Quote:
Originally Posted by AzNMpower32
In regards to currencies, automakers will hedge against a currency years in advance. Therefore although the € has gained strength, essentially what the German and other EU carmakers did was lock in, or hedge the currency years in advance (usually 3-5yrs I think) so that fluctuations will not significantly erode the bottom line.
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Hedging works when you know the amount to hedge. Changes in volume from that expected will erode the effectiveness of the hedging strategy. Given that vehicles sales have been significantly impacted during the current recession, those hedging strategies can easily turn into liabilities.
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2007 X3 3.0si, 6 MT, Premium, White
Retired:
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2003 X5 3.0 Steptronic, Premium, Titanium Silver
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