Euro Rate, Prices & Margins Main Theme at Taipei Cycle
TAIPEI, Taiwan – One day before the 2015 Taipei International Cycle Show opens its doors, the euro rate is casting its shadow over the event already. With the continued drop against the US dollar intense discussions on margins and prices are expected to be all over the show floor.
The euro lost a big 23% of its value against the dollar since about one year ago. And it is expected to drop even more as the European Central Bank has started its quantitative easing program which results in billions of euro’s being poured into the Eurozone economies. It is said that this will bring parity between the euro and dollar. How industry partners in Asia and Europe will be coping with this development is the main question before the 2015 show starts.
Absorbing the value loss
The position of most bike makers & importers and P&A suppliers in Europe will be that they cannot absorb such a value loss. Or that they can raise their prices with 23% or more in order to compensate the drop in value of the euro against the dollar. They will put pressure on their suppliers to have them take their share in this by lowering their prices and margins.
Key price points
In Europe there are bike makers that already have raised their prices at the start of the new year. But much more is expected to come. However, exchange rate fluctuations are not always 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 1.06 on March 12, it seems inevitable that key price points are to be breached. But suppliers will only resort to this as final course of action when all else has failed. In particular as they don’t want to bother the currently reviving bike market in Europe.