Wednesday, 19 April 2017

The Depreciated Pound - The Winners & Losers

I'm sure the Qashqai would go down a treat in North America.
It would compliment the Rogue nicely. Now that the Pound is lower...

Some people see the glass half full, others half empty. The same applies to car company executives. A sudden shift in currency value requires attention but it is just one of the many factors in the industry. Most European manufacturers have rightly played any significance down. So who win an lose?

UK manufacturers: The Pound has been too highly valued so it gives car making in the UK some respite. Mclaren cars - who have been expanding production recently - said it would be helpful. JLR seem to have said little but must gain something. Toyota and Honda import quite a lot of their cars so that may more than offset any benefit, but the difference should be minimal.

Nissan has recently had some good sales increases in Europe but 2016 has seen a sudden reversal in that. I presume it's due to emphasis on profit over volume. Nissan should therefore be well placed for some advantage out of the currency drop, but you wouldn't think so. They are still talking about future investment in the UK being in question. I assume it is to make sure their UK investment is noted and therefore protected in future talks with the EU.

European manufacturers: Premium marques make more money on each car sold so can absorb costs more easily so they are not too worried. Mainstream car makers are pragmatic about it, with a few saying that eventually prices will go up slightly.

Ford source their engines from the UK and then return them inside European made cars. At least the engines inside Ford cars sold in Europe just got cheaper. GM make a few cars and vans in the UK and import a lot of Vauxhall cars so they will be affected more. At least they can export UK vehicles to Europe with some cost reduction.

Asian manufacturers: Hyundai-Kia was concerned about the effect on their profit but I don't know why. The UK is only a small part of their business. The Yen is well managed by Japan to keep it undervalued and enabling a sizable car export industry remain viable. Japanese car makers exporting from home suffered perhaps more than any others, as the Yen jumped but I doubt that will be a prolonged issue.

Summary: So overall all the calamity howlers have gone largely quiet, a few car makers whinging without any obvious reason. The world's economic system is quite fragile and even small events can cause panic among investors. Hopefully the Pound stays down as that is where it deserves to be. It will make holidays abroad more expensive for UK residents but I believe Llandudno is nice this time of year...or Blackpool...or Brighton....

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