Hi
As you will all have seen by now on the news, China has let its currency, the yuan, float against a basket of currencies. The immediate effect of this was to increase the value of the yuan by about 2% against the dollar.
For those who haven't seen it yet, look at
So it's bad news for model rail and diecast collectors?
Didn't know you'd started using dollars in Wales;)
Ken.
Very droll.
As the factory making cost represents about 2%-5% of the retail price of a Chinese-manufactured product in the UK, this would translate as about 3p on the price of a Hornby 08. So the answer is probably not!
Now, if the licence-holders for Thomas the Tank were to demand higher royalties, that would indeed be serious news for Hornby.
Cheers, Steve
As if Hornby and Bachmann needed another reason to increase prices, bet they go up by 5-10 %!
He is in Kent?
You heard of Dolly the sheep, Dollar is her cousin!
pieman
"Piemanlager" wrote
The knowledge of sheep by the Welsh is amazing! ;-)
John.
It doesn't work like that I'm afraid. If the factory cost rises by 2% there's a knock-on effect all the way down the line and sooner or later the retail price is increased by 2%.
(kim)
Not just model railways. Many of the consumer products we take for granted these days are now made or partially made in China. If these increase in price - or as is more likely, cease to fall in price as fast as they have been doing in recent years - there will be less disposable income left in consumers' pockets to spend on other goodies such as model railways.
(kim)
"kim" wrote
About the only thing *not* made in China is houses, and as you'll all be aware house prices have increased beyond all reason in the last two or three years. That and the resulting substantially increased mortgage payments doesn't seem to have made a serious impact on model railway spending.
Even in 2005 when many major high street retailers are reporting lower sales, model railway sales have continued to rise. Not saying this will last indefinitely - in Germany there has been a recent & significant downturn in model train sales, resulting in the announcement of insolvency by Roco, the principle Austrian manufacturer of quality trains.
John.
Not for Hornby. Sales fell in May and have yet to show a recovery according to today's Telegraph. The shares are down quite a bit from their peak.
MBQ
I don't think many model railway enthusiasts are first time buyers? Most of us are of an age where we already own our own homes and have benefited considerably from the rise in house prices. This produces a feel-good factor which makes us more likely to spend on consumer items.
(kim)
wrote
Interesting that; maybe their high price / high profit margins are coming home to roost? Wonder how Bachmann's sales are holding up? Certainly we've done better with their class 66s compared with the Hornby 31, but I understand Hornby are happy with the sales of the latter.
John.
"kim" wrote
Our customer base seems fairly well spread, and includes a significant number who, whilst not first time buyers, will still be challenged with a sizeable mortgage.
Are there actually many first time buyers out there at the moment? Locally I'm told it's a real struggle for anyone to get on the bottom rung of the housing ladder.
John.
To buy a 1-bed flat, I need a mortage about 5-6 times my salary. Lenders will go that high, but the catch is that they also expect you to be able to pay it back. I live in what is loosely termed the South-West, and the average house price to average salary ratio was something like 7.5:1 last time I heard, which at the time was the highest in the country. I don't see anything to make me think that's changed. Generally, I think it is only working couples that can be first-time buyers, or very well-paid single people. I'm neither, so that bottom rung is a pipedream, and my landlord is getting richer! (the house isn't a buy-to-let).
Whilst rambling way off topic, it does annoy me when the media portray the fact that house prices are falling as being bad news. No it isn't, it's excellent news!!!!
If house prices were falling, you wouldn't want to buy one in the first place. You would be better off renting. You can't have it both ways.
(kim)
"kim" wrote
If house prices dropped 20% this week I'd go out and sink every penny I had into housing, because in the medium term I know they'd recover and my investment would be a sound one.
I see no difference between a potential short-term loss on capital investment and paying rent, both give the opportunity of a roof over your head in return for some cash.
John.
And not just for first time buyers, either. Even some way up the housing ladder I would much prefer prices to fall as it bring the next rung on the ladder that much closer.
MBQ
The most likely cause of a fall in house prices would be a drastic rise in interest rates so your monthly payments would remain about the same.
(kim)
"kim" wrote
Doubt that, I'd suggest the most likely cause will be an inability to sell 'starter' houses in some areas because the wage economy is too low.
John.
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