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Weakening Australian dollar could see price rises in the New Year | comment

New car prices could rise if the Australia dollar continues to weaken.

December and January are already good times to drive a bargain as dealers clear 2014 stock and make way for cars built in 2015.

But it could be an even better time to buy if the Australian dollar continues to weaken against the US dollar.

Senior car company executives have told CarsGuide that if the Australian dollar drops below 80 US cents for any length of time then we may start to see price rises on certain models by about March or April next year.

Not all car companies buy in US currency, and the Australian new-car market is still more closely tied to the exchange rate with the Japanese Yen (which has been accused of being artificially devalued by the Japanese government to boost exports) given that about half the new cars sold in Australia wear a Japanese badge.

But brands such as Jeep and Chrysler, which have enjoyed massive sales growth in recent years on the back of sharp pricing, may be forced to raise prices.

Likewise the US-sourced Toyota Kluger, BMW X5 and Mercedes-Benz ML which, despite their Japanese or German badges, are in fact made in the USA.

So if you’re in the mood to treat yourself to a new car, buyers continue to have the upper hand with record low interest rates, overstocked dealers (the market is down 2 per cent yet the forecast was for another boom year) and, now, the prospect of price rises around the corner.