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Price rises for US and European cars

Most car importers have avoided sudden price hikes because they buy foreign currency several months in advance.

The drop in the Australian dollar is expected to spark price rises North American and European cars -- but Japanese cars will likely remain unaffected because of the artificially devalued Yen.

Despite the Australian dollar dropping from a peak of $US1.06 to a low of US90c in the past two months most car importers have avoided sudden price hikes because they buy foreign currency several months in advance.

But those “hedged funds” will likely dry up towards the end of the year, warns the importer of European and North American brands, Fiat-Chrysler Australia.

“We’re managing to hold prices for now and hopefully for the next few months, but we expect to see an impact by the end of this year as hedge funds run out,” said the boss of Fiat-Chrysler Australia, Veronica Johns.

“We will do our best to avoid price rises but if the Australian dollar doesn’t improve then we expect there will be price changes at a lot of brands by the end of this year and early 2014.”

Fiat-Chrysler sales are up 52 per cent year-on-year largely driven by a new model range with sharper pricing thanks to the strong Australian dollar.

Last month the starting price for a Fiat 500 city car was slashed by $6000 to $14,000 drive-away and the Jeep Grand Cherokee dipped to $45,000 drive-away, about $7000 less than before.

This reporter is on Twitter: @JoshuaDowling