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?