A Yen To Lower Prices?

A YEN TO LOWER PRICES?

THE EXCHANGE RATE BEtween the U.S. dollar and the Japanese yen is a crucial factor in determining the Big Four’s motorcycle pricing. Unfortunately, the dollar has grown progressively weaker over the past two decades, laying the groundwork for burgeoning new bike prices.

Recently, however, the worm has begun to turn. For the first time in many years, the dollar has gained strength against the yen, which theoretically should lead to lower bike prices.

Theory and practice, however, do not always jibe, as industry analyst Don Brown suggests: “1 don’t think (the more favorable exchange rate) will cause prices to abate. The Japanese companies will just count their blessings, and their improved profits, unless sales soften and force them to cut prices. Basically, they’ll hang tough and implement smaller price increases.”

What do the OEMs foresee? In a nutshell, spokesmen for the Big Four manufacturers all support Brown’s theory. Says Kawasaki’s Vice President, Sales Bob Moffit, “The exchange rate does have a major impact on pricing, but there’s no free lunch. Costs go up whether the exchange rate is positive or not.”

Honda’s Vice President of Motorcycle Operations Ray Blank says the dollar would have to remain strong, and the exchange rate stable, for around five years before we might see a change: “Right now, the dollar is not strong enough to offset the lack of profitability from the past.”

Suzuki’s Marketing Director Mel Harris, however, suggests that prices have already begun to stabilize. “Overall, Suzuki has experienced a 21 percent price increase over the last three years due to the dollar/yen situation. But now, with the good exchange rate, prices have not increased,” he says.

Yamaha’s National Communications Manager Bob Starr echoes Harris’ sentiment. “Our 1997 YZ250, YZ80 and WR250 are identically priced to 1996 models, but there have been dramatic changes to the line,” he says.

There has also been a dramatic change in the price of the ’97 YZF750R, which was reduced by $1700. Was this a function of the improved financial climate? Starr says no: “Our sportbike pricing is more aggressive this year, and the lower price is due more to marketing decisions than the favorable exchange rate.”

And what would it take for similar price reductions to spread throughout Yamaha’s model line? “Price reduction would require a very, very dramatic change in the exchange rate, because the prices of raw materials, shipping and other things that affect motorcycle pricing continue to go up.”

All things considered, the dollar’s recent change in fortune can only have a positive impact on motorcycle prices.

-Wendy F. Black