porsche case

porsche case - Currency Pass-Through at Porsche Case...

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Currency Pass-Through at Porsche Case Porsche was found in 1931 and it is now a publicly traded company. Porsche currently has three different model lines which have different market characteristics. The three model lines are luxury sports car 911 , competitively priced Boxter roadster, and SUV Cayenne. According to The Economist, on June 5 2003, “Porsche makes most of its cars in Germany, so its costs are mainly in Euro. Yet a large chunk of its revenues come from sales in America.” This means that all of the direct costs in Porsche’s manufacturing are incurred in euro-denominated operations (cost, markup, and basic pricing) and exported to other countries. In 2003, Porsche introduced 911 4S Cabriolet, but was faced with growing pricing dilemma for all of its U.S sales. For example, when the price of 911 was 85,900 Euro in Europe, it was $93,200 in U.S. The U.S price was determined by Price in Euro multiplied by spot rate of $/Euro. The implied exchange rate was considerably stronger dollar than what was available on the open market at that time. Porsche experienced the exchange rate pass through (process of passing through all or part of exchange rate changes to the final customer in price- which is the percentage change in local currency import prices resulting from a one percent change in the exchange rate between the exporting and importing countries) and eventually hurt European producers as Euro continuously appreciated against dollar. In 2004,
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porsche case - Currency Pass-Through at Porsche Case...

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