Price Hikes Inevitable Due to Drop of Euro Rate
AMSTERDAM, the Netherlands – There are already bike makers that have raised their prices at the start of the new year. But much more is to come and not only for complete bicycles and e-bikes due to the fall of the euro rate against the US dollar. This also leads to a shift in key price points in the EU markets.
The exchange rate drop of the euro in particular against the US dollar means that further price increases are inevitable. This inevitability is mainly due to the fact that many components of new bikes on sale in stores throughout Europe store are assembled with components that are purchased in the Far East with US dollars.
Purchasing parts more expensive
The euro exchange rate against the dollar has dropped sharply in 2014. That fall makes the procurement of parts like (alloy) frames considerably more expensive. The same holds true for parts and accessories. In the Far East manufactured P&A will are also to become more expensive; if suggested retail prices are not increased already.
‘Not to bother the market’
In for instance the Netherlands market leader Gazelle has raised the recommended sales prices for various models at the start of the New Year. Main competitor Accell Group said it didn’t want to bother the market just yet with price hikes. Wouter Jager, MD sales and marketing for Accell Netherlands, commented on questions, “For now Accell has the appropriate measures to remedy the strengthening dollar against the euro. At the same time we see that the currency fluctuation is getting very strong and of course there’s an end to what we can do to remedy these fluctuations.”
Exchange rate drop of 17%
Over the past year the exchange rate of the euro against the dollar fell by about 17% making parts & accessories made in the Far East thus 17% more expensive. But, such overall variances are not directly passed on to retail prices as suppliers hedge such fluctuations. However, as Accell MD Jager said; there is an end to what such measures can do.
Key price points breached
Moreover, exchange rate fluctuations are not fully passed on to suggested retail prices as suppliers take key price points into account. But there’s an end to that too. Given the current rate of the euro against the dollar that stood at the Amsterdam stock exchange at USD 1.13 this morning, it seems inevitable that key price points are to be breached.