| Author | Message | ||
     Redscuell |
Just to give you chaps an idea of what BMC is up against in its international trading, consider exchange rates. Buell publishes its MSRP as A$17,500 here in Oz, and that's what I contracted for in August when I put a deposit down on an 09. Had I bought and paid for it the middle of this year (would've been an 08 model at that time) when the exchange rate was at near-parity with the USD, and further assuming BMC got all that (instead they get only 'wholesale'), BMC would've received U$16,800. NOW, however, with falling interest rates here, from a high midyear of over 7% to what's expected to be under 4% by the new year: by the time my bike is ready for the dealer to put it on the road and I hand over full payment next month, the return to BMC would fall to U$9,100. And if any further (it's already a month late) delays pushed that delivery to the new year, the return would fall further to U$7,000. Bearing in mind that it's the timing of the dealer's payment that affects BMC, as opposed to my payment. But didn't I read on the Board somewhere that the engine costs them as much as U$5,000? Just a business 'brain teaser' to start your days off! | ||
| Redscuell |
This thread drew a collective yawn! Next time I'll remember to put the word 'exhaust' in the title to catch everyone's interest!  | ||
| Fresnobuell |
I don't understand. I can see how exchange rates can affect thing the return the BMC, but you are saying falling interest rates in Oz are causing a 45% or more reduction in the return to BMC. Again, I don't understand. | ||
| Gschuette |
Interest rates play a large role in what the exchange rates are. If Australia has a high interest rate compared with the rest of the world then investors will be rushing to buy Australian dollars to invest in Australian investments. This makes the Australian dollar more expensive. Nothing new here. Every company that has ever exported a single product has been up against exchange rate risk. | ||
| Fresnobuell |
ah, I figured there was a connection between the two. THanks for the quick explanation. Is it a direct relationship between interest rate and exchange rate? Seems like the devaluation to BMC is huge...Interesting. | ||
| Gschuette |
Not direct but highly correlated. If that makes sense. There are far more variables that go into fluctuating exchange rates but interest rates do play a large part. | ||
| Gschuette |
Also I would guess that Buell sells in enough international markets to cover this risk. So for most part Buell's loss or gain from exchange rate risk would be close to zero in any given year. | ||
| Rfischer |
Once upon a time, Toyota had a large FX department that did nothing but hedge their foreign exchange risk. Then, the guy that ran the dept. started scratching his head wondering, 'hmmmn...I wonder what all this is getting us..?' Long story short, he found that given the large numbers of currencies the company sold in, over time the losses were offset by the gains almost exactly. Closed the dept and saved Toyota million$. | ||
| Court |
 This is pretty much what my wife, a 30 year veteran of Wall Street specializes in for hedge funds. I can tell you that it's important to get the numerator and denominator right. Last year she got called on to find a "little" $27,000,000 error at a major hedge fund. The Controller, a mere $800,000K/Yr "middle manager" had transposed the exchange rate in some sort of a Rubles for Yen transaction. I suggested she start working on a commission. | ||
| Redscuell |
When I saw that Court had posted, I expected that he had "twigged" (Aussie for "worked it out"). But what's more likely is that BMC conducts its sales to world markets in USD.  Now what would've made a difference to me, would've been if I still made my $$ in the States (as I did 10 years ago) and spent it here in Oz to buy that bike. Mid-year an A$17,500 bike would've cost me nearly that much in USD; by early next year, assuming the Oz price hadn't gone up here, it would've dropped A$10,000 in price after the currency conversion. But I make my money in AUD, so it means bugger-all.  | ||
| Slypiranna |
I'm wagering BMC/HD knows something that we don't in all of this. They seem to be pluggin' right along. This current "economy" is what separates the men from the boys. If I were the type of person to play in stocks...I'd be buying now and herein!  I would love to know their recipe tho! | ||
| Pizzaboy |
think of the economy and stock market right now as 'on sale' at least that's what many intelligent investors do. | ||
| Court |
>>>>think of the economy and stock market right now as 'on sale' Particularly Harley-Davidson which went up 20% yesterday and has been hovering at it's lowest since I first bought in 1987. Morgan-Stanley is fun to watch at the moment too. I'm also keeping an eye on power stocks. There was a $1B change order to expand a nuclear plant yesterday that has not even begun construction. Play what you know. | ||
| Rfischer |
Court, There may have been a "change order", but the anti-nuke granola eaters haven't heard yet. When they do, and mobilize, I'll give short odds it never gets built. The U.S. is consigning itself to continuation of its oil dependency, not to mention massive transfer of its wealth to sworn enemies, by steadfast opposition to nuclear and coal power generation and fuel technologies. The "Greens", and their fellow-travelers, Al Gore et al., are destroying the country. All the while bleating most loudly about the "export of American jobs" and "global warming." Puleeze....! | ||
| Court |
Ido not disagree. The incoming administration looks like they will be arriving with their collective heads in the sand. Several years aog the 63 NRC approved sites were worthless, theb things changed and folks were bidding on getting the sites. Interesting enough is that electric use declined last month for the first time in something like 30 years. I doubt it's a trend. Nuclear is the way to go and, far and awat, the safest and most efficient source of power. We'll see who else the Clinton's, er wait that guy they hired, appoiont to their cabinet. To date, an unimpressive lot unlikely to show much creative vision or leadership. One of the managers who works for me has suggested "electric appreciation day" where we shut our plants down the 1st day of every month. | ||
| Lecanadysbcglobalnet |
I manage 120 guys for a steel company/plate cutting up to 18'' thick Fab & Machine. Next Monday I am laying off 60% of my work force, and I'm just one of many oil related medium size companies here in Houston doing the same. Orders went from 3-4 million a month in an aggressive economy to 700 thousand in one month. Sept. to Oct. Hope it's short lived this time Les | ||
| Ponti1 |
I'm not sure how this turned from Buell's international sales challenges to a commentary on the state of national affairs, but I will be glad to give what qualifies as my <$.02 worth. The electoral college, and all those contributing, made a grave mistake in choosing the far worse of two weak candidates. This next four years are going to be a huge challenge for the nation, especially in terms of corporate, military and personal successes. The to-be leader successfully sold everyone an impossible fairy tale. It will be interesting to see how close he can come to what was promised. | ||
| Redscuell |
"I'm not sure how this turned from Buell's international sales challenges to a commentary on the state of national affairs". As the originator of this thread, I'm quite happy to see how it's turned out. Proves that there are plenty of rational thinkers on BWB. Now let's see if the new Drummer turns out "shiny" as I requested.  | ||
| Rfischer |
Ponti, I trade in Kopeks, but your currency cheerfully accepted...  | ||
| Patrickh |
buell sells their bikes in US dollars. exchange rate fluctuations are the absorbed by the importer, not the exporter. in other words...not buell's problem |
