[Nick]

Food for thought.

This is from page 5 of December 2004 Lotus Newsletter

Exports to North America have been largely hedged for the German manufacturers, says Griffiths, and the hedges “don’t start to unwind until the second half of the next year”, so the pricing need not be changed until then.

My questions are (although I don't expect any answers):

Did Lotus hedge as well?

When was the pricing of the Elise made?

Did the price increase of a few months ago complete any hedge shortfall due to the high demand?

Is this the Esprit problem (priced then the dollar pound problem priced the Esprit much higher) happening again?

The dollar Euro shift in the last few years may cause the European cars to become priced out of the market. This may be the last chance, for a while, to get a European car at a good price.

Fortunately the dollar pound pricing has not moved as much as the dollar Euro.

have fun.

Nick

 

[Surferjer]

I'm not getting into this one again. No one on this Board knows what hedging Proton may or may not have done.

 

[Craigy]

Speaking as a UK resident, I can tell you that the pound Sterling (£) previously bought $US1.44 or thereabouts for a few years, before this "slide" took effect.
One pound now buys approx. $US1.93, and the figure is still rising. It's great for us cash-rich limeys, we can buy tons of stuff dirt cheap on US holidays while simultaneously giving the Federal reserve a good shafting on the US balance of payments. Wahey!

For US$40K back then, Lotus would have got $27,777 or thereabouts.
For US$40K Now, Lotus get £20,618.

Please bear in mind the UK starting price for the 111R (basically the same car as the fed elise) is about £33K and you will start to get an idea of the level of Lotus's problem.

I think this is going to cause them lots of trouble... it may even kill Lotus for good.

Craigy

 

[fitfan]

I don't thnk the US market will "kill" lotus, they will just restructure into financial model that makes sense, that may not include the US.

TVR has been doing well with out much more than just the GB market

 

[Nick]

thanks for the info

Craigy,

Good input - I do think you have a 17% VAT (sales tax to those on this side of the pond) that is included in the total price. Here (in California) we get to pay 8.5% tagged on top.

So it does make sense that the prices were hedged. The longer term prospects of Lotus selling here may be a problem if the exchange rate remains unfavorable for US.

Seems like they used pricing info from a few years back.

If I recall correctly the Esprit had some rapid price increases that caused the product to all but die here.

have fun

Nick

 

[chotto]

There's an article in today's Wall Street Journal on this issue (section C). Porsche has apparently hedged up to 75% of their pre-tax profit (around $1B) through July 2007. Let's hope the boys on Potash Lane thought of this too or they may be in a situation like VW is right now.