New model pricing and the Euro

I hear what you're saying. The currency in Ferrari's largest market is getting stronger relative to their home currency. Unless there is a significant decline in demand and wait lists shorten to 6 months I don't see MSRP coming down. Besides you can be fairly certain that Ferrari foresees and offsets these kinds of exposures with currency swaps and deposit forfeiture revenue.

 

Can you let me know what the Euro will be worth 3 mo, 6 mo and a year out, so I can figure out if 1.20 is a good deal?

 

If we could accurately predict that, we'd all be rich by playing the money markets! I think the prices relative to currency are not going to change much because companies hedge as noted above. Note that in times past when the dollar was weak, cars here were still at prices that did not fully (if at all) reflect that weakness (in other words, they were a relative bargain as compared to a price that fully reflected the exchange rates). Cars generally are priced to their own country's markets.

 

Ferraris are not priced like commodities. Their price is not tightly linked to currency rates.
In fact you could argue that their prices aren't even strongly linked to reality.

 

I believe there was a time when the euro was worth .85 cents to the US dollar. Returning to those days may be optimistic. But a $1.05 euro could be a real possibility. Your guess is as good as mine.

 

Please don't get me started. I don't know what made the EU think a common currency among nations would lead to fiscal and or monetary parity... but that is another discussion. Forward contracts and forward exchange rates are not an exact science.

My advice (If you want it)? Always buy insurance when the house shows an ace, never hit on 12 and maybe short some September. EuroDollar puts at $1.10.

 

Your intuition points the the fundamental difference between how a business operates and how Ferrari Operates. Low production numbers and exclusivity are what the brand is built on.

 

Guys, I took Fred's comment as tongue-in-cheek and think you missed the joke... that's the point - no one knows for certain where the currencies will be going forward, including Ferrari.

Reminds me of all the idiots in the Canadian section wanting our MSRPs to change (only lowered, of course) with every cent in currency fluctuation between the CAD/USD.

Edit - It's been less than 2 months since the Euro really started sliding out of a normal range. Prices for cars and options have already been set, heck cars are even built and ready for delivery. Do you have any idea the s-storm Ferrari would get from their early customers who are now taking delivery of the first 458s, if they dropped prices now?

My best bet would be, if there's continued weakness in the Euro, Ferrari might throw in some "free" options/upgrades on next years cars, or keep the base price static. I would be very surprised to see prices drop much over the model run...

 

Funny, I think the Euro is finally heading back to where it should be, I and that I have been getting screwed for the past 4 years with a strong euro. ( I bring in widgets priced in Euros).

Of course, no one wants to pay more when the dollar declines, and I have to eat the difference. Now that the Euro is falling, and I can finally make a little money, everyone wants a discount.

So, despite the fact the inventory was purchased with weak dollars, I have sell as if it were purchased with strong dollars.

 

Looks like 1.20 was a pretty good deal.