When will AM put new car prices up to reflect Brexit?
Discussion
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
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
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. 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 ?
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
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)
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)
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 changeMaybe they could bring the V12 production to the UK from Germany?
JLR warning in internal documents (that Reuters claims to have seen) that Brexit will cost them gbp1bn per annum. if you do a factory tour of Jaguar there are boxes everywhere of components labelled (made in Germany).
Andy Palmer on Reuters saying AMLwill look productivity improvements (hope that doesn't mean job losses!)
Pound down another 2% in early trading. Fingers crossed no-one noticed the UK deficit....
Andy Palmer on Reuters saying AMLwill look productivity improvements (hope that doesn't mean job losses!)
Pound down another 2% in early trading. Fingers crossed no-one noticed the UK deficit....
Nope - you're broadly correct - just keep in mind it's a two way flow though. We take components from Europe and assemble them into finished product (Mini's are the classic example). But equally we take materials from overseas and assemble them into components for European manufactuers to export. It's a symbiotic relationship.
The difficulty would come if EU manufacturers decide that actually it's simpler to choose an EU based competitor for components than a UK one. And that will depend on tariffs, red tape (that could be a high friction cost) and currency factors
The other difficulty is that 14 percent of our trade is with the rest of the world using preferential terms negotiated by the EU. We lose those the day we leave the EU and negotiating new ones typically takes a decade or so. But I won't go any further with that line of discussion or the flat-earthers will be after me
The difficulty would come if EU manufacturers decide that actually it's simpler to choose an EU based competitor for components than a UK one. And that will depend on tariffs, red tape (that could be a high friction cost) and currency factors
The other difficulty is that 14 percent of our trade is with the rest of the world using preferential terms negotiated by the EU. We lose those the day we leave the EU and negotiating new ones typically takes a decade or so. But I won't go any further with that line of discussion or the flat-earthers will be after me
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