Canon U.S.A. Prices going down?

[BeenThere]

There is talk on the financial news (speculation) that the yen will move to 200 per U.S. Dollar by the end of 2015. This implies a 40% drop in Canon prices over the same period. Will this be a bonanza for U.S. Canon shooters? I hope so! The new crop of lenses have gotten me interested again.

 

[AcutancePhotography]

Not sure I understand how a drop in the Yen would equate to lower prices to the customer. Won't the company continue to sell their cameras at the usual price and just pocket the difference?

Cost increases are passed on to the customer, but I don't know if cost savings are.

 

[BeenThere]

Competition will keep them honest with prices. Short of a Japanese cartel for camera production, prices move toward the lowest common denominator.

 

[YuengLinger]

Hmmm, planning gear purchases based on ForEx cycles...Is there an app for that? :

 

[wtlloyd]

Yeah, that's not really looking critically at the situation, is it?

Didn't Canon provide investment to create the production line, and purchase in advance many of the raw materials to supply production, at the old exchange rate? Where is the savings for Canon? Do they suddenly get a refund from all their suppliers? Oh, I know - now they can pay their employees less, and pass the savings on to us! Yay!

I know everybody in the USA got a huge rebate from their bank when the mortage crisis hit. Upside down? Never heard of that.

 

[unfocused]

Sorry, but it doesn't work that way. For a multinational company like Canon, a drop in the value of the yen means an increase in costs in other regions in relation to the yen. Materials, labor, transportation cost, etc. Must all be paid in the local currency. It all tends to balance out and seldom has a major impact on prices to the consumer.

And, as wtlloyd pointed out, the fluctuation does nothing to help with embedded costs.

 

[BeenThere]

For everything sourced and manufactured in Japan, it does work that way. True, that material sources from foreign suppliers are subject to the exchange rate with that country (yen is probably also falling with respect to their currency), but labor and material sourced in Japan is paid in yen and therefore less expensive in dollar terms. Dollar buyers get the benefit of lower prices. Japan gets the benefit of more exports which boosts their economy.

 

[Mt Spokane Photography]

Not sure I understand how a drop in the Yen would equate to lower prices to the customer. Won't the company continue to sell their cameras at the usual price and just pocket the difference?

Cost increases are passed on to the customer, but I don't know if cost savings are.

While the price of a camera is dependent on the relative value of currencies, drops in price are set by the manufacturer. If Canon raises the price in Japan, for example, then and drop in the value of the Yen in US dollars will be negated.

International companies source parts, from all around the world, so a drop in yen can mean their imported parts are more expensive, it all depends on relative value.

However, we are seeing lower prices on cameras and lenses already, and this has generally been attributed to the drop in the Yen over the past 2 years.

Generally, a big drop in yen value is not a good thing, since Japan imports so much in the form of food, raw materials and products. Prices will rise, consumers will demand higher wages, and things spiral upwards.

This is partially offset by the ability to export more goods at lower prices for the consumers in other countries.

 

[Lurker]

Yes, it will be good news for prices. A bonanza? I wouldn't expect a 40% price drop but prices will come down. We've already seen price drops and these may have been in reaction to the declining yen or in anticipation of the future declines. How much more we'll see depends on how long their recession lasts and how strongly the US economy grows and what happens in the other parts of the world. Canon may prefer to sell in Europe and not give us bigger discounts.

 

[dgatwood]

While the price of a camera is dependent on the relative value of currencies, drops in price are set by the manufacturer. If Canon raises the price in Japan, for example, then and drop in the value of the Yen in US dollars will be negated.

And people in Japan will stop being able to afford them.

Sorry, but it doesn't work that way. For a multinational company like Canon, a drop in the value of the yen means an increase in costs in other regions in relation to the yen. Materials, labor, transportation cost, etc. Must all be paid in the local currency. It all tends to balance out and seldom has a major impact on prices to the consumer.

Here's the thing. Because of grey market imports, you can only stretch the exchange rate so far. Once the retail price of cameras in U.S. Dollars exceeds twice the cost of a direct import, there's no longer any advantage to buying through official channels, because even if it dies, you can buy a second one and have a spare.

I had a similar argument with a local electronics store when they wouldn't match an online price that was half their own price. They said, "Yeah, but if it fails, you can return it more easily." And I said, "Yeah, but I can buy two from Amazon, and if it fails, I can toss the first one in the trash, and I've still saved money. Two or three weeks later, they had repriced the product in question. They didn't really have much choice.

The point being that when you even start to approach a factor of two compared with the raw exchange rate, those official channels are going to start having a very hard time selling products, and that will have a far bigger impact on their ability to pay the bills than lowering the price would. Keeping prices artificially high as a means of paying your bills is generally the shortest path to bankruptcy.

 

[zim]

This implies a 40% drop in Canon prices over the same period. Will this be a bonanza for U.S. Canon shooters? I hope so!

I'm guessing that would mean in UK a 40% rise in prices! ;D