The price disparity between the United States and Canada affects more than just cars, it affects most consumer items. Yesterday, Canadian Finance Minister Jim Flaherty met with the Retail Council of Canada and retail company executives to discuss what changes need to happen to bring prices into line. The end result of this meeting was essentially that Flaherty is barking up the wrong tree and that consumers will have to be patient.
The reality of this situation, is that retailers (other than giants like Walmart) are at the mercy of the companies that manufacture the goods they sell. Likewise, new car dealers are at the mercy of their manufacturers. Until the manufacturers lower their prices to a reasonable level, the poor new car dealer doesn’t stand a chance.
In discussions with several new car sales managers over the past weeks, it seems that many dealers, from different brands are experiencing a serious down turn in sales over past years. Is this a result of cross border shopping?
It may be too soon to tell, as import stats for the past couple of months are likely not available yet. What the general feeling among the sales force seems to be that consumers are staying away from dealers while they wait to see what happens with pricing over the next few months.
What will happen is the manufacturers will likely blame the dealers for not selling initially. After another month or two, then perhaps the manufacturers will begin to see that they need to make some changes. The question is, can the dealers survive the slowdown in sales while they wait for their respective manufacturer to respond?
8 comments ↓
Flaherty was WAY off…it was really just political grandstanding that only a politician can pull off.
Most dealers of hi line cars (where the discrepncy between Canadian and US prices is the most blatant) are experiencing a very quiet October. It will be interesting to see October sales figures next week, while keeping in mind that Sept was lower than the previous year.
Here is an interesting report from a Chrysler dealer meeting in Las Vegas http://wardsdealer.com/latest/chrysler_canadian_dealers/
On tuesday we started a series on our blog titled Wash Out that goes to this coming Saturday, it provides additional insight take a look http://stradaautostore.squarespace.com/display/ShowJournal?moduleId=1005539&categoryId=139872
The Canadian consumer with the dollar at parity finally feels empowered, and is voting with his wallet.
I am in retail but not cars. My wholesalers have not dropped prices and the stock on my shelves was paid for before the dollar rose. If I drop my prices to the US prices I will lose money. That is a fact of life for most small retailers.
I am already selling some product from nearly at cost or below. That does not pay the bills like Hydro, Gas, Telephone and taxes.
The average Canadian consumer does not want to see Canadian prices, match US prices. The consumer has enough understanding to comprehend that prices in Canada for a multitude of Canadian reasons will be higher than US prices.
The question is how much higher? If an item was selling for $ 1.00 in Canada a few months back, if a consumer sees a price of 90 or 95 cents it conveys the message that the “retailer” is making an effort to earn his business.
Before the dollar increased was what 1.10 Canadian to a US dollar?
Leighton, there is no question that all retailers have been put in a very bad position.
Strada, I agree with you. I would have no problem paying a couple of percent extra due to the “unique” challenges of selling in Canada and I think most consumers would agree also. This nonsense of 22-30% extra is ridiculous.
Gary, we would all pay a bit more money to do business in Canada, with Canadians. What pisses people off is that they are literally saying “give me a reason to do business with you”.
On this one the Canadian consumer is a few steps ahead of the Canadian retailer, the consumer has the balance of power.
November 5. This morning the Canadian dollar hit 1.07 US
I just priced a Buick Enclave (loaded) on Buick.ca. It came out to $61,055.00
I priced AN IDENTICAL one on Buick.com (USA website). It came out to $46,040.00
In CANADIAN DOLLARS (as of this morning) that USA price is $42,817.20
The DIFFERENCE (in Canadian Dollars) between these two prices is EIGHTEEN THOUSAND, TWO HUNDERED AND THIRTY SEVEN DOLLARS AND EIGHTEEN CENTS. or .. an amout equal to 29.9% of the Canadian price
My friends, this is a no-brainer.
However, GM dealers in the USA have been instructed NOT to sell NEW vechicles to Canadians..
But, they CAN sell used vechicles.. I am in the process of determining exactly how many miles are needed to be classified as a USED car.
Oh and, UNLIKE Chrysler, GM WILL honor the warranty 6 months after the original warranty start-up date. This date is 6 months after the ORIGINAL owner purchased the vehicle. As I understand it, if the original owner has had the car for 6 months, then there would be no loss of warranty coverage.
I saw a thing on the news a couple weeks ago. A border agent (Montana / Alberta) said there were 60 vehicles a day coming across the border into Canada at that particular crossing.
Hmmm…the 6 month thing seems to be a standard issue. That tells me that demos are the way to go.
The Montana/Alberta thing is interesting too!
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