The launch of digital radio has been dealt a blow as the cost of purchasing a digital radio in Australia is set to almost double, after the plunging Australian dollar hit local DAB+ radio manufacturers.
Graeme Redman, managing director of Pure Australasia, which imports digital radio materials in US dollars, said the 30% devaluation of the Australian dollar brings about a 47% increase in retail price.
“Once you get a move in the dollar of this magnitude then that’s your entire profit margin gone so you absolutely can’t absorb it,” he said.
This equates to at least a $100 price hike on the company’s most basic digital radio model, according to Redman.
Brisbane digital radio supplier Net Opt is facing a similar predicament, according to its product manager Rick Nand. “At this stage we have not raised our pricing, but we’re watching the dollar. We’d be looking at re-pricing our products by about 30%,” he said.
Both Redman and Nand argue that a price increase of this size will negatively impact take up of digital radios when they hit shelves in time for Christmas.
Redman said: “It’s bad news for the digital switch on, it’s a tragic coincidence that it has happened like this”.
“The problem then gets seriously compounded because we are going into tight economic times and all prices will rise. People are going to have less money to spend, their discretionary spend will either be reduced or looked at much more closely”.
And while most suppliers have not yet approached retailers with the news of price increases of their digital radio products, Redman says it is unlikely that retailers will absorb additional costs.
“The retailers won’t carry any risk, they will not slash their margins to help out. So the manufacturer ends up copping it, it’s where the buck stops,” he said.
A spokesperson for Commercial Radio Australia a range of receivers of various prices would be made available before the May 2009 launch.
