Prices to rise as dollar falls
New cars will cost more as the economy struggles, writes NEIL McDONALD
NEW car buyers should buckle up for a rocky ride. If the Australian dollar continues its downward spiral new vehicle prices are set to rise.
The car industry is conservatively predicting price jumps of $500 to $1500 on a $20,000 hatchback and more for luxury brands if the dollar does not recover in the short term.
The Australian dollar has tumbled 30 per cent since reaching a 25-year high of 98.49 US cents in July.
Even the Commonwealth Bank this week forecast that the dollar would remain depressed next year, ranging from a low of 59 to 64 US cents and recovering to 75 cents by year’s end.
The currency crisis and depressed consumer confidence is casting a shadow over new car sales as we approach Christmas.
Carmakers put on a brave face at this month’s Australian International Motor Show in Sydney, but many admitted that rising steel prices and the collapse of the Australian dollar would put upward pressure on prices.
Toyota’s senior executive director of sales and marketing, David Buttner, says though Toyota is not looking at ‘‘anything specific at the moment, we will continue to watch the market’’.
‘‘Prices rises are an integral part of the industry,’’ he says. ‘‘It goes through cycles.’’
He says there are currency upsides and downsides to being a local carmaker that exports and imports.
Toyota, like Holden with its Commodore, is buoyed by a strong export program for its locally built Camry to the Middle East.
‘‘We will always be exposed to the vagaries of the exchange rate and the economy,’’ Buttner says.
‘‘Our job is to make sure we make this a sustainable business through every economic cycle.
‘‘We support the customer, the dealer and the 4500 employees in this country.’’
Buttner says that two months ago economic analysts were talking Australia and US-dollar parity. ‘‘Today it’s an incredible swing,’’ he says.
Mitsubishi Australia chief Rob McEniry warns that the industry is facing short-term pressure on all imports. He says that if prices rise , it will happen in stages. But competitive pricing pressures will make it difficult to pass on any rises, he says.
Despite the sombre mood of the carmakers, Andrew McKellar, chief executive of the Federal Chamber of Automotive Industries, which runs the Sydney show, says the FCAI is confident the market will still sell a million vehicles this year.