Rising Canadian dollar could prompt deep price cuts

[chonkoa]

This is good news. If done properly I may decide not to keep my cars when I move back up north in next couple of years. This is also good for the Canadian economy which is very strong, as consumers will be able to keep more money in the pocket that will further drive growth.

If you live in Canada, you're probably already aware the Canadian dollar matched the U.S. dollar for the first time since 1976 yesterday. Canada's currency has been inching toward par all year, finally coming in line with the greenback on Thursday. Unfortunately for Canadians, car prices have not kept up with trend. But that may be about to change.


Back when it took $1.50 in Canada to match one U.S. dollar, Canada's higher car prices were perfectly logical. A car the sold for $50,000 in America would sticker for $75,000 at a Canadian dealership. Those days are long gone, but car prices remain high.

Take the Porsche Cayman S, for example. If a car shopper in Canada heads to his or her nearest Porsche dealership this weekend, they will have to shell out nearly $85,000 for the mid-engine coupe — a whopping $26,000 more than the U.S. MSRP of $59.000. Similarly, a BMW M5 retails for $83,000 in America and $113,000 in Canada.

According to Quebec's Guide Auto website, luxury automakers including BMW, Mercedes-Benz, Audi, Porsche, and others are preparing to cut their Canadian prices by up to 15 percent in response to the currency changes. According to the French publication, Porsche plans to drop the price of its Cayman S by $10,000 in Canada — a modest cut, but a far cry from the full $26,000 difference.

As for the rest of the auto industry, Guide Auto didn't say whether domestic prices would be adjusted. Even the entry-level Saturn Sky costs $7,000 more in Canada than in America. Even the Dodge Charger — which is built in Canada — costs $6,000 more at Canadian dealers.

The currency problem poses a serious dilemma to automakers, who have to keep new car shoppers happy, without sending the value of used cars plummeting or enraging buyers who make their purchase before price cuts.
Automakers are expected to announce Canadian pricing for the 2008 model year next month. Many analysts suspect Canadians will turn to importing vehicles from America if major price cuts are not implemented.


http://www.left lane news/strong-canadian-dollar-could-prompt-deep-price-cuts.html

 

[Matt530i]

Somehow I don't see steep cuts happening anytime soon. If German companies are losing money because of the low US dollar (their US profits are not worth as much), why would they suddenly decide, "Hey, let's start losing money in Canada too?"

The only way for prices to drop is for Canadians to start cross-border shopping. With cars, that's problematic. The gap on most German cars is large enough that after the import taxes and modifications (need a speedometer in kms, daytime running lights, etc.) you still save but it's a considerable hassel. Plus, some parent companies have agreements with their dealerships not to sell cars in the US to Canadians and some companies are also voiding warrenties if the cars are exported.

Plus, how pissed would you be if you bought, say an M5 for $113,000 only to have it drop in value to $83,000 the next month? I'd love to pick my next BMW for the price it's sold in the US, but sadly I think it's just a dream.

The Canadian dollar has gained a small amount against the euro this year, but it's more US dollar weakness that has the Canadian dollar at par with it. True economic theory would argue for US price increases, but I don't think the auto companies have the stomach for that.

 

[siko]

Somehow I don't see steep cuts happening anytime soon either... all these manufacturers will keep screwing us because we're too stupid to bitch about it.

If i would buy my next car instead of leasing it, I would buy it down south and import it here. In some cases even with the import fees you can save thousands.

 

[Bartek S.]

Canadian Loonie reaches parity with U.S. dollar, so why are Canadian cars more expens

Canadian Loonie reaches parity with U.S. dollar, so why are Canadian cars more expensive?


Due to the dollar's dip, one American greenback is worth the equivalent Canadian Loonie. At least, it's worth the same at the exchange window. However, it is not worth anywhere near the same amount at Canadian car dealerships, and at least one Canadian wants to know why.
Even though the two currencies are at parity, the difference in the prices of various cars ranges from $7,000 to $10,000. An Audi A4 Quattro with the turbo 2.0-liter is $32,000 in the US, but it'll set you back more than $40,000 in Canada. A $25,095 Taurus here will run you $33,399 in Canada. The discrepancy when it comes to Volvo is highest, with a 38-percent markup that equates to an $11,000 premium if you buy in Canada.
With those kinds of numbers, it's no surprise that Canadians are going south of the border to find a set of wheels. The blogger, Clever Shark, has written to automakers to find out why the land of the maple leaf has to pay so much, but he's not holding his breath for answers.

 

[Matt530i]

I've been looking at this a little more (importing from the US). The only major cost is that you have to pay a 6.1% import tax (on the selling price in the US) and get a couple safety inspections and make sure that the car meets Canadian safety standards.

Can anyone from the US tell me the following?
-Are daytime running lights standard on US-spec BMWs?
-Are kilometers shown on the speedometer?
-Do BMWs in the US have 5 mph bumpers?

My lease is up in February 2008 and I'm strongly considering this, even if I have to buy.

 

[Centurion]

Don't get too optimistic about the price cuts. It's much more complex than it appears.

Canadians and people of other nationalities are bound to get more value for their foreign currency in the US compared with 5-7 years ago. Back then 1 Dollar was equal to one Euro, now one Dollar is equal to 0.7 Euro.

When I lived in the California earlier this year more or less every single merchandise like cars, gaming consoles are designers clothes were 30% cheaper than they are in Sweden. That 30% figure represents how much value the dollar has lost during the last 5-6 years.

The ones screwed here are Americans, especially those traveling a lot or moving with their money abroad to Europe, Japan or other nations with strong currencies.

Remember that just because the Canadian Dollar is worth more than the US Dollar it doesn't mean that you guys have right to price cuts. After all many other nations are in the exact seat. Global prices will be stabilized in a slow rate as time goes on. But don't expect any price cuts soon. This is very complex economy tying together many different markets, countries and currencies.

The dollar is still fluctuating a bit making it a bit risky for manufacturers to chop prices too much. They will all proceed with caution.

 

[sunnyman12]

quick question...if you import a BMW from the states with 7000 miles on it do you still qualify for there 50000 mile maintance service or there 80000km warranty?

 

[siko]

-Are kilometers shown on the speedometer?

Look like it.

Here's an enlargement of the 335i interior (photo taken from BMW North America, LLC. - BMW North America)...



X3...

 

[chonkoa]

quick question...if you import a BMW from the states with 7000 miles on it do you still qualify for there 50000 mile maintance service or there 80000km warranty?

From what I have heard, you will lose the free maintenance programme, however the manufacturer warranty is still valid.

 

[siko]

From what I have heard, you will lose the free maintenance programme, however the manufacturer warranty is still valid.

Losing the maintenance programme is no big deal when saving 10k on a car.

 

[sunnyman12]

thanks guys

 

[Matt530i]

Remember that just because the Canadian Dollar is worth more than the US Dollar it doesn't mean that you guys have right to price cuts. After all many other nations are in the exact seat. Global prices will be stabilized in a slow rate as time goes on. But don't expect any price cuts soon. This is very complex economy tying together many different markets, countries and currencies.

The dollar is still fluctuating a bit making it a bit risky for manufacturers to chop prices too much. They will all proceed with caution.

I'm not saying that we're entitled to price cuts. We are, however, entitled to walk across the border, spend our money in the US and get the same products for considerably cheaper even after we return to Canada and pay the necessary import duties.

I've also written BMW Canada to see what part of the warranty / free maintenance programs will be valid in Canada. I'll post their response when/if I get one.

 

[chonkoa]

I'm not saying that we're entitled to price cuts. We are, however, entitled to walk across the border, spend our money in the US and get the same products for considerably cheaper even after we return to Canada and pay the necessary import duties.

I've also written BMW Canada to see what part of the warranty / free maintenance programs will be valid in Canada. I'll post their response when/if I get one.

The annoying thing with doing that is the contribution you make to the US economy rather than the Canadian economy. That action will also add to the sales numbers of the US market rather than the Canadian market.
I would rather the pricing landscape bear a reflection of the currency landscape.

 

[Matt530i]

The annoying thing with doing that is the contribution you make to the US economy rather than the Canadian economy. That action will also add to the sales numbers of the US market rather than the Canadian market.
I would rather the pricing landscape bear a reflection of the currency landscape.

It's simple economics. In order for the pricing landscape to reflect the currency landscape, Canadian auto dealer's need to have an incentive to lower their prices. That incentive will be provided by having to compete with US dealerships on price. If all Canadians ever do is sit around on our asses and complain but take no action, then we'll continue to pay higher prices.

I'd much rather contribute to the Canadian economy, being a Canadian and all but as the saying goes, business is business.

 

[JasonR]

Within the EU there are situations like these. And it has forced car manufacturers to level prices to avoid things like this from happening, especially near borders, where it is a common practice to cross shop. I've always wondered why the Canadian prices are so high (for cars) if they are basically similar to those in the US. Changes are very little from the standard US. (BTW, I love Canada )

 

[siko]

Porsche Lowers Canadian Prices Due To Plummeting US Dollar

Porsche is lowering its Canadian prices on 2008 models by an average of 8 percent (10 percent if you ad equipment improvements) to tackle uprise among its customers. See, due to the tumbling US dollar that is in parity with their dollar, Canadians are facing momentous price differences between cars sold in their home market and the US. “We cannot ignore our customers and dealers in Canada who can look to the U.S. and recognize a substantial price difference,” stated Peter Schwarzenbauer, president of Porsche Cars North America.

Porsche stated that its suggested base retail price for a 2008 Boxster is $58,100, compared with $63,600 for the 2007 model; a base Cayenne is $55,200, down from $60,100, a Cayman is $63,500 from $69,600 and a 911 Turbo drops down to $158,300 from $170,700.

[Source: CarScoop]

 

[siko]

Let's hope it's the start of a wide spread trend.

 

[Matt530i]

I second that motion. Although the gap has closed for Porsche, the difference on a 911 Turbo (as I would equip it) is still going to be something like $20,000 with the dollar around par.

After accounting for the import duty, the relative exchange rate is priced around 1 CAD = 0.87 USD for a 911.

 

[chonkoa]

All I want is no different from what most of the Canadian consumers want, and that is for fair pricing of vehicles in Canada. The currency situation is only going to get better with the Canadian dollar and as such prices should appropriately reflect those conditions.
The US$ is on a free fall which makes me wonder what I am still doing here.

 

[Bartek S.]

Re: Canadian Loonie reaches parity with U.S. dollar, so why are Canadian cars more ex

Automakers to face $2B class-action for Canadian price discrepancies
A few days ago we posted on the price discrepancy between identical vehicles sold in the U.S. and Canada. The discrepancy was always there, but became apparent when the value of the Canadian Loonie reached parity with the U.S. dollar recently. It was then that consumers couldn't ignore the fact that they were paying more for vehicles than their U.S. neighbors, up to 38% in some cases.

The Toronto-based class-action lawsuit firm Juroviesky and Ricci is taking up the case and expected to file a $2 billion class-action suit on behalf of four Canadians who feel that they paid more for their cars than they would have in the U.S. The class-action suit is open to any Canadian consumer who bought a new vehicle between August, 2005 and August, 2007 when the Canadian dollar was rapidly appreciating, but the prices of Canadian cars weren't adjusting.