Spain fears hit stocks, push euro near 2-year lows

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AZRickD

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With the Euro back down to 2010 levels against the dollar, perhaps we are approaching a good time for us (and the US Importer) to consider purchasing some Gassers?

http://finance.townhall.com/news/business/2012/05/30/asia_stocks_fall_as_spain_woes_intensify

The euro fell another 0.6 percent to $1.2411, a little up from its near two-year low of $1.2405 hit earlier. Figures from the European Commission showing that economic confidence in the eurozone slumped to around a two and a half year low in May.
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Though Greece is the epicenter of the debt crisis, Spain has been a growing source of worry over recent weeks. Its banking system is under the microscope, especially after Bankia, the country's fourth-largest lender, last week announced it needed (EURO)19 billion ($23.8 billion) in state aid.
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Investors are worried that Bankia's woes might be replicated across Spain's banking sector, which has suffered badly from the collapse of the construction sector. An economic recession and unemployment at almost 25 percent are fueling concern that the country will become the fourth euro country to be bailed out after Greece, Ireland and Portugal.
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Presuming that the people have the cash to buy the bikes, and that the importer is willing to take the risk that if the Euro tumbles, the dollar won't.

From my point of view, I'd have demand and marketing drive my import/sales volume rather than speculation on what is going to happen to the Euro.

At the very least, times are going to be interesting.
 
The importer can't make money if he doesn't import. So those he *does* import will be priced more favorably. He must estimate how many he can sell. Those that can buy, might. Those who won't are null values (or they will buy used bikes or parts).

The Euro is already tumbling. The drop in the Euro *is* in relation to other currencies, namely the yuan, yen, dollar, ruble...

My point being, a year or two ago, the rise of the Euro relative to the dollar was the reason for a ~~ $1,000 increase in the price of the Gas Gas.

That pressure has dissipated considerably. I expect this to mean more affordable Gassers.
 
If he chooses, Clay can take advantage of the current rate environment by using forward exchange contracts as a hedge, (he may already be doing so) for the remaining 2012 year and the 2013 model year........

Of course, if the Euro continues to drop in value- which it may do thru the rest of the summer(who knows?), taking on currency hedges now could be a bit premature on the buy side. It's all in the timing.
 
This issue is so complicated. If we lock in our retail prices at $1.24 per Euro, what do we do if it suddenly moves the other way like it did when we started this business in 2010? When I priced the '11s in the summer of 2010, the Euro cost $1.19. I priced the bikes at $1.27 to give us some breathing room. Two months later the Euro was at $1.34 and topped out at $1.46. We did not want to raise prices just months into the business so we sucked it up. We literally were making only $80 on some of the '11s we brought in.

Also, Spain is telling me that, because the Japanese Yen has gained in strength, parts from Japan like carbs, ignitions and rims have gone up substantially.

Our orange competitors went up $200? I think prices on our '13s will be about the same as the '12s. To be brutally honest, 2011 was not a profitable year for us due to the currency exchange so we could use a bit of extra profit to dig out of the hole we are in from '11. We gotta get the family farm out of hock.

One other thing that customers seldom consider....if you decrease the coming year's price, what do you do for the dealers that have the prior year model still in stock. How would you like to be a dealer who got a really late '12 only to find out that the '13s are $300 less? There's no way the dealer could sell the '12 at a profit. When a distributor drops prices it does not just effect the current year model. In the motorcycle industry it's called price protection. Price protection can be very expensive.

Rick....the main reason that bikes went up when we began this business was to give the dealers a real margin. The previous importer tried to keep a price advantage over the orange brand and he did it at the expense of the dealer's margin. We could not get dealers to take on Gas Gas with a super slim margin. I expect to be on par with the orange guys and we have a better motorcycle. Now...isn't that a good deal? :)
 
Clay said:
This issue is so complicated. .........

I expect to be on par with the orange guys and we have a better motorcycle. Now...isn't that a good deal? :)
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I hope Gas Gas has steady, competitive growth in the USA market. No big drops in prices just to sell more bikes. No huge price hikes to make up for losses. World markets change quickly and often. Need to focus on the long term trends with no knee jerk reactions.

On a side note...For the brand to be super successful in the USA, there needs to be a steady presence of bikes in view of consumers. Get a Gas Gas into AMA Supercross and win some races. Volume sales will follow, profits will follow! Gas Gas needs to become a culture in the USA like Orange and Harley are.

With that said...I am shopping for another Gas Gas to proudly ride! :)
 
Clay said:
Get a GG into AMA Supercross and win some races? That's pretty expensive to do.
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I can only imagine!

With Dual Sporting becoming so popular in USA now, another route would be to bring the 450/4t to USA in street legal form. I would be in line to buy one right away! :)
 
Have you been to a dealer lately and seen the glut of 450s on the floor? The 2strokes are whats selling. Clay has it right, stay focused on the core products.
 
I frequent many dealerships in my area and I also ride on the trails and roads daily for about 11 months out of the year. Most people I ride with have a 250 or 300 2 stroke for dirt and a 250 or 450 4t for Dual Sport. Very popular at least in Tennessee where I do most of my riding. I also rode a couple weeks in Colorado last fall and 90% of the bikes I saw on the road were 4t dual sports. Just my observations. Thanks.
 
Even weekends 11 months per year is righteous. In Minnesota, the forests are closed 6 months per year.
 
GMP said:
Have you been to a dealer lately and seen the glut of 450s on the floor? The 2strokes are whats selling. Clay has it right, stay focused on the core products.
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I agree 100%.

Besides, even if you could get in and win a SX, that doesn't mean that it will translate in sales. Look at what happened with Suzuki a few years back. They won nearly every championship from Dungey in SX and MX, to Josh Strang in the GNCC. It didn't translate on the showroom floors. Now look at where they are, No riders in GNCC.... reportedly not paying all the perks to the top MX guys....

Like they say, dance with one who brung ya. Drive on Clay!
 
Clay,

You guys are doing such a tremendous job!

Before 2010, how many articles had you ever read on the Gasgas? No, Gassers aren't adorning the cover of our Dirt Bike and Dirt Rider, but they do write some articles from time to time on the bikes and ALWAYS give them rave reviews.

The enduro websites always give gassers great reviews and that is also a great way to get the name recognition as we move from the magazine to web based world.

I think getting Gassers into the hands that matter is what Clay is doing well. Having Chilly and others ride and do extensive reports is going to make a huge impact! People trust those reviews and many make purchases based on them.

Having Gasgas riders at local ISDE and Enduros is a great way to get the name out there and everyone I talk to at events has great respect for the bikes and even though they ride Orange, they consider Gasgas on par with their pumpkins. That says a lot from the koolaide drinking crowd.

Gasgas is a staple in the Euro events and is doing very well in the WEC. I get a few Euro enduro mags and Gassers are all over them, cover and all. They even win shootouts with KTM's!

At some point, a Gasser with a great pilot in the GNCC would be aweome.

Keep up the great work and thanks for all that you do!
 
I think one of the biggest problems is a shrinking market due to land closures.
Which has been compounded by the down-swing of the economy.
As riding areas shrink so will sales.
 
Firffighter,
Thank you for the kind words. I appreciate it very much.
Chris Dennison at Dirt Rider sent me an email last week and told me that he thought I would be very pleased with their article on the 300 GG that will be in the August issue.
Cycle News article should be out any day too. I think Dirt Bike's article will be in their August issue too.
Clay
 
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