Gunnar Fehlau of Riese und Müller, the folding bike supplier of Germany, has sent a newsletter to UK stockists of the Birdy folder explaining why a price cut is on the cards.
Its all down to the world currency market:
The cycle industry obtains the majority of its components from outside the EU. For this reason, it is highly dependant on the exchange rate stability of the Euro. When cycle manufacturers calculate their trade and end-user prices they must act like currency speculators, estimating exchange losses in the future as they set their prices at product launch, said Fehlau.
There’s naturally the risk that the market will develop in a way other than
predicted. Like other manufacturers, we were counting on a strong Euro. This hasn’t happened. The Euro has sunk steadily.
Of course, our calculations include a safety margin, so that short-term currency fluctuations are absorbed. Unfortunately, this safety margin is limited. Now the Euro is valued under one dollar and seems to be sticking at that low level.
The situation on the global financial markets has changed radically in the
last six months. We calculated our retail prices based on a rate of DM
2.50 for one pound sterling. Now it is DM 3.16. That makes Riese und müller bikes much more expensive in the UK than in Euroland countries. Therefore we’ve also recalculated the retail prices.