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Euro is now near $1.30, will it change F-car MSRP?

Discussion in 'Ferrari Discussion (not model specific)' started by sparetireless, Jan 7, 2004.

  1. sparetireless

    sparetireless Formula 3

    Nov 2, 2003
    1,341
    Do you think the F-car will price up to meet the recent change in the euro? My concern is the cars may be way out reach if they move MSRP to reflect the recent changes. Last few months its up over 30%, even with a hedge, the '05 prices will need to move some. 30% up on current MSRP will not be pretty.
     
  2. LA Swede

    LA Swede Formula Junior

    Dec 5, 2003
    369
    SoCal
    when I was in Europe during the spring of 2002, the Euro traded at 1 Euro for 0.75 dollars. since then the dollar has just plummeted. the Euro has gained more than 50% since then. incredible. I feel poor going abroad now.

     
  3. spyderman

    spyderman Formula 3

    Nov 4, 2003
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    I thought that was the point of why the US government wants the dollar to fall was so we would buy American goods in lieu of other. The Ferrari will certainly be climbing in MSRP with in the next 18 to 24 months :(

    Covette's and Vipers here we come :)
     
  4. LA Swede

    LA Swede Formula Junior

    Dec 5, 2003
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    the administration allegedly favors a "strong dollar policy", but what strong means is not defined.

     
  5. Wolfgang

    Wolfgang F1 World Champ
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    spyderman, cool thoughts but maybe wrong?
    Remember when the US$ started to drop down so badly = March 2003!
    And what happened in March 2003....and is not already finished since today?

    just my personal thought & 0,02 cents

    Wolfarossa
    FORZA FERRARI
     
  6. whimike

    whimike Karting

    Jul 26, 2003
    153
    Los Gatos, CA
    Sorry Wolfgang, but nothing in March of '03 had anything to do with the rate. Since May '02 the Euro has been on a steady rise against the US$. If anything, the rise of the Euro halted from when the war started in March to April when the Husseins went on the run. Don't take my word for it, here is the proof:

    http://quote.yahoo.com/m5?s=EUR&t=USD&a=1&c=2

    Perhaps you would like to expand on where you are getting your information?

    The Euro/US$ rate difference has to do with simple financial situtaions that can easily be tracked. Namely, the lowering of interest rates in the US, as interest rates are lowered people move their US$ to Euro where they will get better return on their money. The recent statements by the US Govt. that they have no immediate plans to raise interest rates, nor have any plan on doing anything about the imbalance of the Euro/US$, is what is causing it to move up further now.

    -- Michael
     
  7. wax

    wax Four Time F1 World Champ
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    Well put, though special emphasis must be placed on the trade imbalance which is out of whack - in record numbers. Take China... Please!
     
  8. Wolfgang

    Wolfgang F1 World Champ
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    Michael,

    thanks a lot for your statement/opinion and the link.
    I`m doing with my firm lots of business with the USA. Its also a big problem to me `cause most of my customers are coming from the USA and the Export to US is going down and down.
    The question to me is:
    Is the €uro realy so strong?
    or
    is the US$ just so weak?
    And if there is realy a context to the war, started in March 03, is something I can`t (I know too less about) and don`t want (here at ferrarichat.com) to discuss.
    It was and it is just my thoughts and opinion.
    Remember those statements/words from stutied, intelligent people like: "We don`t want to make any more business with peace loving Germany or France"
    Otherwise the EU is still growing and getting bigger and bigger with all the countries over Euope joining the EU and the €uro.
    We can not compare the old German Deutschmark to the new €uro.

    Wolfarossa
    FORZA FERRARI
     
  9. whimike

    whimike Karting

    Jul 26, 2003
    153
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    Trade imbalance may have some to do with it. But, since the Chinese Yuan is pegged to the US$ the rate has absolutely no effect on any trade with China, it just hurts China's trade with Europe.

    -- Michael
     
  10. whimike

    whimike Karting

    Jul 26, 2003
    153
    Los Gatos, CA
    Wolfgang,

    I don't think it is as simple as whether the US$ is getting weaker or the Euro stronger, it is a mixture of both. Certainly, the US$ is weaker to every currency in the world that isn't pegged to the US$. Compre it to the Japanese Yen, lowest since the last 3 years now.

    I think the "We don`t want to make any more business with peace loving Germany or France" is a very limited thought of few, and probably totally overblown in the German/French media. Just take a look at Porsche/BMW/Mercedes sales.

    In my business I do a lot of importing from Germany, Italy, and a few other EU countries. The US$/Euro rate is killing me. I definitely feel your pain.

    To get back to the topic of this thread... The whole design of the Euro was to be 1:1 with the US$. Being at nearly 1.30 US$ to 1 Euro is a total imbalance and really is having a dramatic effect. Ferrari is making 30% less on each car they sell to FNA, this is not something they can afford to absorb. Take a $155k 360M. Let us assume Ferrari SP sells to FNA dealers for $135k? Well, at 1:1 they of course get $135k, at 1.30 they are getting less than $104k, a loss of over $30k per car!!! Ouch.

    My best guess is that most manufactures in Europe are waiting for whatever events are taking place to pass and for the US$ to head back to its natural equilibrium of 1:1 with the Euro. After all, it would really screw them up to bump prices by 20% then have the US$ come back and have an utter imbalance of US pricecs to Euro prices, as they are already imbalanced for Ferrari with US prices being quite a bit higher than Euro prices.

    It is my belief that 1.30 is about as high as we can bear, and it sure does hurt at this level. I expect it to reverse course within the year and settle back down to more reasonable levels, perhaps still imbalanced but at more bearable levels such as 1.10 or 1.15. Just IMHO.

    -- Michael
     
  11. Wolfgang

    Wolfgang F1 World Champ
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    Michael,
    same thoughts and same ideas about the dramatical $ drop down. Maybe I have the handicap to explain my thoughts in a second language and something might get lost in my poor translation, sorry.

    I have done over 30% less profit the last year with this horrible exchange rate....and no end to see. It realy hurts and drives me crazy.

    Well, something around 1:1,10 or 1:1,15 would be fine and realistic.
    Mercedes, BMW, Porsche, Ferrari a.s.o. are loosing big, big money with all the contracts done in US$; and at least we in Europe will/must pay their deficit here in Europe!

    Another example: Some of my friends here in Germany are working for US firms in Germany. This gents have a contract and get payed their monthly salary in US$ = 20% less...but the living in Germany (rent, food a.s.o.) is getting more and more expensive.

    And sorry, this was and is no ofense: "We don`t want to make any.....bla, bla"
    I swear you, I (and many friends of mine) have gotten so many emails like this; but we all know its usual and always just 1% of people all over the world with such a stupid opinion also here over Gremany.
    Forget it and don`t care about we are looking forward and not backwards.

    Wolfarossa
    FORZA FERRARI
     
  12. wax

    wax Four Time F1 World Champ
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    Michael - Thank you for your reply.

    Here's the problem: Japan and US are China's biggest customers. Without counting Hong Kong imports (Made in China, exported from HK) - China's still exporting $53.2 Billion to the US this year. Double that if you include Hong Kong, since China doesn't - though the US does. With the Yuan (renminbi) pegged to the dollar (done in late 90's to rescue the Yuan, as it was getting sucked into a vortex) - it takes it into a free-fall. Euro is exchanging at the rate of 1.3:1 instead of China's fixed 8.28:1. That still takes Euro down.

    Think about what will happen if China has $ surplus... floats the now severely undervalued Yuan... and wonder if that was their plan all along. I do - and it ain't pretty. Once that sucker gets loose, China is the Boom, everybody else is the Bust. More Ferraris in Hong Kong, that's for damn sure.

    In a sense, it's the reverse of the Baring's Bank fiasco of '95. Just as one man destroyed that company - and in so doing - sent Eastern Markets into further uncertainty - in so many words, this would boost the East at the expense of the West.
     
  13. Eilig

    Eilig Formula 3
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    Many articles on this subject recently in the Wall Street Journal. Sounds to me like it does indeed have much to do with the growing trade imbalance problem in the US. A weaker dollar buys less abroad, ergo less import to add to the already huge trade imbalance. The only problem is that such a deflated dollar can/will then cause other problems. Nobody is buying the dollar right now, and it's sort of a runaway train it seems (?) Hope this situation gets under control before the Euro hits 1.5:1 against the dollar!
     
  14. ryalex

    ryalex Two Time F1 World Champ
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    As an armchair economist I would say that the low interest rate we've had since 9/11 is what is tanking int'l demand for US dollars.

    Banks who want higher returns will instantaneously throw their money into higher yielding currencies.

    Canada's central bank raised interest rates back in April (when I wrote my last econ paper trying to forecast the bank's decision), and their dollar has leapt from .67 to .776 since then. It's likely true that the Euro is giving better returns.
     
  15. ryalex

    ryalex Two Time F1 World Champ
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    I think about this nearly daily, as my friends email me from China and invite me to come get a piece of the action... arrgh. The worst part is seeing it coming and not using ones business sense to get into the game.
     
  16. dan360

    dan360 F1 Rookie

    Feb 18, 2003
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    Lets not forget that all car companies are taking out forward contracts to fix their fx rate's back into their domestic currency. 3-6 month forwards are pretty standards and are priced just as an interest rate decomposition on the current spot rate. Prices will naturally increase when the current set of Forwards roll off.

    Lets just hope its not before I have to pay for my CS in March/April ...
     
  17. 1975gt4don

    1975gt4don Formula Junior

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    your only solution is to buy gold coins, silver coins and gold stocks: GG, BGO, WHT, NEM, DROOY, HMY, HL(silver and gold), pull up the charts on those guys, it will put a smile on your face. Gold will easily go over $1000 per ounce this year. Gold hit 431.00 yesterday. DROOY and HMY are south african gold stocks and their stock price can be affected by the RAND vs. US Dollar exchange rate.
     
  18. Brian C. Stradale

    Brian C. Stradale F1 Rookie
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    Easily, huh? :rollseyes: So, you can easily double your money this year by buying gold now at $500. And why isn't every expert doing this? So, do you have all your money in Gold right now?
     
  19. dan360

    dan360 F1 Rookie

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    #19 dan360, Jan 7, 2004
    Last edited by a moderator: Sep 7, 2017
  20. atheyg

    atheyg Guest

    The US $ is weak, artificially lowered interest rates.

    Interesting Gold chart haven't looked at one in quite a while looks inflationary for our economy, definately in the US housing market bubble up 30+% in last few years, we are asking for a big hangover from this fed policy.
     
  21. henryr

    henryr F1 World Champ
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    so as the dollar drops (all else equal) gold must rise in price to maintain its parity. the same can be said of oil.
     
  22. andrew911

    andrew911 F1 Rookie
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    Sep 8, 2003
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    that's right henryr. Natural for the oil producing nations to want more US$ for the oil they sell, as the US$ is worth less. That's a big area where we may all be feeling this in the future- if OPEC controls production to push prices higher, we'll all be paying at the pump....glad I don't have a suburban or H2 :)
     
  23. 1975gt4don

    1975gt4don Formula Junior

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    Yes, mine is in BGO right now. The US govt cannot protect the US Dollar without raising interest rates. It can't affort to do so. This would cause the stock market to crash. Check out the bottom 5 charts for an eye opener. All commodities in general are rising as the charts will clearly show. POG has broken out of a 15 year bear market. Financial brokerage houses rarely speak about gold stocks.
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID369857&cmd=show[s23076780]&disp=O

     
  24. staceman

    staceman Karting

    Sep 23, 2003
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    I find this topic of great interest. Personally I've never been a fan of the Euro nor the direction that the EU has taken over the last twenty years. The initial concept of the EU was spot on the mark. Today they (those faceless men in Brussles) are taking a vital part of our world and laying a coat of socialism over the entire continent forcing country's to forgo their century's old identities. This article which is in the current issue of Forbes speaks directly to this. So perhaps there is more at work here between the two currency's. I would wager that within the next six months there will be a significant change in the valuations. What say everyone?

    http://www.forbes.com/forbes/2004/0112/031.html
     
  25. 1975gt4don

    1975gt4don Formula Junior

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    this chart of silver speaks for itself.
     

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