The Canadian dollar is back. After a thirty-year slump, the “loonie” is now staring eye-to-eye at the American greenback. The strong Canadian economy, the worldwide thirst for oil, and George Bush using The Fed as a money tree have all converged to push the Canadian dollar skyward. The meteoric rise of the dollar has given Canadians incredible arbitrage opportunities with American products; especially cars. The Canadian car industry ain’t pleased– and for good reason.
In 2006, Canadians imported 112k new and used vehicles from their neighbors to the south. That stat represents over 50 percent growth in US imports over the last two years. The crux of the problem: many retail prices in Canada are based on an exchange rate more appropriate for the Clinton era. To wit: Buying a Nissan 350Z Coupé in the United States will cost you $29,000. A similarly optioned car in Canada will cost – wait for this – $51,000.
Now, converting the US price of $29k at a rate of about 1.06 yields $30,740. Throw in $2k for shipping (you can drive it up yourself on a temp plate), $1800 in import duties (which you don’t pay on any vehicle assembled in the NAFTA zone), $5,200 in taxes (assuming Quebec and Ontario’s rates) and you’ve pocketed a cool CA$13k by buying your new Z stateside.
The downside, of course, is that Nissan, like most manufacturers, doesn’t honor warranties in any country other than the country of purchase. One notable exception (of course): Toyota. The Japanese automaker honors warranties all across North America. It’s good for the whole family, too: Lexus, Scion, Toyota and the newest addition, Subaru, are all included. Still, if you’re not expecting 13 grand’s worth of warranty repairs on a reliable car like the 350Z, the deal is hotter than a dancing bobcat with its ass on fire.
The other problem is red tape. In order to get a US-spec vehicle on the road in Canada, it must first be admissible for import. The government has printed a list of such vehicles on http://www.riv.ca. Conspicuous by their inadmissibility are the Pontiac GTO and the Mistubishi Lancer Evolution IX, which have failed Canadian bumper and emissions tests. Export papers need to be filed at U.S. customs, and import papers at Canadian customs, including a manufacturer’s letter stating that no outstanding recalls apply to the vehicle in question.
Once imported, a vehicle has to be converted to display kilometer-based readings, and have daytime running lights installed. Finally, the vehicle must be inspected and (possibly) emissions tested before it can be registered in a province of Canada. Other annoyances may apply. For example, if the vehicle comes from a state with lax tint and modification laws, you might end up needing to make cosmetic adjustments as well.
The fact that new cars start so much lower on the MRSP ladder in the U.S. also has ramifications in the used market. A 2005 Honda Accord EX-L with 14k miles will fetch about US$18k stateside. The same car will cost $23,400 in Canada. Converting 18-grand to Canadian and applying taxes will give us a car that costs $21,050. The best part? Since the Accord is assembled in Ohio, it’s a NAFTA car! On savings of $2,350, the day trip to upstate New York pays for itself. Even greater savings can be had on big-time depreciators like the Cadillac CTS-V or the Porsche 911 Turbo.
I picked the 350Z scenario because it’s a more extreme example of manufacturers being too greedily lethargic to adjust their Canadian pricing. Driving.ca recently quoted an average difference to be about $5,800 across international lines in one of its articles. The difference is still important enough to encourage a steady, increasingly large parade of vehicles across the border.
The government of Canada is hemming and hawing about ways to protect Canadian dealers while in some ways paying lip service to NAFTA. For their part, manufacturers are now threatening U.S. dealers with a loss of franchise if they continue selling to Canadians. Meanwhile, the market is busy reacting predictably. For those too lazy to go through all the hoops, vast arrays of brokers and importers have put out a shingle and are waiting for your business.
Eventually, something will break. Either the manufacturers will adjust Canadian pricing, outright ban the sale of cars in the United States to non-residents or the Canadian government will impose an automotive tariff.
The medium-term outlook for the U.S. dollar is particularly bearish. Therefore, there is no reason to expect an abatement of any kind in Canadian imports. It’s a strange role reversal for many Americans, to think their country has become Canada’s automotive outlet mall. Quite soon, Canadians will be making fun of that “funny, two-tone money,” too.
The downside, of course, is that Nissan, like most manufacturers, doesn’t honor warranties in any country other than the country of purchase.
Does this mean if I’m on vacation north of the border and my new car breaks down, I can’t get warranty work up there?
Actually, this is not a true statement. Nissan is one of the few manufacturers who DOES honor their warranty to purchasers on both sides of the border. SO I can buy a US Spec Nissan and get full warranty support in Canada. And there is an increasing amount of movement of US Nissan vehicles to Canada as a result. There are some minor updates that have to be applied like daytime running lights (which is simply programming on most cars, these days)
Honda and Toyota, however, do not do this. Why? be cause they can, I guess.
Need to check your math. 1 loonie will buy you $1.02 US. A US greenback buys you 98 cents CDN.
Doesn’t change anything with the rest of the article, but as an ex-pat Canadian just had to let you know. Experience tells me that many Americans can’t do currency conversion, in both directions. Only know or care what the US dollar is worth.
Samir,well documented editorial!
The major impact is on higher priced vehicles, were the Canadian consumer is comparing prices and seeing a substantial discrepency.
Canadian retailing is being buffeted by US retailing in unforseen ways that have never been seen or experienced before, with the consumer waiting and holding back for change.
Vehicles attract the most attention with dramatic discepencies in several instances.
The Canadian consumer for many years felt disempowered with a low valuation of the Canadian dollar. The Canadian retailer felt empowered with a low valuation. The roles have changed, the consumer feels empowered, and the retailer is shell shocked.
The Canadian media and pundits are on the side of the consumer,and the few “analysts” that side with the manufacturer or retailer are literally called names, and their ethics questioned.
Retailers will get increasingly concerned with the upcoming Christmas season. Vehicle manufacturers and dealers will react a at a slightly later time, and throw caution to the wind, give it a PR spin, and move metal.
They are playing the BS game of used values, residuals, and protecting investments and values. In Canada leasing is more popular than in the US especially for higher priced vehicles.
Bringing a motorcycle to the US from canada is a real bitch, when the bi-lingual money was worthless I considered it but the red tape persuaded me not to. With the high Canada dollar it’s not even an option.
I know someone who smuggled a bike back in pieces as parts and reassembled it. Applied for a new title and pulled it off.
it’s a more extreme example of manufacturers being too greedily lethargic to adjust their Canadian pricing.
Why should they “adjust” prices? They are rational to charge what the local market will bare. Prices are based on supply and demand. Since your number 112K imports in 2006 includes used cars, that leaves an insignificant number of new cars in a 1.6 million new car market to really affect prices. If Canadians are still buying the cars at the current prices, dealers would be stupid to lower prices. If so many Canadians buy imports that local dealers realize they can’t sell their inventory, they WILL lower prices. What’s the problem? You don’t think Canadian dealers have enough brains to calculate whether or not they’re making any money each month?
and George Bush using The Fed as a money tree
I’m not sure what that means, but then you aren’t either, are you? It just sounded like a trite little throwaway line, didn’t it? George Bush does not control interest rates or the Fed, which is famously independent.
The medium-term outlook for the U.S. dollar is particularly bearish.
Wow, you have a rare gift if you can reliably predict currency movements, what with all the moderating feedback loops built into international money systems — such as Canadians traveling south and buying US dollars so as to buy US cars, as just one example. If you can predict so well, I suggest you quit wasting time writing articles and become a currency trader. You’ll be a billionaire in no time.
kevin, most Canadian dealers sold less vehicles in Sept 2007 than Sept 2006.
The chief economist at a major Canadian bamk (we only have five of them) yesterday predicted the loonie at $1.20 American and oil at $100 a barrel at the end of 2008. Maybe he has a rare gift, too?
Samir,
Perhaps you should talk to Mr. Friedman about how to blame Bush for anything and get away with it (not that it will help you here, we are smarter than the readers of the Old Gray Rag). “W” is no more responsible for the present weak dollar than anyone going back to Roosevelt. Otherwise an interesting topic.
I never could figure out why the car manufacturers are so inflexible that they can’t adjust prices to reflect a 15% change in the Canadian Dollar. Don’t all these guys have hundreds of millions spent on database programs, ERP, and financial analytics? Have they not ever used customer rebates in Canada?
I suppose they are all talking about “sovereignty” up there right now. As if this had anything to do with it. When your solution to someone using a gun to cross the boarder illegally is to call the American Customs Service for help, car prices doesn’t really register as a “sovereignty” issue in my book.
Cheers.
On a totally unrelated subject, I remember the nice summer of 1997 when I took a trip of the Atlantic provinces (Prince Edward Island, Nova Scotia, and New Brunswick) with the great, for Americans, exchange around $1.35/40 per USD. It was still a screaming deal even when the HST was starting to be used (in the trip the following summer.) How times have changed…
Kevin, in europe there’s rumours of 2 euros to the dollar and even 3 dollars to the pound by the end of 2008, earlier if the fallout from the morgage/credit continues, add in any fed interest rate drops, oil price increases, currency/bond sell offs and another war in the middle east and watch it continue to tank. Moved here a couple of years ago and the dollar has slid all the way since then.
As for the money tree, where does the money come from when Bush goes cap in hand to congress asking for more?
Last fall I took a hard look at buying a VW GTI from a Buffalo dealer and importing it to Ontario. Even at 90¢/USD and with Canadian taxes and duties, I would’ve saved about three grand.
I called VW customer service to see if the warranty would be honoured. After patiently asking the same question about a dozen times—”but sir, that’s ‘cross border shopping’!”, “sir, perhaps you’re interested in moving to the U.S. first?”—the rep eventually conceded that the warranty would be honoured. “Can you put that in writing?” “Uh, no.”
I postponed buying until the spring, and when I called back to the NY dealer, he told me that the order had come from VWoA that selling to Canadians was verboten.
@theflyersfan — to be totally pedantic, PEI, New Brunswick and Nova Scotia are the Maritime provinces. You don’t have the Atlantic provinces until you add Newfoundland (& Labrador).
Frank Williams :
October 5th, 2007 at 10:37 am
Does this mean if I’m on vacation north of the border and my new car breaks down, I can’t get warranty work up there?
You can.
Since your car will have plates from the U.S. and you are a resident of that country, you will be covered in Canada.
If you are buying a car outside your country of residence that the warranty is not honored – which is the case for a Canadian importing a 350Z from upstate NY for example.
Queensmet :
October 5th, 2007 at 11:11 am
Need to check your math. 1 loonie will buy you $1.02 US. A US greenback buys you 98 cents CDN.
The editorial was actually written before the Canadian dollar surpassed parity with the U.S. In any event, the gist of the editorial still applies.
Interesting article from the Globe and Mail
http://www.globeauto.com/servlet/story/RTGAM.20071003.wh-dealweek-1004/GAStory/specialGlobeAuto/home
FYI – In Canada its Thanksgiving week end.
I’ll tell you when Canadian car prices will be dollar for dollar the same as the US’s (before tax variations, I mean).
About 20 minutes after BYD, Geely, SAIC, Roewe, Brilliance, China Motors, Tata and Mahindra start selling new cars in Canada for 1/2 the current price of the current competitors.
C’mon, Honda, c’mon, Toyota. “Do the right thing” by the Canadian customers and reset prices on par with the broad exchange rate, at least for US built cars imported into and sold through Canadian dealers – with the understanding that if they’re locked into the dollar/dollar exchange, prices may go up in future (or, even, down). I know you two can do it. The rest will follow (just as used to be the case with GM – GM set the prices, everyone else followed). Of course, that was 40-50 years ago.
Why should they “adjust” prices? They are rational to charge what the local market will bare.
Not to appear socialist – I think it’s hard being a petrolhead and a communist and a socialist at the same time – but pure capitalism exists only in economics textbooks and Ayn Rand’s fantasies. We’re talking about the real world, and in the real world, sometimes the free hand of the market is busy stroking something else.
Toyota Canada will honour the warranty on a US-bought vehicle, however, US dealers have been ‘instructed’ by HQ not to sell new vehicles to non-US residents.
We are currently in the market for a new ES350 (difference of $8-9k between Canadian and US pricing). When we contacted some US dealers, they refused to sell us a new model but were more than happy to offer a used ’07. I believe some other manufacturers are using similar tactics even though they claim to honour US warranties.
With the disparity in pricing, you get an additional kick in the teeth when paying taxes. Using the ES350 as an example, Ontario taxes (currently 14%) on a $33,000 US car will be $4,620. Buy the same car in Ontario and you will pay $5,880. How great is that?
I recently priced out a base model Corvette. $48K in the US, $68K in Canada. I’m not sure if they the base models are comparatively equipped. But I think I’ll put my midlife crisis on hold for now.
We need to be careful what we ask for. There is the possibility that instead of Canada reducing the price of cars, the US would increase the price of their cars stateside. It would probably be a combination of both.
Great article.
Manufacturers are making it more difficult for non-residents to export cars using varying strategies. Toyota, VW for example will honor the warranty, however they apply severe penalities for any dealers that sell to non-residents. Some like Honda voids the warranty completely if a new car is exported. And others will only honor the warranty 6 months after sale.
The paperwork and hassle is not that bad. There are many guides and individual experiences documented on the net. For the typical $5000-$15000 savings, the time invested (usually just a couple of days) is totally worth it.
However, it is my understanding the manufacturers generally will honor the warranty and allow the export of used vehicles. The used car market is where I expect the pricing gap to shrink as the market becomes more competitive. Already dealers are importing many US used cars and I have heard they are now using US black book rates for pricing trade-in’s.
Wow, Dr. Kevin prescribes that half of you sneak into some college’s Remedial Econ class for a couple of days. It would do you good.
AGR: most Canadian dealers sold less vehicles in Sept 2007 than Sept 2006.
Canada auto sales through September are UP 3.9% on the year. Why slash prices? Canadian car dealers and other employers pay wages and taxes in Canadian dollars. Are Canadian workers volunteering for pay cuts to compensate for the rising Canadian dollar? For a Canadian car dealer, his costs are all the same and sales are growing — where is the motivation to slash prices? Even if a given dealer is starting to sell fewer units, his goal is to maximize profit. Will cutting prices 30% to move 2% more units make him more profitable?
philbailey:,/b> The chief economist at a major Canadian bank yesterday predicted the loonie at $1.20 American and oil at $100 a barrel at the end of 2008.
Ten million brainiacs competing with each other every day in the currency markets, and I care about one guy’s opinion why? If he has the crystal ball, why is he still someone’s employee?
Boston in europe there’s rumours of 2 euros to the dollar and even 3 dollars to the pound by the end of 2008
Since no one can reliably predict future currency movements, the “rumours” are nothing but individuals’ opinions. And opinions are like, uh, noses, everybody has one. A good reason we may not see such an extreme is that as the exchange rate becomes more and more distorted, Europeans are spending more and more money on American goods and tourism, which boosts the demand to exchange Euros & Pounds for Dollars, counteracting the weak Dollar. This is happening right now — just as the textbooks say it should.
Samir but pure capitalism exists only in economics textbooks and Ayn Rand’s fantasies.
…in fantasies and in Canada, apparently: note that I am explaining to you WHY Canadian car dealers are doing what they ARE indisputably doing, right now, in Canada. You are the one who seems to be expecting something that is not actually happening in the real world, and blaming “lethargic greed” as the reason the real world is not behaving as you expect. But maybe I’m wrong and Canadian car dealers all went into business for some reason other than to make money.
Last month I imported an ’04 330i from the US to Canada and even after paying the 6.1% duty and importation related expenses, I saved at least $5000. BMW Canada DOES honour the original 4 yr/50K mile warranty, although they don’t honour the free maintenance program nor extended warranties. The RIV process is slightly confusing, but overall it’s not terribly difficult. Further, most US dealers near the border are familiar with the process and can handle the paperwork for you.
Regarding US car dealers being forbidden to sell new cars to Canadians, the work-around some dealers are using is to transfer the car into their demo fleet. Demo = used car.
Ok lets take a look at a few vehicles
Nissan Rouge.. CA$ 25K US$19K
Honda Accord 2008 CA$25K US$20k
Acura MDX Base 2008 CA$54K US$40k
From 5k to 14k and all over the place. Now if they are claiming inventory .. then that is hogwash these are 2008 models. What I would like the see is that when writers are review these nice cars.. please in your writing put the MSRP for Canadian and US. Just like in the old day. If writers start to put the comparative prices then you would see how Manufactures would react more quickly. They wine and dine some of these writer and they are the one who is keeping the truth of this massive amount of extortion. The Canadian and US government are also funded by Mega Auto Industries and so they are very protective, deceptive and down right evil to the consumers.
ONE question.. for the average family how long does it take to save 5K, 10k or 15k? Are you going to give up all those days of work for free to these Auto Manufacturers?
Now ask the Chinese Nationals if that is wise :)
Thanks,
Dr.Kevin lets see how the “pricing patient” evolves in the immediate future.
As you certainly know or should know, its not the dealer that sets prices, its the manufacturers, dealer profitability is not based on the transaction price of new vehicles. That new vehicle prices come down 30% the dealer’s profitability is hardly impacted. There could be the possibility of the dealer making more money, the consumer getting a better price, and the manufacturer making less money. The captive finance companies taking a bigger hit than they already are with lease residuals.
Could it be that manufacturers, and captive finance companies are the driving force to maintain the status quo?
On the ground here at teh dealership. I was down at the Nissan dealer I used to work at, and another where my good friend works. They are getting HAMMERED with the cross border issue. My friend estimates 1 in 4 sales calls are now asking about pricing differences and warranty coverage for imported cars.
The first dealer responds by telling people the warranty won’t be covered and tells the customer that a bunch of expensive work will be required to import a car.
My friend at the other Nissan dealer simply shrugs and tells people to “Have a nice flight and drive back”.
It’s clear from being on the ground that retail canadian prices will have to adjust closer to parity hwoever given that canada has relatively few people and a lot of miles to ship cars I think you’ll almost always see Canadian cars slightly higher.
I don’t think there are any emissions regulations in Canada that US vehicles do not meet. The reason why the Evolution is banned is because the bumper is not strong enough to protect the FMIC in the event of a parking lot accident at 8km/hr. I think that was the case with a lot of vehicles (SRT-4 Neon comes to mind), with some manufactures shelling out the money to meet Canadian regulations, and some not.
The odd situation is that a number of Evos were allowed into Canada, as the border guards at the time were not informed that such a vehicle existed and allowed them to pass through simply as “Lancers”. These were grandfathered as street legal, and now that they are suddenly “exotics”, the owners can easily sell them for double the price they paid at the dealers for them.
Funny thing is, Canadians didnt bitch about paying so much when the carmakers lost their shirts selling cars in Canada because of the strong US dollar. When I was at GM (late 90s), GM Canada typically lost $1bn+ a year selling in Canada (remember this was when GM made 5bn+ in North America). Saving grace was they PRINTED money on the production side. Now the sides have flipped. And these issues existed in Europe until the EU forced some migration to the center (prices went down in Germany and up in the Netherlands as an example).
Dubya doesn’t use the Fed…Congress does.
Currency fluctuations are a bitch for global manufactures. If auto companies lower prices in Canada then what happens if/when the USD starts appreciating? Or the Canadian government fires-up their monetary printing press? Will auto companies raise their prices? Nothing drives customers away more that price increases.
Maybe our Owners can come up with a NAFTA currency that spends the same everywhere. The [dead-president-free] NAFTAbuck. Our Owners want to create a single currency for the Americas in the near future and then a single global currency in time.
I’ve said it before, and I’ll echo Kevin in saying it again: until Canadians decide en masse to stop buying new cars at these prices nothing will change.
What the manufacturers don’t seem to understand is that with the web everyone buying a car in Canada knows they’re getting shafted on MSRP. Eventually we’ll wake up and collectively put off car purchases until prices come down. The MSM is all over the exchange rate story, too, so it is on everyone’s mind right now.
With the new models coming out I think we’ll see a sales bump as people who “gotta have it” jump in, but I suspect that the normally slow period at the start of the new year will see a cliff-like drop in sales. That is when we might see some serious movement in pricing.
Honestly, I’m a little surprised that an auto manufacturer hasn’t siezed this as an opportunity for some great PR. Instead, the industry groups are all making hollow excuses.
Have to check your math for another reason. You pay tax on the car regardless of where it came from so also add in the savings on tax on $29,000 vs. $51,000.
Luther: point about raising prices on a weakening Canadian dollar is well taken. The manufacturers could do an end run around this by keeping the prices constant and using currency adjustment discounts (aka rebates, minus the “cash”). This is the same philosophy, in reverse, of fuel surcharges on air travel. You don’t change the price but add an extra charge (or credit in the auto case) that can be adjusted up or down frequently without needing to alter published prices all the time.
Then again, if you can’t advertise a new, lower price, then who is going to know you’re giving them a better deal? It is one thing with air fares, where nobody has a clue what they are going to pay until they actually book a seat. Cars and other hard goods are a little different.
Luther: I’m afraid you are mistaken about the pricing increases.
The price of Harley-Davidson motorcycles in Canada has changed once or twice a year due to currency fluxuations for the last 6 years, both up and down. That means that right now a Harley-Davidson is thousands cheaper than a similar class Japanese motorcycle in Canada, and are selling like they never have before. Automakers on the other hand, not only shaft us on US built cars, they have been shafting us for years on CANADIAN built cars, selling them cheaper in the USA with lower freight fees! Do you really beleive that Canadians would rather forgo a 30% discount now just so that they won’t face a corisponding 30% increase later if the dollar swings the other way? Laughable.
Canadians are a funny bread….kind of half US, half English. It the English part that gets them in trouble. It’s the taxes imposed on the Z that makes it so expensive just like it does across the pond.
And calling the Canadian car industry an industry is a misnomer. More like a cottage industry that’s a small appendage to the US industry. Its even smaller because of all the governmental rules and taxes imposed on “imports”.
Everyone knows Canada is just the Northern Region of the US. Everyone except the Canadian government who ought to give up and join the US. All these stupid taxes and higher costs would be stripped away from the Canadian people and they could afford to drive the vehicles they really want to.
msowersone : That’s some hard core ignorance right there, I don’t think I neven need to refute what you said, everyone else here knows the difference.
Name one Canadian car company?
I continue to hold that since the Canadians got the R3x Skylines, and other nifty fasty cars that we didn’t get, paying more for a car is an acceptable trade.
s mike :
Relevance?
Virtual Insanity : That’s if we don’t get stuck with the 25 year rule due to US gov’t pressure.
In my opinion, the issue isn’t that the Canadian divisions of these car companies haven’t lowered prices to coincide with the strength of the Canadian dollar. Rather, I think it gets close to unfair trade practices for companies to do things like:
– Refusal to honor warranty
– Witholding Recall notices if a Canadian purchaser is involved
– Threaten US dealers with closure if they sell to Canadians
– etc. etc.
And don’t hand out crap about maintaining dealer territories etc. It’s the manufacturer pocketing the difference (by selling to Canadian dealers in CAD), not the dealer!
msowersone: Tankd0g was correct….you are obviously very ignorant of the world around you, or you like to troll for replies. Either way, no response will do any good.
Bubbafat: My exaggerated point was similar to yours. In terms of the car industry, just get rid of the “boarders” silly gov. rules/taxes between the US and Canada and vehicleprices for Canadians will go down
There are a couple “legitimate” reasons for manufacturers to want to delay adjusting prices to reflect today’s exchange rate:
(1) they may have used various financial instruments to lock in a specific exchange rate over a certain planning horizon – perhaps a year. When these contracts expire, they may be more willing to start making price adjustments in Canada.
(2) manufacturers with facilities in Canada use this cost base as a natural hedge – the Canadian expenses they incur making a car can be hedged with the Canadian revenues they make selling a car. As the Canadian dollar appreciates, the cost of manufacturing in Canada increases, but the increased revenues from car sales in Canada can offset this.
(3) to the extent that the manufacturer has a financial subsidiary that arranges leases and loans, there would be a great reluctance to quickly and dramatically cut prices as this would kill resale values and thus have the potential to result in huge losses on existing leases
That being said, firms will only cut prices when they have to. I notice that the fire sale prices on outgoing GM and Chrysler vehicles seem close to American prices, while Honda and Toyota seem to continue with great pricing power.
The bottom line is that the consumer should actually be glad that this discrepency exists! Back in the late 90’s when the Canadian dollar was worthless, I purchased a “no-haggle” Saturn for $10,000 CDN with no delivery charge (it was a demo with all of 13 km) AND financing at 0.9%. This worked out to about $6,500 in U.S. dollars.
Now, I can go buy something like a Prius in the U.S. and save over $9,000! If the prices were always equal, there would be no opportunity for this arbitrage………..
Thanks for the article explaining the plight of the Canadian car shopper Samir. There are a few additiona I would like to make.
-Toyota has issued an order to US dealers to stop selling to Canadians so the comment about the warranty coverage is moot. How can they get around this? Sell themselves the car first.
-Daytime running lights more likely than not do not have to be installed. It is simply a computer setting that has to be switched on or off
-Cars must display kilometers – same thing as above, no big deal as all speedos already do
The best deal in my opinion for Canadians crossing the border.. the Corvette – 43K US or 68K CAN ** -slight bumper mod required.
On a related note – can the Big 3 (and Buzz Hargrove) keep using the low Yen as an excuse for non-competitiveness now that the USD is so low?
What a number of people have done, at the suggestion of their US car salesmen, is to set up a US P.O. Box with the mailed forwarded to home.
The chorus that every manufacturer is “singing” to anyone that wants to listen.
1-Our product is “market priced”, which translates into we feel that the Canadian market can support this price, and if we all stick together it will work.
2-In Canada we have different “programs” to offer consumers additional incentives to offset the price differential, which translates into if you believe this line you deserve it.
3-Our captive finance companies must deal with residuals, and avert residual losses, and resale values. From 2 above increased incentives have the same effects on residual and resale values. Many manufacturers use “future sales” to support “previous sales” and use CPO programs with financial incentives to “artificially enhance used values”. Which translates into, we are multibillion dollar entities and will take care of ourselves.
4- Remember a few years ago when the dollar was at 65 cents, enough time has gone by for all manufacturers to recoup whatever losses they experienced during that time. Residual losses barely existed, most lease returns were “dissapearing” at good prices. Until US buyers got smart and started buying through Canadian agents.
I do have to sympathize with the Canadian auto dealers. Especially those who are close to US major cities. It has to suck to be stuck with a bunch of aging stock that you bought a while back, only to have the new stock come out across the border cheaper thanks to currency fluctuations. Kind of like those iPhone buyers who paid too much.
I find the idea that a US auto dealer won’t sell to a Canadian silly. The dealers have to spout the party line when called. God knows that car salesmen are very creative bunch. The Canadian buyer has to learn how to ask the right questions.
I suspect the dealer already has a way for the Canadian to bypass the corporate restrictions. The buyer only needs to learn the trick for tapping into that program. It might be an offsite “friend” of the dealer, a code word, or something along the lines of buying a demo model.
Regarding the poster who speculated about a North American Currency. There was rapid rumors a couple of months about the Amero, a North American (or Pan American depending on what rumor) currency that was going to replace the US dollar. My own mom asked me about this and honestly believed that the US Treasury had printed the new Ameros up and was waiting for the signal to replace the greenback.
msowersone : That’s some hard core ignorance right there, I don’t think I neven need to refute what you said, everyone else here knows the difference.
Thanks tankd
As I have noted in previous editorial replies, I am a Canadian looking for a new car.
I don’t give a rats as* what the Canadian dealers charge for vehicles. Long live the free market system. What I do want is the freedom offered by NAFTA and supposedly protected by law to buy goods from our biggest trading partner without fear of reprisal.
I always have believed that a manufacturer with-holding warranty rights bought and paid for like everyone else is illegal. Period!
I also believe that it is illegal for a merchant to refuse to refuse to sell their product to a customer based on their (the customers’) country of origin.
The gov’t of either one or both countries may have some wonky policies in place for this type of activity (arbitrage) but it is not the manufacturers place to do this.
It’s my money, don’t tell me where I have to spend it!
@Samir Syed
Ayn Rand would crap if she tried to buy a M3 in Canada.
You are the one who seems to be expecting something that is not actually happening in the real world, and blaming “lethargic greed” as the reason the real world is not behaving as you expect.
I’m not expecting anything other than an eventual correction. If this were a pure, homogeneous capitalist market, the price would already have adjusted itself a long time ago.
It hasn’t because of a host of legislation – safety, emissions, tarriffs and tax laws to name a few. However, a large part of the problem we are facing is asymetrical information: Manufacturers know about the discrepancy in price, many Canadians don’t. The manufacturers and dealers are exploiting this asymmetry to maximum advantage. The Internet is probably the best information delivery system history has ever known, but it’s not perfect. Without a perfect delivery system, the North American car market will never function with 100% efficiency.
Ergo, my original comment – pure capitalism exists only in theory.
I am currently shopping for a new car from the US. Yes the prices are quite a bit cheaper than Canada. But in all seriousness, if the US dollar is sinking in value compared to every other currency, then shouldn’t American dealers start charging MORE for cars?
grifter :
October 5th, 2007 at 6:03 pm
I am currently shopping for a new car from the US. Yes the prices are quite a bit cheaper than Canada. But in all seriousness, if the US dollar is sinking in value compared to every other currency, then shouldn’t American dealers start charging MORE for cars?
They certainly should be for the ones that they manufactuer and then transport to the USA from Canada, duty free thanks to NAFTA.
“Canadians would rather forgo a 30% discount now just so that they won’t face a corisponding 30% increase later if the dollar swings the other way?”
Most people will tend to forget the discount but will never forget the increase. Most people dwell on angst where glee is short-lived. People aren’t happy unless they are miserable…It seems a modern-life psychology :) Global companies avoid adjusting sales price to avoid pee-ing off their customers…The people who only see price increase. Global producers all do currency hedging to avoid losses. A 30% move on currency exchange between border countries is a REAL bitch though.
A better way is what dean suggested but if rebates are offered for a long period of time then customers will start to always demand rebates…See 2.801 trucks. It is better to ween people off rebates than to increase sticker prices.
FedEx et al used “fuel surcharge” instead of raising/adjusting shipping prices. It’s a good strategy.
That’s certainly how the auto makers look at it. However if one or all of them would take the risk and equalize the prices as Harley-Davidson has been doing, they might find they’ve set of an unprecedented flurry of purchasing activity, GM and Ford dealers in particular could use some quantity over quality of sales right now.
Customers can grumble all they want when the prices go back up, what are they going to do, buy cars from our other neighbor with a weak currency? I don’t really want a russian car, especially one that’s crossed the artic tundra.
theflyersfan :
October 5th, 2007 at 11:47 am
On a totally unrelated subject, I remember the nice summer of 1997 when I took a trip of the Atlantic provinces (Prince Edward Island, Nova Scotia, and New Brunswick) with the great, for Americans, exchange around $1.35/40 per USD. It was still a screaming deal even when the HST was starting to be used (in the trip the following summer.) How times have changed…
Yes, the bottom has really fallen out of the tourism industry in the Atlantic pronvinces as a result. It is our largest industry (at least it was), but at least all those layed off people get to spend their unemployment checks on $24,000 Civics right? :)
Agreed. prices will rise in the US once the hedging the manufacturers do currency-wise runs out. Enjoy it while it lasts on both sides of the border.
A few points:
I am a Canadian living in Toronto. For those that are not aware Toronto metro area is about 6 million people. We live 1.5 hours away from the border.
1. I was planning to buy an BMW X5 next year. I will be buying it in the US. While there are hassles, the savings is just massive. X5 3.0si lists for $61900 in Canada but $45900 in the US. I won’t do all the math here, but in short there is about $14000 in savings after all costs, excepting the couple of days off work to make it happen.
2. I hear mixed things about the warranty. I know that I can get it serviced in the US if something major happens. That said, I think that the Canadian market will want my off warranty business, so they will have to play fair or I go off dealership for all common service work. $14000 buys a lot of warranty work.
3. I am not a currency speculator. However, as a realist who reads Economist, New York Times, CNN online, I think that you would have a hard time finding many people that are bullish on the US dollar. Canadian manufactures (not dealers!) will take this into consideration at some point in the future, but it won’t be either quickly or fully.
4. Doing business in Canada does cost more. As an owner of a business in Canada, I will admit to that. However, I was a manager of a distributor in the US at one point and Americans create many unneeded hassles and taxes on business too. We are not communists any more than Americans are a tax free and red tape free society.
5. Most Canadians will buy cars in Canada anyway. I’ll put it politely here: Canadians are apathetic, and most will not even care about the price difference unless it gets even greater. For the 2% (if it is that high) that buy product in the US, if I was a Canadian manufacturer I wouldn’t lower my prices by much, if at all. A drop of 10% of list might mean a drop of 30-40% of profit. Big dollars here!
6. Porsche Canada dropped their prices here 10% last week. But they have customers with deep pockets that don’t need to finance their cars. Others will eventually follow.
7. I have been buying products in the US for many years. Even when the dollars was at it’s worst. The $3000 laptop that I am typing on was bought in the US 18 months ago. $500 savings. I have brought 7 digital cameras across the border in the last three years for family and friends. I don’t buy cars as often.
8. When I bought my current 2000 BMW 323i the prices in Canada according to the dealer at the time, were the cheapest in the world. Payback time, the manufacturers are going to think.
9. BMW Toronto sells oodles of 7 series and many are on corporate leases. What does a stockbroker or CEO with a $1mil job care about saving a few dollars???
10. If I was BMW Canada, I would rebate some of the savings back to the dealers in different ways. Money shuts many people up.
11. If the US dollar falls even further (it is US1=cdn1.02 today) something will have to give somewhere.
12. US prices on all imported goods are going up.
13. Lots of people complain about pricing. That is not what matters. People walking in buying cars matters. Unless sales go down in Canada as a result of this, what manufacturer is going to care? They still get the deal in the US but harvest more money in Canada.
14. What is wrong with a company making money (as long as it is not coming out of my pocket)? Canadians seem to hate that. Maybe we are commies!
gsp, the bulk of BMW sales in Canada are 3 Series with highly incentivised leases, as you see advertised on a regular basis, not 5 or 7 series.
This year the X5 was a new model, with sales spiking up for a period of time, as any new model usually does.
From the GTA, Buffalo is not far, Detroit is just a little further away, and for 1,000 to 2,500 in transportation nothing is far away.
The motivating force for manufacturers to maintain the status quo in Canada is “lease returns” and the residual values of these returns. Since the majority of lease customers walk away from their lease, the vehicle is not worth the residual. It begs the question “used vehicle values are important to who?” Not the lessee, and not the used vehicle buyer who is also comparing US prices to Canadian prices.
The other motivating force is $$$$(profits).
GSP,
Being from Toronto myself, I agree with most of your statements. However, saying that we’re angry because a manufacturer is making money may be oversimplifying things. My personal beef is with manufacturers who resort to threatening… ahem, ‘asking’ their dealers to refuse to sell to Canadians, or refusing to honour a warranty (Honda anyone?) While the legality of this is questionable, it certainly does nothing for my opinion of such manufacturers. Anyone remember the Soup Nazi?
p00ch,
It was the identical situation in Canada when the dollar was at 65/70 cents, the same manufacturers were doing the same thing with Canadian dealers.
The individual that calls a US dealer from Canada will be politely told that they cannot sell to Canadians. What else can a US dealer say over the phone, not knowing if its a “mystery shopper” on behalf of the manufacturer.
Yes, Canadian dealers were doing the same to US buyers some (short) years ago, which was just as irritating. However, I don’t believe the disparity was as pronounced as it is now.
This is one of the rare situations when I sympathize with car dealers. On both sides of the border. The Canadian dealers can’t sell at US prices because they bought high from the manufacturer. At the same time, US dealers are afraid of mystery shoppers and have no choice but to politely tell the customer “no sale”. This is pure manipulation on the manufacturers’ part and I think it may create bad PR for some companies.
People are waiting for prices to drop. Canadian prices will go south and American prices will go up… that is my prediction.
Last time I chime in on this ed.
I’d like to add that there is at least one Canadian bank that is financing US auto purchases.
I think the Manufactures are to blame for both the Price and with holding warranty protection, I also think that for the average Buyer of say a Civic or a Corolla there is not that much of a saving but for high end vehicles like Corvettes and BMW’s there is a huge saving available by buying in the USA.
Our Dollar is High due to our massive supply of Gasoline, Natural Gas, Steel and other minerals, the World wants these items along with the USA.
An example of Canadian pricing:
When smart was launched in Canada in Sept 2004 the Pure version was starting at 16,500CDN which at the time was approximately 12,630US.
The smart that will be launched in the US, the Pure version has a starting price of 11,590US and since smart sales in Canada have been trending downward the 2008 Pure will start in Canada at 14,990 including the softouch transmission, leather wrapped steering wheel, full hubcaps.
On Sept 1, 2004
CDN to US= 1.3068 CDN to Euro=1.5915 US to Euro=1.2179
On Oct 1, 2007
CDN to US= 0.9931 CDN to Euro=1.4121 US to Euro=1.4227
smart was launched 3 years ago in Canada, and was not sold in the US at the time, smart is launched in the US at a dramatically lower price than in Canada, suddenly after 3 years the Canadian price is adjusted downward.
In this case its not a question of saying that the US price must increase. The car is not out yet in the US, they surely knew the mid term trend of exchange rates, prior to establishing the US price.
and smart in Euros was 8500 on the road price compared to around 20k CAN the same year.
Another thing to point out on this pricing issue: Canadians are not any worse off, so why complain?
Canadian prices and wages are the same [as they were before the exchange rate w/ the USD changed]; I’d guess some real wage growth continues, in fact, probably more than usual.
Anyway I’m still waiting for someone to tell me that wages are dropping like a stone across Canada to compensate for the rising Canadian dollar. That not being the case, Canadians are no worse off, are they? This whole complaint is mere jealousy that Americans and a few spunky Canadians can buy something more cheaply in the US.
P.S. — I myself sell a product that is available for export, and I proudly proclaim that I will NOT discriminate against my Canadian brothers who want to give me money — the more the better!
Kevin: Who told you Canadian wages were 30% higher than US wages? If anything it’s the other way around.
tank, I didn’t say that Canadian wages are 30% higher than in the US. (And I’m not saying a car in Canada costs the same in terms of hours of labor.)
I meant that Canadian wages are the same now, in Canadian dollars, as they were a year or two ago. I.e., a Canadian job with a salary of 40,000 Canadian two years ago still pays 40,000 Canadian now (probably a bit more). Canadians are therefore not taking a corresponding pay cut.
By the way, I assume there are exceptions — I’ve been to Windsor, seen the big houses there on the lake, and was told that a lot of those folks work across the water in Detroit. So border Canadians who commute to the US and get paid in USD (if it works like that) would be getting screwed now to some degree.
Forget about exchange rates. This is about choice. And my choice is protected by NAFTA. It’s law.
I mean really, can you imagine buying a television at a Best Buy in New Jersey and being asked for your citizenship identification papers?
It’s about time the courts tell BMW and Porsche that the FT in NAFTA stands for free trade. Not kind of, or almost, or if we feel like it, or how about 10%.
Let me put it another way. The Honda Civic DX, a NAFTA car, is $17,000 Canadian or $14,000 US. If the dollar was at $1.215, then those two prices would be equal. The last time the dollar was steady at 1.215 was mid 2004.
This is when things get more interesting. Nissan 350z, not a NAFTA car but also not built in either country. Starts at $49,768 Canadian, $27,900 US. Now on the face of it, those prices are based n a 1.78 exchange rate. Last time the dollar was at that level? Never as far as I know, not in the life time of this car anyway.
Ah, but what about tariffs you say. Well, I’m pretty sure that there is a tarriff on Japanese imports in the USA just like Canada, but lets pretend for a moment that there isn’t. Add 6.9% to that $27,900 to bring it to Canada. That’s still a 1.67 exchange. You can’t really use RIV and conversion fees to boost that US price any higher because the dealers don’t pay that. You can’t add taxes in there either because both these prices are before any tax is applied. So even 7 years ago, we were getting boned on cars like this. I don’t know what it’s like in the USA, but to afford a 350z in Canada, you have to be be a fairly highly paid professional. Hell to comfortably afford a Honda Civic SI you have to be making 40-50 grand a year.
The current exchange rate is largely irrelevant in this argument. The only reason it’s at the forefront is that when the dollar is at or near 1:1, even people who can’t do basic math can see the huge difference on the US and Canadian web site for the same car.
Good points, Tank, I wouldn’t argue. But you seem to be assuming things should cost the same in Canada, once you adjust for exchange rates and tariffs. That is an incorrect assumption.
I see that it is time for me to let you folks in on another Economics secret. And really, this is the whole point here.
Most things DO cost relatively more to Canadians than to Americans for one simple reason: The US economy is more productive than the Canadian one. American workers are substantially more productive than Canadians. A day of work produces a greater value of stuff in the US than in Canada.
That’s not an insult to Canadians, that’s just a simple fact of economic statistics. (A recent report on this was released by the UN’s International Labor Organization, called “The Key Indicators of the Labour Market”: the U.S. was ranked #1 and further widening its productivity lead over most developed countries).
Explicit price tags and exchange rates do not matter. The point is that a year’s salary for an American buys more actual stuff than a year’s salary for a Canadian, because a year’s work for an American produces greater value than a year’s work for a Canadian — that is the issue that is being filtered through all the chaotic complexities of the whole economy down to car prices. And no, you cannot expect one product (like cars) to be an exception for whatever reason — unless you have a direct, unadulterated pipeline into the American market. And both governments strive to limit those “pipelines”, NAFTA or no NAFTA.
If Canadians want more affordable cars, you need to make your economy more productive, not expect unearned gifts from temporary swings in the exchange rate.
Kevin: You must be kidding me.
While what you said sounds like it was torn from the pages of a greenspan report, it’s obviously not true. If the US economy was so productive the dollar wouldn’t be headed to peso levels. I can think of no other product sold in both countries with the same point of manufacture that shows such a disparity in prices. If you can, please enlighten me. When an airline buys a plane from Boeing, does the Canadian airline pay 30% more than the American? I brought up the example of Harley-Davidson motorcycles. Prices are on par give or take 6 months of exchange rate. Electronics are on par damn near to the penny. Why is a Japanese made HDTV different from a Japanese sports car? I agree that a years salary for an American buys more than a Canadians. That is due to taxes. It has nothing to do with the price of goods.
On side note: I can’t wait to see the price difference on the Nissan GT-R, a car that’s going to go on sale for the first time when the Canadian dollar is actually stronger against the Yen than the US dollar. I bet there is still a difference upwards of $15,000 in the American’s favor.
Tank, well I referred to a very basic truism of economics and to a current statistical compilation released last month by a UN agency. You don’t have to believe me or them.
The price behavior of any one product is affected by a lot of things, and the behavior of different product classes are different. If a Canadian is getting a good deal on electronics and airplanes, then I suppose that’s balanced by the bad deal he gets on cars and other things. Not hard to see the enormous differences in the market dynamics for those three things.
I don’t make the rules, I’m just explaining a likely reason for why you see what you are now seeing.
American people aren’t more productive than Canadians. The American ECONOMY is more productive, simply due to the fact that there is 10x the population to produce goods, and pay taxes. GDP is not a per capita measure.
Exchange rate or not, let’s accept that US prices are lower. So, under normal free market conditions, Canadian customers will drift toward the better deals. In simple economic terms, this will result in a) slightly lower Canadian prices due to drop in demand, and b) slightly higher prices in the northern US states due to increased demand. Meeting halfway may not happen but the price differential will become insignificant enough that most Canadians won’t bother crossing the border.
Problem is, this market movement is being stifled by the manufacturers. Someone mentioned an excellent example earlier with Boeing. Can you imagine Boeing charging Air Canada 20-30% more than they charge KLM or Lufthansa (all other things being equal)?
Car dealerships and car makers have a lot of political clout, at the end of the day, the government is going to intervene on their behalf and the consumer is going to get it in the shorts. Daimler Benz has already put an effective end to the importation of their products, it can’t be long before other companies do the same. I suspect they are just waiting for the new models to come out – when that happens, they can just refuse to certify the US models as “safe” for Canada and make them illegal for import, just like the Evo, the GTO, and essentially all Mercedes are now, and eliminate that path completely for consumers.
There is never going to be “free trade” when it comes to cars – they are too heavily regulated, so even if the government doesn’t want to, the makers themselves will just use the regulations to their advantage. Reading the comments on the Colorado review reminds me of another Canadian issue being fought out right now – over 40,000 vehicles have been imported from Japan over the last 4 or 5 years, under another legal “loophole” (the 15 year rule). The vast majority of these imports are Japanese turbo diesel versions of the Toyota Hilux, Landcruiser Prado and Mitsubishi Pajero. I suspect that this is hardly a surprise to the commentators in the Colorado treview clamoring for diesel pickup trucks that apparently no one wants to sell, new or used, in North America. The lobby of dealers and manufacturers is fighting as we speak for these vehicles to be banned, no doubt for “safety” reasons. They did the same thing in Australia and New Zealand, and it looks like it will be happening in Canada soon enough.
Car dealers have no control over the pricing of the product they sell – the manufacturer set the price.
M-B is the only manufacturer that does not provide RIV with a list of elegible vehicles, all the others provide RIV with a list. On request M-B provides the documentation to import an elegible vehicle.
Canadians buying vehicles imported from Japan, that can no longer be certified in Japan, should ask themselves a few questions?
The vehicles assembled in Oshawa, Oakville, Brampton, Alliston, Cambridge and sold in the US for less money are conveying a clear message to Canadians, and confirming that they are paying too much.
Over 80% of Canada’s population is within 100 klms of the US, its close, easy access, and reinforces the fact that only 100 klms away, the vehicle assembled in Canada is less money.
The 15 year rule will be modified to 25 years in the near future.
Car dealers have no control over the pricing of the product they sell – the manufacturer set the price.
M-B is the only manufacturer that does not provide RIV with a list of elegible vehicles, all the others provide RIV with a list. On request M-B provides the documentation to import an elegible vehicle.
In terms of wholesale pricing, that’s correct, of course. (Obviously, the dealer will negotiate the ultimate price paid by the retail customer, but I’m sure that AGR meant this when he made that comment and that’s not the point here.)
The point that many of the other commentators here aren’t seeing is that much of this ultimately goes back to the manufacturer. It’s the manufacturer that sets the wholesale (invoice) price and MSRP. Chances are pretty good that the margin between wholesale and MSRP is similar in Canada to what it is in the US.
What you’re largely seeing here is that multinational corporations tend to establish profit and margin targets based upon a dominant currency, because they will ultimately convert the revenues back to that currency. For many companies, that means converting to US dollars, as the US is so large that much of their revenues will have been earned in US dollars, regardless. (This is even true of some multinationals not based in the US.)
So what you’re seeing now is the byproduct of an old exchange rate, and you’ll likely see some erosion of the gap as time goes on and manufacturers can hit their targets based upon lower prices.
The warranty games and Mercedes’ failure to cooperate with RIV are the manufacturers’ efforts to protect their Canadian dealers. Canada is in somewhat of a unique circumstance in that much of its population resides within a couple of hours’ drive of the United States, which means that it is difficult for the manufacturers to maintain the two-tier pricing structure without adding additional measures to keep Canadian customers in Canada.
You see this two-tier pricing system with a lot of products, not just cars; for example, most consumer electronics items sold in the US do not have warranties that will be honored in Canada, even though the products themselves are identical but for French packaging and instruction manuals. The retailers would howl in protest if these companies made it easy for Canadians to shop south of the border, and the lack of a warranty is often enough to deter many otherwise would-be shoppers from buying in US stores.
So even with the exchange rate at parity, I suspect that the warranty issues will remain as they are. While the pricing may not ultimately end up as being exactly the same, the proximity to the US will invariably force prices down if the exchange rate remains as is.
M-B is the only manufacturer that does not provide RIV with a list of elegible vehicles, all the others provide RIV with a list. On request M-B provides the documentation to import an elegible vehicle.
Have you actually tried this? Do you know anyone who has successfully imported a Meecedes?
Canadians buying vehicles imported from Japan, that can no longer be certified in Japan, should ask themselves a few questions?
Sure, the first question, “will it pass OOP inspection in Canada?” is easily answered. There seems to be no law against driving CANADIAN vehicles, generally in much worse condition that Japanese ones, over 15 years old, is there?
Even if there was, the consumer’s preferred solution is to eliminate the 15 year rule, so that NEWER Japanese vehicles can be imported. How will extending the rule to 25 years help anyone?
The only reason this is happening is because the car dealerships have the political clout to make it happen. Soon enough, the US border will be closed to imports as other makers join Mercedes and then Canadians can go back to paying the 100% Canadian dealer markup.
Pch101, M-B in Canada owns the dealers in the major metro markets, they make money at the wholesale level, and at retail…they make money twice when they sell a new vehicle. These are the dealers that are factory owned in one market http://www.mbtoronto.com/
tentacles, yes M-B’s have been imported from the US into Canada, make a request to M-B for a specific vehicles, they will either say yes or no, if yes once the vehicle is in Canada it must be modified by an M-B dealer, depending on the model it can be not much to thousands, once modified, M-B will provide the letter of compliance.
Extending the rule to 25 years, will mean that a vehicle will have to be over 25 years old to be exempt from RIV requirements. Now its 15 years old.
The major challenge is the price of Canadian used vehicles, although there are hurdles to import them, it takes a potential customer a few seconds to verify prices in the US, and use the US prices as a negotiator.
Additionally, in Canada especially for higher priced vehicles, leasing is very popular, in certain segments over 50% of the vehicles are leased. Manufacturers and captive finance companies are very concerned about the residual values on lease returns. Especially when 36 months prior, the residual was “enhanced” to lower the monthly payments.
Used vehicles in are in a “perfect storm” scenario.
yes M-B’s have been imported from the US into Canada, make a request to M-B for a specific vehicles, they will either say yes or no, if yes once the vehicle is in Canada it must be modified by an M-B dealer, depending on the model it can be not much to thousands, once modified, M-B will provide the letter of compliance.
Do you YOURSELF know anyone who has? I am perfectly aware of what the “official” MB position is, I know of a number of people who have bought BMWs when they might have preferred Mercedes, because it was not worth the trouble. I am also anecdotally aware of a number of people who have tried, and end up selling their cars back to the US because Mercedes made it all but impossible for their cars to be legalized. Looking in the Autotrader, I don’t think I have EVER seen a US spec Mercedes for sale, while about half the BMWs for sale at any point in time are US imports, a little strange, eh? As far as I am concerned, Mercedes has solved their importation problem.
In the past few weeks I heard of 3 imported cars being modified by an M-B dealer one of them an E Class.
The folks that arbitrarily import an M-B without a letter from M-B prior to bringing the car into Canada, most probably run out of time, there is only a 45 day delay to have the vehicle modified, and approved by RIV.
I know factually that M-B will not allow a W140 to come into Canada.
An M Class requires little modifications, cars usually need work to the rear bumper. All modification work must be performed by an M-B dealer, only new M-B parts must be used.
You will not find US M-B’s in the autotrader since I would speculate that all the imported vehicles are done by individuals for private use, not for resale. A dealer will not get on his knees in front of M-B to import one from the US, when the same dealer can import a BMW or Porsche without getting on his knees.
They might have solved the physical importation of a vehicle, the online importation of prices, and the effect of potential customers voting with their wallets for something else…they cannot solve.
This situation is laughable. And prooves to me actually how little red tape there is in Canada to import vehicles (which ultimately brings me to the conclusion that the canadian government will adopt severe measures for vehicle importation pretty soon).
I would like to bring the attention of the readers to the situation in Mexico, which is as most of you know (i hope) the Other border.
In Mexico the dealership markup for vehicles is even more outrageous than in Canada, even for vehicles “Hechos en Mexico”.
The reaction of the Mexican government was very simple an straight forward. No vehicle importation possible!!!! unless it is used, non-luxury, and more than 15 yeras old.
Of course they create another phenomena: the used car market migration of all trucks and minivans 10yer old toward the south!
The Boeing example isn’t apples to apples because Boeing will charge whoever buys their planes in American dollars.
Canadians can’t do that with cars. I’d love to be able to walk into a dealer with US bucks and buy a car at US MSRP. But I can’t.
Several people have commented about how Canadians are still buying cars here despite the price “rip off”. It should be noted however that the largest auto segment in Canada is compact cars where the price difference is relatively minimal. I believe there is a consensus among journalists covering this topic that the price differential has to be in the order of $5,000 to make the purchase worthwhile (factoring in travel, negotiating time, importation costs, etc.). The price difference for Civics, VW Rabbits or the Mazda3 aren’t sufficiently large to make this worthwhile. Now – about the MINI Cooper S – that is a rip-off by BMW.
GSP hit the nail on the head except for the rich guys with 7 series and million dollar incomes. I’m one of them…I’m buying everything in the USA. I send my personal assistant south and I’m bringing everything back from cars to plasma tvs to boats. I’m no sucker. And most people making that kind of money aren’t either. They care about price. When you stop caring about price, you lose your money and become a fool.
A company I know is bringing in 8 Subaru Tribeca Limiteds…2008, brand new. $33,000. Shop around Oakville leasing companies, you’ll find them. I’m taking one of those.
As for BMW, I tried to get an M6 cab thru BMW Canada at $140,000. Sorry. I can get it in the USA for $105,000. Brand new. Even my BMW Canada dealer is bringing in used Beemers.
I live in a rural community, you should see the Escalades around here. Everyone has one. All from the USA. Me included.
Plasma TV’s – check out Panasonic 60 inch Vierra 1080p – $5,500 at Future Shop, $4,500 from my maw and paw supplier store here…not good enough, I bought it in The USA for $3,200. I did get my dealer to sell me a 52 inch Sharp LCD for the same price as the US…$2,700 – was his cost.
SeaDoo’s and Yamaha’s – all new 2008 models – introduced with 31% and 38% mark up over US prices. Guess who is going down to the USA to buy – and all his rich friends too.
I feel sorry for the dealers, but the fat cats in Toronto’s big towers can piggy up to the trough in the offerings from the stupid, ignorant or lazy…and of course, those who just don’t value money or know any better.
GSP hit the nail on the head – a drop in prices of 10% is a huge profit hit for the distributors…profit like they have never seen before EVER. The only way they will budge is if head office decides their image is getting smoked or sales drop off 25 to 50% and then market share becomes an issue. Last I looked, the Canadian economy is smoking hot, USD sinking – they ain’t droppin their prices guys. And those that do, will just give up a token of their greed. Which is the same thing each and every one of you would do. So you can’t blame them. Blame the Demand side.
Guess who is going down to the USA to buy – and all his rich friends too.
It’s interesting to see that while everyone keeps buzzing about the weak US dollar and the booming Canadian economy, the strengthened Canadian dollar is now trying to undermine some of the very factors that have been stimulating Canada’s growth (what American company would build a factory in Canada right now?).
And Canadians themselves are taking precisely the textbook actions that would tend to restore the previous exchange rate (buying US dollars, selling Canadian dollars) and to slow the Canadian economy (shifting consumption to imports), while stimulating the US Economy (buying US goods).
You’re absolutely right Kevin. This is the most interesting economic time for Canada. I personally believe that the expense of the US military in Iraq and the incredible price tag of homeland security are the major cause of the drop in the US dollar. I have a few businesses, both sell to America so my income is US Dollar based. My service business, a software company, has been hammered under high growth…we take two steps forward and one back as we increase our sales but lose some on the exchange. No problem…we’re selling electrons so the business can cope – in fact it’s doing really well. My other business…makes an alternative energy product…sorry to say we have decided to close our factory with 50 employees, that we were in the middle of expanding to 4 times in size. Production is going to China. China is another drain on the US dollar. And it’s accelerating. That business is doing really well, but we can’t justify the expense of making the product in Canada. And we’re moving the operation to California. I also attribute issues in the US to a tightening of immigration…immigrants are the engine of a powerful economy. They do the work we don’t want to do freeing us to take on new and bigger challenges.
Globalization and free trade increase prosperity…but each step of progress brings short term challenges which results in some chaos and unemployment. Those things are coming our way soon…and increased prosperity will follow as we work our way thru it.
I am a fan of Milton Friedman.
Even India’s economy is booming. I often wonder if all the company’s that outsource to cheaper countries really thought that they would always be paying 3 cents on the dollar for labor. Some day, after the current Chinese government dies off, we’ll be making things to sell to China instead of the other way around. Chinese cars will be too expensive to export and we’ll all be moaning about how they get the “col” Civic Type R and we just get the Si. :)
I lived through Canada’s Mulroney years and heard repeated hype about the benefits that free trade would bring to Canadians. You can argue ecomonics all you want, but now, corporate necktie people, you are going to have to ante up – the Canadian dollar is hovering at par with the US dollar and there’s no bloody way I’m going to pay any domestic manufacturer MORE than what it charges in the USA when a vehicle is assembled in Ingersoll or Oshawa or wherever here. If you want to move your products in Canada, I have to see some equalization or I’m simply going to purchase a “Honda Certified” (not all of them are) used vehicle. I would receive the following on such a vehicle:
6yr/120,000km transferable powertrain warranty
7 days/1000km exchange priviledge
Carproof vehicle history report
Now I might pay up front for this, but
a) the powertrain’s covered (most expensive to fix generally speaking)
b) vehicle should be in reasonable condition (or Honda wouldn’t go out on a limb)
c) a vehicle with a decent residual value
I’ve been GM since the 70’s, but guys, if you want repeat business, I want to see some reason to do so.
Finally, don’t confuse this with a rant against the dealers – I want to see adjustments originate at the corporate level.
I have just scanned the posts here, so this may already have been said, but since we all think that we are economists, let’s talk.
The US dollar has fallen against the Canadian Dollar. It is nothing the Canadians have done.
The US dollar has also fallen against the Euro and the Yen.
Therefore, unless the Germans and the Japanese are willing to lower their profits, the Bimmers, Toyotas, Porches, etc will all INCREASE in price in the US when the current stocks are gone. So all you Canadians out there. BUY NOW. The lower US prices will not last for long.
The Canadian dollar has made big gains against the yen, which makes it all the more difficult to explain current pricing of Japanese built cars. It’s stayed pretty steady against the euro.
From the cbc…
—
“Last Updated: Tuesday, September 25, 2007 | 10:04 PM ET
CBC News
If you’ve been hopelessly ogling a sweet new Porsche, it’s no longer quite as far out of reach.
Porsche announced Tuesday plans to lower prices by an average of about eight per cent on its 2008 models to better reflect the loonie’s strength.”
—
It would seem that one of the German companies has already demonstrated a willingness to lower their profits, or is the term “profiteering” more accurate?
I have been searching for a company willing to export from the US into Canada for the past few weeks. I know they exist- I just haven’t been able to find (a reputable) one. Does anyone know of any?
Links or names GREATLY appreciated
Jeff Niman, where are you located in Canada?
Toronto-
Know of anyone?
Jeff Niman, in the GTA there are a few companies that bring in vehicles from the US on a regular and ongoing basis.
If you are looking for a specific vehicle, these companies within a reasonable period of time can come up with the vehicle.
Just scanning the posts – very interesting too.
An important point, worthy of consideration I believe, is that the government’s role in this should be protection of the voter, who is primarily a consumer. It appears agreements like NAFTA appear to do little for the consumer and have more to do with the prosperity of businesses. I think it’s odd that most of us assume that government prioritizes business interests first. Of course, none of us can individually afford lobby groups, expensive legal firms and reorganize our tax liabilities like big business can.
Government should support the principle of NAFTA, irrespective of whether we are single people or large enterprises. The only qualification should be that we are citizens. If not then we should tear up NAFTA completely.
Within the NAFTA framework and a separate currency, prices for consumer goods should equate across the border. If there weren’t some pre-existing “harmony” between the US and Canada, then US visitors would be required to leave their unsafe vehicles as they travelled across the border, and vice-versa.
Just my thoughts.
The media is siding with the Canadian consumer with their coverage of the price disparity, it would seem that RIV is also siding with the consumer.
The “popular opinion” is with the consumer.
For Canadian if you want help and advice on purchasing a vehicle in the USA, look at this web site Carhelpcanada.com or phone them at 416-651-0555. Someone made a comment on this site about where or who to contact, this organization is a non-profit group and I purchased my last Car from them, Gentle Ted