Will Nokta Be Able To Blow Away The Competition With Prices?

[phrunt]

I've been keeping an eye on the Lira for a while now, the Turkish currency and it's just been on a massive fall against most currencies, in fact it's fallen 65% in the past 2 years against the USD, 20% in the past month alone.  The Turkish economy is obviously a basket case causing this with insane inflation with the annual inflation rate at 40%, makes us feel kinda silly complaining about our mid single figure inflation rates.  And if you thought your interest rates were bad in Turkey they've just doubled from 8.5% to 15% in the past couple of days and they're needing to go up a lot more yet with forecasts of 25% by the end of the year.

This it the past 2 years of the Lira, look at it tracking right down vs the USD.

And the last month alone, look at the dive at the end.

The annual inflation rate reached 85 per cent late last year and the central bank burned through most of its reserves trying to prop up the Lira, down 90 per cent against the USD over the past 10 years.

So what does this mean for Nokta's pricing? All those US buyers paying their 500 or 600 USD or whatever the Legend currently costs is a whole lot of Liras, much more than it was even a month ago, so does this mean Nokta can further reduce prices blowing the competition out of the water? Possibly.  We can only wait and see.

 

[glacialgold]

Very interesting situation to consider, glad you brought up this topic.

Marketing and economics are not my forte, but I'd have to wonder about future impacts of short term (?) price reductions to capture external market share in an internally inflationary environment. Say Notka dropped the MSRP on the re-modeled Legends to 300USD, for example --  incredible deal, puts it on par pricing-wise w/the XTerra Pro. They'd move a ton of units, for sure.

But what happens if/when Turkey pulls out of this inflationary cycle? Nokta would need move prices back up sigificantly to keep their margins, but buyers would be conceptually locked in to the brand at the lower price points, i.e., thinking of NM as even more of "super-value" brand than it already is.

I'd be thrilled to hear from those w/deeper backgrounds in these areas, and please take my novice ruminations above w/many grains of salt. 🙂

[j71038]

I too am not an economist but there may be an impediment to price reductions by Nokta. Anything that is sourced and made in Turkey or local labour would be cheaper as their currency falls. On the other hand any components that originate out of country will cost Nokta more in Lira. However that too may be somewhat offset by selling them and receiving payment in foreign currency such as USD.

Definitely an interesting topic for discussion.