small compared to sales price.
And why are sales falling, could easily go up as domestic demand increases due to new increased confidence in our expanding worldwide economy, stay positive ?
Thanks but I'm trying to make a serious point here for prospective buyers.

The cost of imported parts is clearly going to be very material; I think last time they presented to bond investors the average gross margin iirc was something list over £100k a car. But clearly a lot less for say a vantage than a vanquish. So if you see a 20% increase in the cost of engines, gearbox, brakes, electrical gubbons from Mercedes it is going to be significant.and it's not as if AML can afford to cut profit margins overall

At some stage I would imagine AML will move prices to reflect their higher input costs - they could presumably look to accept lower UK margins and compensate via higher export margins, but I would imagine they would prefer to see a boost to overseas sales (particularly the US) by cutting retail prices in the RoW

So assuming they don't want to chop UK margins my point is when will they put that price increase through? Do they wait for the change in model year? That would make a lot of sense to me.

And as I said, looking for the silver lining this could be good news for values of used cars, all other things being equal

It all just says to me that any prospective buyer (new or used) might want to think about pulling the trigger sooner rather than later

V8 Vantage GT

1,563 posts

105 months

Saturday 25th June 2016
quotequote all
Prices in the UK may change, but here in the US any profits due the devaluation of the pound will be kept by the dealers. MSRP's won't change.

RobDown

Original Poster:

3,803 posts

127 months

Saturday 25th June 2016
quotequote all
V8 Vantage GT said:
Prices in the UK may change, but here in the US any profits due the devaluation of the pound will be kept by the dealers. MSRP's won't change.
Would be a shame, but guess a distinct possibility too

Dblue

3,252 posts

199 months

Saturday 25th June 2016
quotequote all
The pound has only returned to where it was 3 weeks ago and large companies hedge their currency to smooth over any fluctuations. It would need to be a much more extended and bigger movement than we're seeing to make the slightest difference

RobDown

Original Poster:

3,803 posts

127 months

Saturday 25th June 2016
quotequote all
The pound hit a 35 year low vs the dollar at one point early Friday, before bouncing (partly on rumours of BoE intervention). But I agree AML will presumably need to see how things settle over the next month or so

Not sure they would use much hedging though, given the sales mix they're net beneficiaries from a weak pound (even more so with the development of the Welsh plant)

steveatesh

4,893 posts

163 months

Saturday 25th June 2016
quotequote all
Don't know if this link helps with an insight into AM management views on Brexit:

http://www.cityam.com/244086/aston-martin-go-ahead...

Basically no change but maybe more productivity improvements.

I read a list of comments by various motor manufacturers in Autocar, none of them seemed concerned.

Maybe they didn't get the memo from Cameron during the campaign?

NickXX

1,546 posts

217 months

Saturday 25th June 2016
quotequote all
What proportion of sales go overseas though? Surely the company will be partially if not fully hedged through sales in Euros to the European market?

RobDown

Original Poster:

3,803 posts

127 months

Sunday 26th June 2016
quotequote all
NickXX said:
What proportion of sales go overseas though? Surely the company will be partially if not fully hedged through sales in Euros to the European market?
I know they sell more overseas than they do in the UK, will dig out the bond prospectus when back in the office next week and dig out the numbers. So overall the company should be a net beneficiary from weaker sterling. But the UK division will be less so than before without a change

Maybe they could bring the V12 production to the UK from Germany?

12pack

1,533 posts

167 months

Sunday 26th June 2016
quotequote all
Like the MNE I work for, AM will benefit from the lower GBP as 60-80% of their sales are abroad and assuming they will manage to pass on some of the drop to customers (and not dealers). But effectively prices will rise for EU made components which would only become worse if tariffs come into play. So I can imagine new car GBP prices will rise for UK buyers.

tonyhall38

4,194 posts

215 months

Sunday 26th June 2016
quotequote all
Tariffs....what tariffs.....more speculation....the eu will need to do business with us....its in their own interest .....putting any form of tariff on any future trade deals would be suicide for a lot of small companies based in Europe....besides...believe it or not there are other countries on this planet we can deal with...wiThout tariffs.....ASTON if you recall didn't do to bad when owned by ford.....an American company.....

Jon39

12,782 posts

142 months

Sunday 26th June 2016
quotequote all

NickXX said:
What proportion of sales go overseas though?

The latest production figures publicly announced are for 2014.
'Production about 3,500 cars'.

UK registrations for 2014 were 864.

Therefore 75% of sales went overseas.




feef

5,206 posts

182 months

Sunday 26th June 2016
quotequote all
Swings and roundabouts

If the cost of the parts imported goes up due to a currency fluctuation, and they increase the cost of the car accordingly, the same currency fluctuation will result in the price in other countries remaining about the same

NickXX

1,546 posts

217 months

Sunday 26th June 2016
quotequote all
12pack said:
Like the MNE I work for, AM will benefit from the lower GBP as 60-80% of their sales are abroad and assuming they will manage to pass on some of the drop to customers (and not dealers). But effectively prices will rise for EU made components which would only become worse if tariffs come into play. So I can imagine new car GBP prices will rise for UK buyers.
This sounds about right- given the proportions mentioned by Jon, they'll benefit from the reduced value of the pound, although domestic prices would likely rise.

This would make sense given that the company was a late backer of Brexit.