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Truckmakers reject link between lower Yen and vehicle prices

Currency fluctuations too ephemeral to be basis of pricing but scope opens up for added features in vehicles, experts say

By Rob McKay | January 23, 2013

Prospective truck buyers tempted to foresee reduced truck prices due to the Japanese currency’s fall in value may need to think again.

Though the Yen has depreciated more than 10 percent since Prime Minister Shinzo Abe took office on Boxing Day and though the Bank of Japan has doubled its inflation target, the Australian arms of Japanese manufacturers say there is more to prices than currency movements.

Hino Australia National Marketing Manager Paul Tuffy points out that much depends on transfer pricing and those details were not readily available.

Complicating matters at present was that Hino works to the Japanese financial year, which ends on March 31, and many decisions, including pricing, have yet to be made.

The cautious outlook has an echo at Isuzu.

“It depends on whether it’s permanent,” Isuzu Australia Marketing Manager Jeff Birdseye says.

Birdseye points out that his firm had just released its 2013 range with pricing in place and, anyway, it was “not that responsive to currency fluctuations”.

Birdseye says Isuzu avoids competing on price, which is based on what the market will pay for the product.
He also notes that a weaker Yen will make imports of goods that go into making vehicles more expensive in Japan.

Tuffy believes
that after abnormal truck-sale gyrations over the past five years driven by the Global Financial Crisis, the end of Australian Government subsidies and natural disasters in Japan, some sort of
market normalisation may occure this year. But it would be a “new normal” of even more aggressive competition between truck makers on vehicle enhancements.

Truck Industry Council Chief Technical Officer Simon Humphries takes a more familiar tack broadly, saying he expects a cheaper Yen would result in lower cost for imported products in general, “just as a cheaper Euro over the past few years has resulted in lower cost European products”.

But he agrees with the position on truck prices and currency fluctuations.

“As for vehicles in general, and heavy vehicles in particular, their prices do not usually change with short-term exchange-rate variations, as thus can have an adverse effect on resale values,” Humphries says.

“If currency rates remain favourable for the medium-long term, what we tend to see in Australia is little or no change in selling prices, but with the inclusion of more value through added features.

“This has been especially evident in the new car market over the past three years, as our dollar has maintained its strength against the US dollar and the Euro.”

Meanwhile, with economic commentators highlighting earlier European and US moves to reduce the value of their currencies, there is a possibility that various regions will cancel out each other’s attempt to gain a competitive advantage.

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