Canada-U.S. Pricing Dilemma

Canadians look at sharply lower auto prices in States and feel it’s very unfair they’re paying thousands more while the buck hovers near par; Wheels talks to buyers, dealers and car makers.

Like Seinfeld’s non-fat yogurt, the pitch seems too good to be true.

A brand-new Ford Focus with air conditioning for just $9,999, a factory-fresh VW Rabbit for $12,999 and a 2007 Chevy Trailblazer 4×4 for $21,999 are three pinch-me-I’m-dreaming bargains advertised recently in The Boston Globe.

Prices like these take the breath away of vacationing Canadians who open a local newspaper in the U.S.

The lease deals seem even more unbelievable Boston’s Kelly Nissan offers a new Altima for $139 per month (with $2,723 due at signing) and a Pathfinder 4×4 for $239 monthly.

While priced in American dollars, the gap between the two currencies is closing, making the U.S. stickers especially appealing.

Yet it begs the question with the loonie’s rise against the U.S. currency, why aren’t Canadians seeing lower automobile prices here?

Reader Tom Becker asked the same question of Porsche North America, the importer of his 2001 911 C4 Download the video from amazon library. He’s contemplating purchasing a new 911, but noticed the wide chasm between American and Canadian prices on the auto maker’s website.

“Why do I and every other Canadian get unfair pricing?” Becker wrote in an e-mail. “You list a GT3 at $147,300 Canadian and $106,000 American. After conversion, I would have to pay more than $24,000.”

When he posed his question last December, one American dollar cost $1.16. Plug in a more recent exchange rate ($1.06) and the gap between the two prices has widened to more than $33,000 (Canadian) (the GT3 is now listed at $107,500 in the U.S.).

Porsche wrote back, explaining that its German-built cars are valued in Euros, not American greenbacks, so the Canada-U.S. exchange rate was moot.

But when Becker crunched the Euro’s exchange rates, he discovered that Canadians were still paying well over $20,000 more than Americans for the same model wie kann ich video downloaden.

“Wow, that would buy many sets of tires, gas and insurance!” he wrote to us.

Despite growing awareness of the loonie’s favourable exchange rate, auto manufacturers seemingly have done nothing to address the situation. If anything, they’ve let the price disparity grow unchecked.

“The gap has become embarrassingly large,” confirms George Iny, president of the Automobile Protection Association (APA). “The potential is there to erode the Canadian dealers’ business,” he says, as more consumers go new-car shopping south of the border.

Iny knows of one Montreal-area Porsche dealer that has seen one-quarter of its sales volume migrate to the U.S.

“The phenomenon is most pronounced in the super high-end market where the savings are substantial,” he says.

Like other car-buying services, the APA has begun purchasing vehicles in the U.S. for its members, but it’s strictly a cash-only proposition, which precludes two-thirds of the buying public, says Iny netflix nederland downloaden.

Broker Mark Derry says his clients increasingly have been asking about importing new cars from the U.S., but he has declined to do so.

“It is a very detailed transaction that must be done perfectly or you will have difficulties at the border, such as faxing the title to the border you are crossing 48 or 72 hours beforehand,” he says. “I am busy enough with regular business that is very straightforward.”

WHILE IMPORTING VEHICLES from the U.S. is not as complicated as it used to be – thanks to the North American Free Trade Agreement – it is time-consuming and intimidating for the novice.

But where there’s a problem, an entrepreneur can often spot an opportunity.

Originally a decades-old Pontiac dealership in Hamburg, N.Y., Superior Auto Sales opened a satellite showroom in Oakville two years ago under the name Fournier Auto Sales, where it could display new and used American-sourced vehicles and explain how Canadians could tap into the savings without leaving the GTA.

“We offer a 10 per cent savings by the time all is said and done,” explains sales agent Jim Reddy. “The more expensive the vehicle, the more significant the savings.”

The Fournier showroom offers a mix of pristine used vehicles and brand-new models, including a Porsche GT3, Mustang Shelby GT500 and Dodge Charger Super Bee.

Fournier promises a dealership experience virtually identical to that of a new-car dealer, a convenience factor that has considerable appeal given the do-it-yourself alternative thm windows herunterladen.

“IMPORT THE CAR yourself and you have to present the title to U.S. Customs, which could take 72 hours,” cautions Reddy. “The consumer basically has to book a week’s vacation to shop in the U.S.”

That’s if the buyer can find an American dealer willing to deal at all.

“U.S. dealerships have clamped down and will not sell new cars to Canadians anymore,” warns Fournier general manager Bob Barker. “Used cars are a different kettle of fish, however.”

The company has amassed plenty of experience, having exported some 30,000 vehicles from Canada to the U.S. back when American dealers took advantage of the 65-cent dollar. Now Fournier hopes to reverse the flow by making it easy to shop American.

In a study conducted last year, DesRosiers Automotive Consultants determined that the typical new vehicle was $5,842 more expensive in Canada than in the U.S., a 17 per cent price premium (after the exchange rate was factored in).

Dennis DesRosiers believes auto makers are addressing the yawning price gap by offering Canadians better incentives.

“They are taking some of their exchange rate bonus and putting it out into the market in the form of aggressive incentives,” he says.

“Not much movement on MSRPs yet, but we expect these to come gradually with the new models being priced aggressively this fall.”

Stew Low, communications director at General Motors of Canada, maintains that Canadians are getting better deals on the showroom floor, regardless of the disparity in manufacturers’ suggested retail prices Download avira free for free.

“ANY PUBLIC COMPARISONS of pricing I have seen does not take the discussion to the actual transaction level, which is important because of the high percentage of Canadians that finance/lease and the level of finance/lease incentives in the Canadian market,” he wrote in an email.

But when pressed to provide an example of a superior Canadian deal, Low could not supply one.

Spotted in the Boston Globe was an advertised GMAC lease on a 2007 Chevrolet Silverado 2500 4×4 for $249 per month, while a GMAC SmartLease on a similar Chevy pickup truck in Ontario costs about $400 per month (with $2,000 down in both cases).

It would take a Cray supercomputer to uncover all of the differences between Canadian and American sales incentives, but suffice it to say American consumers are no strangers to deep discounts.

To suggest Canadians are getting better deals is open to debate. Just try negotiating a $79 per month lease on a new Nissan Sentra with $1,995 down (as offered by Colonial Nissan of Medford, Mass.).

Robert Dexter, a spokesperson for BMW Canada, was more forthcoming with some answers as to why Canadians are paying more.

He says adjusting prices to reflect currency fluctuations can introduce “instability” in the marketplace, impacting the residual values of leased vehicles and ticking off owners who purchased earlier at higher prices spotify playlist herunterladen speicherort.

Then there’s the negative perception of falling prices, Dexter says, which can hurt an upscale image.

“There’s a reluctance to discount, which can affect the ‘premium’ brand,” he says.

Rather than tinker with sticker prices, BMW and other manufacturers prefer to give Canadians more product features for the same price.

“We’ve made efforts to address the currency (valuation) by adding content to our products,” Dexter says. “Base models are better equipped in Canada than in the U.S.”

He explains the reason Canadians will never see identical prices on both sides of the border is because the cost of doing business in the Great White North is higher.

“The U.S. has economies of scale with 10 times the population. Marketing costs are higher here by doing everything in two languages. There is only one port of entry in Canada (for BMW), while there are three or four in the U.S. Taxes are higher here.”

Meanwhile, the volume of U.S. vehicles being imported into Canada continues to grow. Last year’s sum was 112,826 units while this year’s total to June was 64,096 – 29 per cent ahead of last year’s cumulative total to June ganze seiten herunterladen.

The types of vehicles crossing the border have changed, too.

FIVE YEARS AGO, the list reflected Canada’s top sellers, such as the Honda Civic and Toyota Corolla, while the popular 2006 and 2007 models now entering the country are Chevrolet Trailblazers, Cadillac Escalades and Hummers, according to information compiled by the Registrar of Imported Vehicles (, which is authorized by federal authorities to provide information to importers and make sure regulations are followed.

While most imported vehicles are pre-owned, it is new and nearly new products that are experiencing greater importation volumes now.

“Basically everything that enters the RIV is considered used despite the fact you may have purchased it off the lot minutes prior to importing (it) into Canada,” says deputy registrar Gary Moriarty.

“It does give an idea of the increasing trend towards current-year models going through the program,” he says of the latest data.

The trend suggests dealers, brokers and fleet buyers are getting involved in importation in a big way, likely to circumvent the manufacturers’ Canadian pricing.

Beyond the obvious higher prices Canadian consumers pay, it is new-car dealers here who bear the brunt of the fallout.

Mike Karim, president of the Toronto Automobile Dealers Association, is hopeful a meeting between his association and car makers can take place to discuss the issue of price differentials.

“We would like the manufacturers to do away with the cost disparity between the two countries, especially as the dollar approaches parity,” he says, adding that “we have to tread carefully.”

Fat chance, says the APA’s George Iny download prime movies to laptop. The automobile manufacturers ultimately don’t care, he maintains, since a car sold is a unit moved – regardless of which side of the border the transaction takes place.

“The manufacturers view it as one market, a continental economy,” says Iny. “Only the dealers lose.”

Iny believes the dealers’ protests will fall on deaf ears. The only hope, he suggests, is to bend the rules so that they can import cars, too.

“Create a partnership with U.S. dealers to control the importation and service of the vehicles,” Iny advises.

For the most part, new-car warranties that are often cited by many as the biggest impediment to importation already transcend the U.S.-Canada border.

Among major manufacturers, only Chrysler and Honda/Acura do not honour their warranties on vehicles imported from the U.S.

In the case of GM, the car has to be six months old before warranty repairs are honoured chess game to.

“We find when we properly explain the warranty situation to the consumer, they can make an informed decision,” says Fournier Auto Sales’ Bob Barker.

As a consequence, Fournier sells a lot more Lexus RX 350 crossovers than it does Acura MDXs, thanks to the full factory warranty provided by Toyota.

Some customers, however, wouldn’t think twice about driving their Honda or Acura down the QEW to Buffalo for warranty work, Barker says.

FOURNIER EVEN SELLS a Lubrico warranty that mirrors factory coverage on Chryslers and Jeeps, for example, whose exported products are not supported by the manufacturer.

Chris Travell, vice-president of the Automotive Research Group of Maritz Research, believes the manufacturers view U.S.-Canadian pricing as a nuisance issue, despite the growing trend of private importation.

He draws a comparison with Internet-based auto sales, which five years ago were predicted to make bricks-and-mortar dealerships obsolete. Needless to say, that hasn’t happened herunterladen support.

“Maybe five per cent of vehicles will be sold by enterprising dealers as U.S. imports,” he says. “That five per cent factor will always be there.”


September 22, 2007


The Toronto Star