Yesterday, we reported on a Canadian class action lawsuit claiming carmakers and dealers conspired to violate “competition and consumer protection laws” to artificially inflate new car prices. Today, the National Post reports that Porsche is lowering prices on its 2008 models in Canada by more that 10 percent– plus an additional 2 percent on an “equipment adjusted basis” when compared to an ’07 model. "We cannot ignore our customers and dealers in Canada who can look to the U.S. and recognize a substantial price difference," says the president and CEO of Porsche North America. Yes, but– the price of a new Porsche will remain higher than those sold in the US. Assuming the loonie is at parity with the US dollar, a 2008 Cayenne will still cost some 27 percent more in Canada (C$55,200) than German sport trucks sold south of the border (US$43,400). Still, Porsche’s Schwarzenbauer's back remains patted: "We listened to the market and did what is best for our customers in Canada."
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“We listened to the market and did what is best for our customers in Canada.”
If those customers were class action lawyers this would be a very true statement on it’s face. I don’t see what the problem is. If Porsche charges more and it is too much they suffer for it. Are we to believe there that owning and buying a Porsche is a human right?
RF would probably side with them on that lol.
Isn’t the price difference due to some extra taxes in Canada?
For instance in Denmark or the Netherlands (unfortunately), there are some huge taxes on cars to provide the government with enough funds to maintain the “social system”, aka communism (ok, maybe that’s my frustration about this subject speaking…a litlle).
JJ: Isn’t the price difference due to some extra taxes in Canada?
According to the article in the National Post, the numbers are the Manufacturer’s Suggested Retail Price (MSRP) for an ’08 Cayenne in each country.
For a discussion of various Canadian new-car taxes, see the comments under yesterday’s “class action lawsuit” news entry here at TTAC.
Porsche was one of the rare manufacturer that made it very easy for anyone to import a Porsche into Canada from the US. Porsche dealers honored the warranty.
That being said, Porsche prices in Canada had become an “insult to human intelligence” the prices defied gravity.
After the 10% reduction the prices are still high but more palatable. As for the price of used Porsches? The US imports already impacted values.
JJ:
The only “hidden” tax in the Manufacturer’s Suggested Retail Price (MSRP) is an import duty which I believe is 6.1% – hich would lower the price to around $52,000 Cdn. (NAFTA cars exempted). All other taxes are added at the point of sale and are visible to the customer (e.g. G.S.T., provincial sales tax, air conditioning tax, etc.)
BTW – does anyone know if the U.S. has an import duty on non-NAFTA cars.
AGR:
As representative of one of Porsche’s premier North American dealerships, I would strongly disagree with the statement that “Porsche makes it easy” to import a vehicle into Canada. Any U.S. dealer involved with exporting vehicles out of the country, bound for anywhere, would face severe sanctions from Porsche Cars North America. Other manufacturers may have chosen to go the route of punishing the end use customer by cancelling warranty coverages, while Porsche has chosen the harder route to deal with this difficult issue by cutting off the supply at the source. While this causes quite a bit of grumbling at the dealer level, I would have to commend Porsche for taking the high road in this regard.
So, did the lower the prices a bit? Or, just aboot a bit?
Michael Brairton, Porsche makes it easy to bring cars into Canada with the stipulations that they provide to RIV. Porsches are one of the most imported cars into Canada, since they had the highest price differences.
Usually they are used or “slightly used cars” that are imported.
Most manufacturers have policies regarding the exporting of vehicles, some even require dealers to have the customer sign non export agreements. If the dealer is blatantly exporting a car, there are several conditions that apply.
Which dealer will blatantly export a car and get caught with his hand in the “cookie jar”?
We could have a debate about Porsche taking the high road?
Yes, we certainly could have a debate.
Most manufacturers (if not all) do indeed have export policies. Other than printing them on paper and making sure that everyone gets to see that they have a policy, what do they do to back it up?
As for having customers sign non export agreements, I would assume you are speaking of Ferrari. If that is the case anyone who has ever signed one of those agreements, or any dealer who has ever asked a customer to sign one would get a real chuckle out of the idea that the agreement is worth the paper it is printed on.
Porsche has a policy, and actually puts their money where their mouth is so to speak.
Perhaps you could explain for everyone how it is that Porsche can curtail the export/import of used or “nearly new” titled vehicles, beyond the list of “banned customers” that we receive each month, who have been known to export vehicles.
Dealers do not blatantly export cars, they never did, never will, they are not in the export business.
Porsche gives RIV the requirements and stipulations to have a US car enter Canada, the Porsche warranty is honored by a Canadian dealer.
The Canadian dealers complain to Porsche NA that US cars are flooding the Canadian market, due to the extreme price discrepency. Porsche NA tells its US dealers that if they export cars, they will cut allocations, and use other “levers” against dealers that export. Also supplies lists of know “exporters” to US dealers, and reinforces the seriousness and gravity of exporting cars to Canada.
In the case of Porsche every model is an export potential, will every Porsche dealer sell cars to only customers that they know, in their local market, and ascertain that every single car sold returns for service and warranty work. If the dealer has doubts that the car “disappeared” will he pull a Carfax to see what happened to that car?
Will your dealership turn down a deal and a profit from a customer in your showroom ready to buy a Porsche with a local address, because you might have a doubt that the car will be exported?
When you are dealing with 6 figure cars, its a delicate and subtle process to start questioning a serious buyer in your showromm as per their ultimate intentions.
Porsche will curb sales to the blatant exporters, the subtle covert exporters are a different situation.
I think that I have told you enough…I’m certain that you can use your creativity to develop a myriad of scenarios.
“Other manufacturers may have chosen to go the route of punishing the end use customer by cancelling warranty coverages, while Porsche has chosen the harder route to deal with this difficult issue by cutting off the supply at the source.”
Isn’t it interesting how almost every international company is strongly for free trade across national borders, as long as they are the ones doing the trading. Once the individual customer is the one doing the trading these big companies use every one of the many means at their disposal to stop it.
The real justification for charging much higher prices in some markets than others is simply that if they can find any way to get away with doing so, they will.
I don’t see a problem with the pricing–if the cost of the good is too great, don’t buy it.
I *DO* have a problem with a bunch of men in suits a thousand miles away telling me that I can or cannot own a car from across a somewhat imaginary latitude line without paying them tribute.
Speaking as a Canadian, I was very happy to buy a car when our dollar was down to 65 cents and the manufacturers had not raised the price commensurately.
I thought they were dumb and stupid not to raise the prices. Every other item went up, so I could not fathom why car prices did not.
Now, however, our dollar has gone up to a level not seen in 30 years, trading at more than par with US currency. Inherently, due to geography and a small population, Canada is less productive economically per capita than the US, so I presume our currency will slip again to about the 85 cent mark at some point, particularly if the US manages to weather the current credit problems associated with flogging housing to people who couldn’t afford it.
If cars were sold in Canada at the equivalent of an 85 cent US dollar today , I wouldn’t complain. Take an Acura TSX. $28200 in the us with $700 freight and PDI, manual or auto. In Canada $36300 manual, $37300 auto with a $1700 freight and PDI. The pricing figures for a Subaru Forester XT are almost identical. It does not take a mathematical genius to see that this disparity is way more than 15%, even if one factors in the 4.2% import duty difference between the US and Canada on Japanese imports (no doubt on some mythically low trade price). Local taxes are not included in this comparo.
This is what Canadians are fundamentally complaining about.
However, everyone also agrees that the car companies or any company selling anything can attempt to charge whatever price they want. Forgive me if I decline to do so at what I personally regard as extortionate pricing. Forgive me also if I feel like taking a week off and going to the US to purchase a vehicle, and saving 10 grand on a not particularly upmarket car.
Now, however, car companies such as Porsche are attempting to prevent their US dealers from selling to Canadians, eh? This is blatant restraint of trade under the NAFTA rules, and also meets the test of collusion to prevent individual Canadians from purchasing a vehicle in the US. That is the basis of the lawsuit that is being pursued, and to me it looks like a slam dunk winner. All these car companies are admitting to doing it. Calling it “taking the high road” is a statement so farcical, it could only come from someone who is toeing a corporate line and avoiding reality.
Imagine, if you will, my going into a US WalMart store to purchase some underwear and being forced to sign a no-export agreement, because they are half-price compared to the price in a Canadian WalMart, and WalMart doesn’t want to upset the sweetheart deal it has flogging underwear in Canada at ridiculously high prices.
In principle, there is no difference whatsoever between between my analogy and the car situation. None.
I could go on and talk about the ripoffs we face in Canada on things like the vehicle freight/PDI charge, printed book prices and sundry other items, but that is the way it is.
Meanwhile, the issue would go away if prices were adjusted reasonably. A token 10% of Porsche munificence is not going to do it. The nearest vehicle I can find to my 85 cent mark is the WRX. $33K Cdn against $28K US for the same options. Right at 85%. Except for an extra grand of freight to pay for the monthly champagne parties at the dealerships.
Canada is a huge ripoff country… You essentially wind up paying 40 grand OTD for same vehicle that costs 25k stateside on the road.
Is this any different than Americans importing German Mercedes-Benzs to the US because they can (or at least used to) be purchased much cheaper there. What is considered a taxi there (such as a E320) is flogged as an expensive luxury car in the US.
I know the MBNA is totally against US citizens being able to buy their Benz in Germany for prices that Germans pay, instead of the big markup the US dealers want.
What it boils down to is the question: Can a private company impose a tariff on their own products that are purchased in one market for consumption/use in another market?
Didn’t Canada get the R3x Skylines? I think its a fair trade. You get the better cars, we pay less. Works well for me.