Strong OZ dollar, means anything when buying at local?

[Adam]

Just been doing useless reading these days, and somehow I am thinking to myself. Given how strong the Australian dollar is comparing to the USA, and UK. Would we see a filter through effect in having cheaper parts and accessories? Sure, bussiness buy their product in hedges but our currency has been strong for the past many months.

For example, ECU upgrade, on an American website, a flash for a 1.8T costs $495US, whereas currently we are still paying $896. If we use the current exchange rate of .88, should we not see prices of $562 or similar?

It is one thing to support the local business. But another to be silly and get ripped off? What are your thoughts?

[vwthunder]

Here we go




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[Gti Dave]

I hope I don't offend anyone but being a retailer myself, I can see how much this sort of mindset has hurt our industry (automotive) and all dealers and importers etc are bleeding and losing sales because of it. Yes, you can get things cheaper at times from overseas but you need to think about the local product support you would be getting should anything go wrong or need warranty not to mention the level of direct customer service that you may be offered etc etc etc. Every country has its schedule of taxes and unfortunately it doesn't help the fact that Australia is one of the highest taxing countries. Also, the more you buy overseas, the more jobs that are lost here in Australia. Just look at what the manufacturing industry are doing now? Not to mention call centres?

Just my 2 cents worth.

[Adam]

but that's not the question I am refering to. I amasking, given if our dollar is buying more for the same dollar through other countries, that would mean the retailers' "cost" would be lower, yeh?

What I am asking is whether this cost saving would really be filtered through to the consumers. Or would retailers would enjoy the lower cost, keep the same selling price and be happy with that extra money he gets.

[Gti Dave]

but that's not the question I am refering to. I amasking, given if our dollar is buying more for the same dollar through other countries, that would mean the retailers' "cost" would be lower, yeh?

What I am asking is whether this cost saving would really be filtered through to the consumers. Or would retailers would enjoy the lower cost, keep the same selling price and be happy with that extra money he gets.

Oh I c, sorry. Well it depends on the retailer themselves. Some may not give any discounts and are firm on their pricing regardless of their savings whereas others may pass on the savings. It also depends on where the retailer gets their stock from. If their supplier is overseas then possibly but only if the difference is massive otherwise a small drop in price may not be adjusted accordingly as the retailer may need to recuperate losses associated with being charged various fees with international purchases, import duties, postage etc or more so from price fluctutations of stock or postage charges (because sometimes retailers are not advised by suppliers appropriately hence the loss when we get billed for more for the same product unexpectedly). If the supplier is local, then similar deal but also comes down to whether the distributor/importer etc decides to change the pricing not to mention the various discount levels that large distributors especially work on (i.e. the more a retailer buys on a monthly basis, the cheaper it is to a certain extent). Discounts in the automotive industry ain't all that great either hence some retailers puts up the price that is significantly higher than the RRP that the importer sets as a guide.

I get asked this occasionally so hopefully it helps to answer your question.

Hope this helps

[Mrk_Mickey]

That's quite a useful wad of information Dave, cheers for sharing.

The way I think about it is if you're set on buying something and have found it cheaper overseas, don't just overlook the aussie market. Talk to the sellers, ask them the question why they have xx amount on the price tag and just see what they have to say; a little human interaction really goes a long way!

A lot of the time, people can end up more happy paying a bit more, simply because they get a person to talk to and shake hands with, they get warranty and the chance to hand it back with ease if anything goes wrong, etc.

[Dubdabest]

Generally yes the stronger AUD should reflect in lower imported good prices but not all goods/industry have the same price liquidity in up/down movement, depending on the stock level already purchased at the old price or goods already brought into the country. Sure currency hedging helps but if I had purchased some stock at old (higher price) then I probably wouldn't want to lower the price drastically until the old stock is cleared?

[h100vw]

Just been doing useless reading these days, and somehow I am thinking to myself. Given how strong the Australian dollar is comparing to the USA, and UK. Would we see a filter through effect in having cheaper parts and accessories? Sure, bussiness buy their product in hedges but our currency has been strong for the past many months.

For example, ECU upgrade, on an American website, a flash for a 1.8T costs $495US, whereas currently we are still paying $896. If we use the current exchange rate of .88, should we not see prices of $562 or similar?

It is one thing to support the local business. But another to be silly and get ripped off? What are your thoughts?

There's nothing to stop you shipping your ECU to the States. I am sure there's plenty of folk that have. The biggest deal is what will you do if it doesn't work? No amount of saving is going to recover that situation. Do they have a tune for your ECU.

Are you going to datalog it afterwards and make sure it's running right or trust your luck?

You aren't just getting 15minutes of my time and use of my laptop. You can ring me up during the day and talk to me.

I don't feel I have to tell you all the details about my business but I believe my prices are justifiable.

There are some big differences between software prices, Unitronic appear to be the lowest and APR the highest on a car for car basis. You can buy a 5 dollar watch or spend millions, they both tell the time...

There's a lot more involved than simple currency conversion. Don't just look at the price is my advice.

Gavin

[Tulyar]

I arent going to claim to know the car parts and accessories market particularly well so please dont hang me out to dry however on occasions I train and mentor professional buyers nationally and internationally.

One of the programmes we take them through is how suppliers establish prices. In simple terms there are some 60+ methods of pricing however only one is based on cost.It follows then that it cannot always be assumed that prices will go up or down based on changes in the currency markets although we are conditioned to expect that.

[gerhard]

This is almost an unanswerable question.

If a vendor overstocks and needs to keep the price high to cover his bad business decision, should I still deal with him rather than importing at substantial lower cost.

EG, an aircon pipe for a GTI is ~$1000 locally, but imported from the USA including freight (which is rather more expensive than it was a couple of years ago) is ~$200.

Would anyone buy the pipe locally for any justifiable reason? No, nor would I - even if it had a leak, I could buy another four and still be no worse off in money terms.

When the product is software there is no real excuse for not "floating" the price.

[noone]

Yep, not easy.

When shopping for coilovers, I could not find anyone in Australia (or even a Singapore distributor) Who came within 30% of what I got it for (including the freight charge from UK).

As many have noted, the cost to the buyer often has little to do with the cost to the distributor.

I work for a company who's margin on a product ranges between 15% and 1000%. It is a strange game.

[gregozedobe]

Yes, you can get things cheaper at times from overseas but you need to think about the local product support you would be getting should anything go wrong or need warranty not to mention the level of direct customer service that you may be offered etc etc etc.

I've heard this (or something very similar) mentioned many times as part of the justification for higher prices in Australia, but I don't think it stands up to closer scrutiny, particularly in the case of performance software remaps.

I'm looking at this argument being used purely as justification for a much higher price in Oz than what simple foreign exchange rates would suggest is reasonable (for the same product in both countries).

I agree that having local support can be important to many people, but what is being stated (as a reason for different prices) implies is that there is NO local support in the other country but there is local support in Oz, and that is why the product is cheaper there than here (the only other explanation is that local support in Oz is MUCH more expensive than there).

AFAIK there IS local support offered in both countries, and the cost of local support is built into the price in both, so this is not a rational justification for a much higher price in Australia.

Am I right, or have I somehow misinterpreted what is being said ?

[Tim]

As competition in this segment hots up prices will come down. Its happening already. Prices will be set at what the market will bare. Not what the dollar will dictate

Does it make sense to do 500 transactions a year and make $100 off each one or does it make better sense to do 5000 transactions and make $10 off each one?

The industry is way too small in this country to compare to the US market.

I think an ecu tune at $896 aint half bad compared to where prices were not that long ago.

[mikepologti]

personally if i can i try to shop locally infact there the very first people i source. but with some mods being 60%- 70% dearer even after you've imported them from over seas , its hard to justify buying local.

[GOLFBALLS]

Tim's got the point.

Europe and the USA have MUCH bigger VW markets so the retailers there have massive buying power from manufacturers etc.

Because they can buy up and trade huge amounts of stock in one go, they obviously get better bulk discounts from suppliers, so theoretically can offer more competitive resale prices to the customer.
Most of us operating VW affiliated businesses here simply can't do that and subsequently have higher prices.
I'd love to be able to go nuts and order a container full of performance goodies and take advantage of the discounts but there simply arent enough vehicles/customers here to sell to yet. And half the potential buyers just buy online anyway. Obviously if more people bought locally, the prices should eventualy become more competitive as suppliers can give better deals.

Of course there's heaps more to it, but it's not just about exchange rates. There's a little thing called buying power to think about.

Go to a huge liquor retailer and buy a carton $10 cheaper than the little bottlo down on the corner... The big retailer gets looked after by the brewery because they buy and sell far more stock, and even though its going cheap, the volume they sell makes up for it tenfold. sooner or later the little bottlo wont be there anymore.....