Currency Question (Audi Content)
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Currency Question (Audi Content)
Last night about 1:30 AM I started thinking (I know its a first)... I was wondering what the price difference of an A6 in Germany is to that of the same car here in the states. I went to audi.de worked my through the German as best I could. I finally got a price on a base 4.2l A6. Took that plugged it into a currency converter, that I found on google, and it came out to be 98,000 US. I must have dome something wrong because the price should be raised in the US due to our import tariffs. Does anyone know the price difference in US dollars?
AudiWorld Senior Member
Joined: Dec 2002
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From: Marin County, CA
It's more than just taxes (economic explanation)...
Audi sells their cars at a substantially reduced price compared with Europe. The main reason for this being the devalued dollar and, conversely, the strength of the euro.
When the dollar was stronger, the difference between the two market prices was smaller.
So how does Audi make a profit in our market? Simply, they hedge their foreign exchange risk through the purchase of what's called foreign currency derivatives.
Derivates are, as the name implies, based or derived on something. The something in this case are option contracts on the foreign exchange (FX) market. Bet right, and you don't lose any money from selling at a lower price in a foreign (in this case, the U.S.) market.
When the dollar was stronger, the difference between the two market prices was smaller.
So how does Audi make a profit in our market? Simply, they hedge their foreign exchange risk through the purchase of what's called foreign currency derivatives.
Derivates are, as the name implies, based or derived on something. The something in this case are option contracts on the foreign exchange (FX) market. Bet right, and you don't lose any money from selling at a lower price in a foreign (in this case, the U.S.) market.
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I added a 4.2 up to 63,440 Euro which at 1.3 conversion = $84K US.
That includes the lovely 16% sales tax on cars (and other "luxury" items like cam corders, etc.) 63,000 Euro is right about tied for a loaded A6 4.2 over here. Take away the 16% tax, and you have 53,000 euro which is a little less than a comparable A6 4.2 over here, of course assuming the Euro equals a dollar, which it used to, before the dollar tanked I remember checking out Mercedes pricing in Heidelberg in 1990 and seeing the sticker was 20 or so percent less than here, but the tax brought the price close to ours. Of course, the dollar was much stronger than the DM at that point.
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What about prices in other countries - Italy, France?
I read once that VW was fighting the situation when their cars were cheaper in Italy than in Germany, and people went South to save few DMs. I wonder if it's still so, with Euro and no borders?
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