Luxury car dealers caught in a jam

PUBLISHED : Monday, 06 December, 2004, 12:00am
UPDATED : Monday, 06 December, 2004, 12:00am

With the Euro hitting new highs against the beleaguered greenback over the weekend, the city's car dealers say they will most likely have to raise prices in the near future to keep margins where they are.

'We are suffering a bit,' said Robby Niermann, general manager of Porsche Centre. '[The dollar's weakness] will definitely affect our margins if it continues.

'We wish we could basically do something to increase prices to compensate for it, but not all of our competitors are in the same position.

'With the Boxster that has just been released, the published price is about 6 to 7 per cent higher than previously. Some of that is technology, but some of it is to do with the strength of the Euro,' Mr Niermann said.

Customers at the premium end of the market, he said, were unlikely to find that much of a deterrent. 'When you are talking about a $700,000 to $1.3 million car, an extra $40,000 is not going to be too decisive.'

The sales manager for Mercedes-Benz China, Rae Yeung, said the company had seen margins shrink somewhat but would continue to expand its product range.

'[The exchange rate] is something that is not really helping us, but we are trying not to move that impact onto the market.'

She said that as part of its strategy and in an effort to stabilise the price of their products, the firm periodically negotiated a set exchange rate with Mercedes in Germany.

'As a responsible dealer in Hong Kong, we cannot have unstable prices. It doesn't look good if you change the prices of your cars like they change the prices of vegetables at the market. We will try to keep it as stable as possible while we can stand it.'

The situation was much the same at BMW, where a spokesman said that with the downward trend seemingly locked in for the moment, prices were bound to rise.

'We don't see any downward trend in the next half year or so,' he said. 'So it's just a matter of timing.'

He, like the other dealers, did not foresee a big impact on sales, although he said the prospect of price rises might spur a few buying decisions.