Spain fears hit stocks, push euro near 2-year lows

[AZRickD]

With the Euro back down to 2010 levels against the dollar, perhaps we are approaching a good time for us (and the US Importer) to consider purchasing some Gassers?

http://finance.townhall.com/news/bus...woes_intensify

The euro fell another 0.6 percent to $1.2411, a little up from its near two-year low of $1.2405 hit earlier. Figures from the European Commission showing that economic confidence in the eurozone slumped to around a two and a half year low in May.

Though Greece is the epicenter of the debt crisis, Spain has been a growing source of worry over recent weeks. Its banking system is under the microscope, especially after Bankia, the country's fourth-largest lender, last week announced it needed (EURO)19 billion ($23.8 billion) in state aid.

Investors are worried that Bankia's woes might be replicated across Spain's banking sector, which has suffered badly from the collapse of the construction sector. An economic recession and unemployment at almost 25 percent are fueling concern that the country will become the fourth euro country to be bailed out after Greece, Ireland and Portugal.

[blitz11]

Presuming that the people have the cash to buy the bikes, and that the importer is willing to take the risk that if the Euro tumbles, the dollar won't.

From my point of view, I'd have demand and marketing drive my import/sales volume rather than speculation on what is going to happen to the Euro.

At the very least, times are going to be interesting.

[AZRickD]

The importer can't make money if he doesn't import. So those he *does* import will be priced more favorably. He must estimate how many he can sell. Those that can buy, might. Those who won't are null values (or they will buy used bikes or parts).

The Euro is already tumbling. The drop in the Euro *is* in relation to other currencies, namely the yuan, yen, dollar, ruble...

My point being, a year or two ago, the rise of the Euro relative to the dollar was the reason for a ~~ $1,000 increase in the price of the Gas Gas.

That pressure has dissipated considerably. I expect this to mean more affordable Gassers.

[3beejay3]

If he chooses, Clay can take advantage of the current rate environment by using forward exchange contracts as a hedge, (he may already be doing so) for the remaining 2012 year and the 2013 model year........

Of course, if the Euro continues to drop in value- which it may do thru the rest of the summer(who knows?), taking on currency hedges now could be a bit premature on the buy side. It's all in the timing.

[GMP]

I think '12s are done so buying the '13s may work out in our favor.

[Clay]

This issue is so complicated. If we lock in our retail prices at $1.24 per Euro, what do we do if it suddenly moves the other way like it did when we started this business in 2010? When I priced the '11s in the summer of 2010, the Euro cost $1.19. I priced the bikes at $1.27 to give us some breathing room. Two months later the Euro was at $1.34 and topped out at $1.46. We did not want to raise prices just months into the business so we sucked it up. We literally were making only $80 on some of the '11s we brought in.

Also, Spain is telling me that, because the Japanese Yen has gained in strength, parts from Japan like carbs, ignitions and rims have gone up substantially.

Our orange competitors went up $200? I think prices on our '13s will be about the same as the '12s. To be brutally honest, 2011 was not a profitable year for us due to the currency exchange so we could use a bit of extra profit to dig out of the hole we are in from '11. We gotta get the family farm out of hock.

One other thing that customers seldom consider....if you decrease the coming year's price, what do you do for the dealers that have the prior year model still in stock. How would you like to be a dealer who got a really late '12 only to find out that the '13s are $300 less? There's no way the dealer could sell the '12 at a profit. When a distributor drops prices it does not just effect the current year model. In the motorcycle industry it's called price protection. Price protection can be very expensive.

Rick....the main reason that bikes went up when we began this business was to give the dealers a real margin. The previous importer tried to keep a price advantage over the orange brand and he did it at the expense of the dealer's margin. We could not get dealers to take on Gas Gas with a super slim margin. I expect to be on par with the orange guys and we have a better motorcycle. Now...isn't that a good deal?