Germany in Recession

[marknorton]

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Here in the UK, we have a particular issue with the value of the pound. If you are in the market for the new big 3 lenses (I was, but no more due to Leica's Hot Air and Broken Promises), the GBP cost of those lenses is already more than £1000 than at Photokina 6 weeks ago, so not clear how long the prices will be held before they ratchet upwards.

[adan]

Wasn't the Lei(tz) Ca(mera) born out economic upheaval, when E. Leitz the company was looking for something to keep the microscope makers busy during bad times in the Weimar era?

[jaapv]

Here in the UK, we have a particular issue with the value of the pound. If you are in the market for the new big 3 lenses (I was, but no more due to Leica's Hot Air and Broken Promises), the GBP cost of those lenses is already more than £1000 than at Photokina 6 weeks ago, so not clear how long the prices will be held before they ratchet upwards.

 

 

I think that is a different matter. Here in Holland we have a huge influx of Polish workers, coming from the UK, partly because they are made redundant, but mainly because their wages in GBP are not worth working for any more, relative to Poland

[adan]

Steve L: The RED system is intriguing - BUT - for 24 Mpixels, even in the cheapo scarlet line it's $12,000 for just the box - no battery, lens, viewfinder, grip, etc. etc. Figure at least double that at RED's prices for a fully functional camera with one zoom lens (which, yes, will shoot phenomenal video as well)

 

Slightly cropped 645 is available in the EPIC line - for $45,000 (and again that is just the sensor and lens mount - no viewfinder, no grip, no lens). So I don't see RED doing much to frighten other MF formats.

 

Having a real 6 x 17 sensor in the works (even if still vaporware) IS impressive, however.

[delander †]

Here in the UK, we have a particular issue with the value of the pound. If you are in the market for the new big 3 lenses (I was, but no more due to Leica's Hot Air and Broken Promises), the GBP cost of those lenses is already more than £1000 than at Photokina 6 weeks ago, so not clear how long the prices will be held before they ratchet upwards.

 

Leica has been milking M lens prices for the last two years. I'm sure the dealers must be dreading any further price increases. They have added 33% to the price of an M8 in its M8.2 form. I would be amazed if sales volumes were on plan.

 

Jeff

[NZDavid]

Top end products, where demand is limited, tend to survive a downturn. (This seems to be the case in other areas, architecture, for example). It's the middle that suffers.

[phovsho]

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Howdy again

 

Excuse my ignorance, but where do folks get the idea that luxury goods do well in an recession? I stole this quote off the web:

 

Financial analysts using historical sales data predict that luxury goods companies such as Moet Hennessy Louis Vuitton (LVMH) or GUCCI are traditionally hit hard by economic downturns. There is evidence of the same too as LVMH saw it profits drop by at least 20% in the aftermath of 9/11. According to Financial Times, in 2008, Bulgari felt slower sales growth in March, Richemont at the end of last year, while Gucci sold less in the first quarter than last year.

 

I also think it is unlikely that leica's core client is a multi-millionaire. There advertising campaign and the composition of this forum doesn't support that. I would think upper middle class, with an interest in photography, is more accurate.

 

I think this is going to be tough on Leica and its owner!

 

M

[gwelland]

Well, there's "high end" and then there's HIGH END.

 

I'm sure that Ferrari, Bugatti, Bentley and Rolls Royce are probably weathering the storm better than their cheaper brethren. Ditto the high end yacht builders. Their clientele really is much more recession proof than the punters who aspire to Luis Vuitton & Gucci IMHO.

 

Where Leica fits into this I'm not so sure. It's probably more of a discretionary purchase item these days than a pro necessity as they might have been in the past. I'm sure the clientele for Leica goods will be more inclined to restrict discretionary spending on new cameras/lenses if only because of economic uncertainty vs inability to afford the items.

 

It will be interesting to watch what happens this time around. It seems to me that we're beyond the initial financial meltdown due to bad lending/derivatives exposure and now just into the blind panic/fear stage of consumer & banking slow down.

 

In the US at least I welcome the fact that people are waking up to the fact that you can't use your house as an ATM machine and rely on a appetite of continuous spiraling debt. This should hopefully be a positive outcome at least at some point.

 

Don't get me started on the media's contribution to the doom & gloom ...

 

I like to think that I'm doing my bit for the economy by buying a new M8.2 last week. I applaud the other poster here who also got his new MP too (albeit for perhaps a mildly depressing reason). I really want to see Leica weather this current storm as they have so many others. Hopefully Kaufmann's pockets are deep with real cash vs. leveraged against other assets in the market right now.

[stevelap]

Steve L: The RED system is intriguing - BUT - for 24 Mpixels, even in the cheapo scarlet line it's $12,000 for just the box - no battery, lens, viewfinder, grip, etc. etc. Figure at least double that at RED's prices for a fully functional camera with one zoom lens (which, yes, will shoot phenomenal video as well)

 

Slightly cropped 645 is available in the EPIC line - for $45,000 (and again that is just the sensor and lens mount - no viewfinder, no grip, no lens). So I don't see RED doing much to frighten other MF formats.

 

Having a real 6 x 17 sensor in the works (even if still vaporware) IS impressive, however.

Yes, it's certainly not going to be cheap (but then, neither is Leica:) ). With modularity though you might not have to buy all the accessories more than once, just swap the "brain" as your resolution/fps requirements change.

 

I must admit I'm intrigued by RED, it will be interesting to see if Jim Jannard can pull it off.

[stevelap]

Leica has been milking M lens prices for the last two years. I'm sure the dealers must be dreading any further price increases. They have added 33% to the price of an M8 in its M8.2 form. I would be amazed if sales volumes were on plan.

 

Jeff

I've been wondering how the dealers fit into all this myself. Leica have been getting a bit of a pasting from some on the forum over the M8 upgrade v M8.2 saga, but the dealer perspective hasn't been discussed too often.

 

I seem to remember that disquiet amongst the dealer network was one of the factors in the SKL debacle, so Leica have had to try to placate both camps, existing customers and dealers, with their subsequent strategy.

Dealerships can't be finding it too easy to shift stock in the current economic climate, give the much higher list prices of the new kit. So I can't imagine that they would be best pleased to see every feature from the M8.2 available as an upgrade to the M8. What incentive then for existing customers to trade up?

[Wolfgang Esslinger]

I seem to remember that disquiet amongst the dealer network was one of the factors in the SKL debacle, so Leica have had to try to placate both camps, existing customers and dealers, with their subsequent strategy.

Dealerships can't be finding it too easy to shift stock in the current economic climate, give the much higher list prices of the new kit. So I can't imagine that they would be best pleased to see every feature from the M8.2 available as an upgrade to the M8. What incentive then for existing customers to trade up?

 

I assume dealers need to rely on Leica's compacts to attract potential customers. I also assume that dealers have a much better margin on these compacts than they do on other brands (they should have, taking into account the price differences between P and L).

 

From my own experience I also think that it is essential for a dealer to have good second-hand gear business running: I hardly buy new Leica stuff but rely mostly on dealers with a good reputation.

[Theodor Heinrichsohn]

Living in Germany and drawing a German pension, I am of course concerned about the direction the financial crisis has taken and the resulting recession.

I agree with Mark that Leica was not up to their promise regarding the upgrading policy, however, that will probably not result in my not purchasing one of the new f 1.4 lenses - I am wavering between the 21 and the 24mm and tending towards the 21mm - because there is no kind of promise involved and Leitz/Leica's lenses do last very long. My oldest ones are more than 70 years of age and work perfectly.

On the other hand, I do not plan to upgrade my 2 M8 bodies.

Most camera dealers in Germany will feel the pinch as far as I can tell. Their major sales items are lower priced cameras, digital pictures/prints, accessories such as CF and SD cards, etc. It is possible that Leica instituted the limited upgrade policy for the M8 in order to help dealers sell the M8.2 As far as I know, dealers strong complaints about the Stephen Lee upgrade policy (which left dealers empty handed) was one of the reasons for his termination.

Teddy

[lars_bergquist]

Wasn't the Lei(tz) Ca(mera) born out economic upheaval, when E. Leitz the company was looking for something to keep the microscope makers busy during bad times in the Weimar era?

True. And the Leica became a system camera, the world's first, during the Depression years. After the first nick in the sales curve during 1930–31, sales rose steadily—because Leitz had a revolutionary new product. Today, Leica have a revolutionary new product, the S2. Therefore there is hope. But the old, pre-Kauffmann company would have been hopelessly lost.

 

The old man from the Age of the Leica IIIa

[Wolfgang Esslinger]

True. And the Leica became a system camera, the world's first, during the Depression years. After the first nick in the sales curve during 1930–31, sales rose steadily—because Leitz had a revolutionary new product. Today, Leica have a revolutionary new product, the S2. Therefore there is hope. But the old, pre-Kauffmann company would have been hopelessly lost.

 

The old man from the Age of the Leica IIIa

 

Was this first Leica in a price range comparable to the S2?

[SJP]

A 1959 M2 + Summaron 35/2.8 cost about 500 guilders = 226 euro

 

Price hike since then would boil down to about 5000 -10.000 eur (2009) (based on DOW-Jones & AEX, rough analysis).

 

The M2 sensor (135 film) is somewhat smaller than than of the S2 so if they keep the S2 at 15.000 euro or so then it would be 'relatively cheap' actually.

[leicar7]

Today's Wall Street Journal newspaper had articles on Germany's being in recession and on luxury goods manufacturers lowering prices for the first time in a long while. Maybe just in the US to reflect the strengthening $, but could be more widely the case.

[phovsho]

Rich vs. Poor Consumers’ Confidence - Economix Blog - NYTimes.com

 

Interesting

[wattsy]

Today, Leica have a revolutionary new product, the S2. Therefore there is hope.

 

On paper, the S2 is a very attractive product but it is hardly revolutionary in the same way that the first Barnack Leica's were.

[Goldie]

Firstly an academic point but neither the US nor the UK have officially met the definition of a recession. The Euro zone entered one officially today (Friday).

As for Leica I am sure the immediate future is going to be difficult, however it is in the happy position of basically being privately owned, with an owner who is in it for the long term and the resources to handle a certain level of business stress.

As to developing new product, downturns are when the well-run companies really get their heads down and have the product ready for the upturn.

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Hallo,

Look here: Interesting Leica gear

[adan]

I'll toss in a couple of observations:

 

1. Leica's sales are pretty global. Not so long ago the Asian market moved ahead of Germany and the U.S (second only to Europe outside of Germany) in % of Leica's sales. Although those four "markets" are still fairly close - roughly 25% of sales each. It's something to keep in mind. Leica is a GLOBAL company based in Germany. So local conditions aren't that critical. Unfortunately, the GLOBAL economy is fractured as well.

 

2. I'm sure Leica today is in better shape than, say, the U.S. carmakers - former wonders of modern industrial production (if one goes back far enough, anyway).

 

3. The credit infarction has likely been worse for dealers than for Leica directly. Dr. Kauffman has cash reserves to cover ongoing expenses, but small-business camera shops (and even the big guys like Beimeister and B&H) may be finding it hard to get loans to carry inventory simply because their banks' money is all glued up in unsellable mortgage-back securities. Without inventory they don't have anything to sell even if their customers have money to buy. So no cash flow either. A downward spiral.

 

4. And on the subject of dealers - yes, they were not happy about being cut out of the upgrade path. I'm sure limiting the upgrades is not just so that Leica can sell more M8.2s, but so that Leica's dealers can sell more M8.2s, and take M8s in trade, and sell those and keep their own business rolling.