Very weak dollar = higher 2009 Smart prices?

[Lewis]

Given what has happened to the dollar / Euro exchange rate it's hard to see how PAG can keep the prices stable into 2009. Hope we all get our cars before the inevitable happens!

[Carnut]

I would say that PAG has probably hedged that contingency for 2008 at the least.

[Lewis]

Looking at what the Smarts go for in Canada it looks like we in the US are getting a bargain- and their currency has done way better than the greenback.

[pagja]

...I think with the continued falling value of the dollar vs. the Euro, it will be unbelievable if the PAG group can keep to their original pricing as quoted for their Smart vehicles. With deliveries of the US units projected as "during the 1st half of 2008", if this is the case, they will have held the pricing for over 6 MONTHS. With the drop of the US dollar in just the past two weeks, if it continues, they will lose over 25% +/- in devaluation. I am afraid that any day now we are going to get the BAD news of an "adjustment" in pricing due to conditions beyond their control. I am sure that Mr. Penske is going to do his best to keep to his word on the initial pricing....but let's not be unrealistic.

[SmartBob]

We reserved OUR Smarts based on a specific price. Penske would be silly to make a killing while trying to promote this risky venture. Plus we don't know what's going to happen in January. Too many variables to speculate now but I think we'll be ok.

[Lewis]

Lord knows I've been critical of PAG and have mocked the idea of some posters that they have great sympathy for them regarding the secrecy of details of the launch. The funny thing is on this one I'm actually feeling bad for PAG- no one could have anticipated just how badly the dollar has depreciated against the euro these last 8 months. This major drop will cost PAG VERY dearly if they don't find a way to mitigate the effects. Perhaps that's what is behind the shockingly short waranty? I think we'll see a shockingly large delivery charge, dealer prewp etc., etc. as they try to recoup at least a portion of this loss.

[lhoboy]

No doubt the 2009 models will be pricier. As mentioned before, Penske was probably shrewd enough to buy enough forward currency exchange contracts to take the worry out of the 2008 prices. Perfect opportunity to take delivery on a 2008, sell it in 2009 for a profit, effectively getting paid to drive it for a year. With the 2 year warranty, you don't want it for more than a year anyway.

[a2jack]

Prices for the new Smarts must go up!

Today, 11-9-07 the asking price is so cheap in US $ that it no longer makes sense for PAG to sell the cars.

Currency Hedge works only if you hold, or control, a large supply of high value foreign moneys. In this go-around you want to be holding Euros.

Although PAG has overseas business intrests (Car and truck dealerships) I'm not sure this will bring in enough Euros to ride out the fall in US dollar.

We wish PAG and Smart the best, but we expect to pay more in Jan when we pick up our car.

A2Jack.

[lhoboy]

Originally Posted by a2jack

Prices for the new Smarts must go up!


Currency Hedge works only if you hold, or control, a large supply of high value foreign moneys. In this go-around you want to be holding Euros.

A2Jack.

Not true. You can secure futures contracts on foreign currency for a small fraction of the total contract value. You don't actually have to buy the currency to hedge against fluctuations in the exchange rates. The actual transction occurs when the contract expires at the exchange rate negotiated at the beginning of the contract.