Prices - What with Pound/Euro woes!

[Jabberwocky]

Hi All, just like to hear your views. I have just (six weeks ago) ordered a new Cali Ocean. With the movement downwards of the Pound against the Euro I wonder how long VW will take in moving prices upwards to compensate. I am not sure when they last had a UK price increase but I note that since October last year our good old GBP will buy 22% less Euros as a result of its recent movement. I also note that many of the prices in VW's configurator are now marked with an asterisk which asks visitors to contact dealers for firm prices......an omen? If I were a betting man I would bet on prices going up pretty soon and a fair old chunk!!

I am glad to have ordered my Cali already, those of you on brink......better get moving me thinks!

 

[Alibee]

Was thinking exactly the same today, prices should go up significantly. That said, VW will have strategies for coping with forex-derived changes in demand, and I dare say a bit of price management is amongst them...

 

[Jabberwocky]

Was thinking exactly the same today, prices should go up significantly. That said, VW will have strategies for coping with forex-derived changes in demand, and I dare say a bit of price management is amongst them...

I agree, but a 22% movement in GBP/Euro exh rate could not have been foreseen when they set their 2016 budgets!! We will see how elastic their price management is!

 

[Jabberwocky]

Tried to amalgamate earlier post but system wont let me....Sorry!

Buy the way 22% on my new Cali price is a tad over €14k Euros. No one can live with that hit - especially VW at present. (emissions scandals etc!)

 

[WelshGas]

Last price rise was around June, I believe with the introduction of the Model Year 2017.

 

[Alibee]

Buy the way 22% on my new Cali price is a tad over €14k Euros. No one can live with that hit - especially VW at present. (emissions scandals etc!)

No, but I wouldn't be surprised if they split the difference, at least in the short to mid term to avoid sales coming to a standstill. Having an expensive factory and a load of labour hanging around doing nothing is very bad for business!

Would push most Cali's above £70k if they adjusted to the last 12 months fluctuations, but they probably have much more realistic expectations when it comes to the rolling average £/€ rate (€1.25/£ or thereabouts?).

 

[2into1]

I think they already charge every penny they think they can get. It's therefore not automatically a case of the price must change if the £/Eur changes. Don't agree? Would you have been expecting the list prices to fall had the £ strengthened?

 

[Jabberwocky]

I think they already charge every penny they think they can get. It's therefore not automatically a case of the price must change if the £/Eur changes. Don't agree? Would you have been expecting the list prices to fall had the £ strengthened?

Oh, don't misunderstand me. As far as I am concerned, and as one who has worked in manufacturing all my life it is their job to, as you put it, "charge every penny they think they can get" for what ever the reason. After all that is what their shareholders would expect, nay, even demand! It's a big nasty world out there! All I was trying to do was alert those who are not so savvy to just get their orders in as soon as they can! Nothing more nothing less......

 

[VW Cali]

Speaking from detailed experience:

Car makers in Germany hedge their FX exposure through the purchases of Forward or Options contracts. They go for a slight variation with currency delivery not on the settlement date but further forward - delayed delivery in other words.

The most usual kind of hedge for them is a 1 year contract with delivery in say 3 years time.

This means that their existing hedges are in the money already. Money has arrived, and this pot will pay for the poor exchange rate for a while as it is whittled away. So prices at consumer level will hold for a while.

Apart from simple Forward with Delayed delivery, some also purchase options on Forwards with delayed delivery. Also compound options, which are options on options (on forwards with delayed delivery) are traded too.

The question is what they plan to do as their current raft of hedges roll off in next x months or years.

I posted a separate thread on this. More than just Cali prices it is intetesting vis-a-vis Brexit and German imports into the country.

 

[Jabberwocky]

Speaking from detailed experience:

Car makers in Germany hedge their FX exposure through the purchases of Forward or Options contracts. They go for a slight variation with currency delivery not on the settlement date but further forward - delayed delivery in other words.

The most usual kind of hedge for them is a 1 year contract with delivery in say 3 years time.

This means that their existing hedges are in the money already. Money has arrived, and this pot will pay for the poor exchange rate for a while as it is whittled away. So prices at consumer level will hold for a while.

Apart from simple Forward with Delayed delivery, some also purchase options on Forwards with delayed delivery. Also compound options, which are options on options (on forwards with delayed delivery) are traded too.

The question is what they plan to do as their current raft of hedges roll off in next x months or years.

I posted a separate thread on this. More than just Cali prices it is intetesting vis-a-vis Brexit and German imports into the country.

Thanks VW Cali, I kind of had the feeling they may do something like this but as you say such arrangements do run out.

Thanks for the clarity. Will look up your other thread.

 

[Annik]

On a side subject, the pound is getting just 88 cents at airports today, this will make France a very expensive holiday destination next year

 

[briwy]

Exchange rate on the DFDS Newhaven/Dieppe ferry last week was 1.38 to the pound if buying stuff in the shop and cafe. Not sure what was going on here and I should have checked in the Bureau de Change. If that was the same there its probably worth taking a cheap day return and changing a few grand.