23 August 2007

Canadians Are Getting The Shaft

Have you looked at car prices lately?

If you're an American, probably not too closely since all of your media and information is fairly insular and will always report the US pricing alone. Subcompact cars will run from 12k to 16k, compacts will nudge up to 21k, midsizers will range from 20k to 30k, and so forth. There are identifiable pricing segments, and there are identifiable ranges. Yes, inflation has moved pricing upwards, but at a fairly average pace.

If you're a Canadian however, and you've looked at car prices lately, you're probably slamming your head against your computer monitor as you read this. The reason? Car prices in Canada are ridiculously out of whack. Due to pricing differences predicated on a 60 to 70 cent Canadian dollar from 3-5 years ago, Canadian car prices have absolutely soared compared to their American counterparts- without moving up beyond usual inflation increases- all this is because if you haven't heard about it recently- the Canadian dollar is floating near 95 cents US...and climbing.

Parity between the bucks appears likely to happen, and every car maker is sitting back quietly raking in the profits.

Some examples?

Take the Honda S2000. In Canada, the pricing starts at approximately $51,000. A 70 cent dollar would give you an American price of about $35,000. However, with the dollar at the level it is, the American price should be closer to $49,000. Want to know the actual price of an S2000 in the US? $34,000. So for every S2000 sold near sticker in Canada right now, Honda is making an extra $15,000 Canadian. Without doing anything. Think about that for a second. If you adjust for the current dollar, the S2000 shouldn't be anywhere near $51,000 in Canada right now- it should be closer to $36,000.

Want another example? Let's go mainstream.

How about the Camry? The XLE V6 trim with navigation will cost a Canadian buyer a tad over $40,000. So you would expect that the same American car would cost about $37,000 US right? Wrong. A Camry XLE V6 with navigation in the US will cost at MOST $31,520. In essence, just by sitting pat and letting the markets move, Toyota is making an extra $6,000 per Camry sold in Canada. Think they don't want to increase their market share at these prices?

A final example? Let's play with a truck.

An extended cab Chevrolet Silverado LTZ 4WD with a regular box with cost a Canadian buyer a shade over $45,000 with no other options ticked off. The American version at current dollar levels should cost almost $43,000 US. Instead, US buyers can get the exact same vehicle in the US for about $34,500- a difference of $7,500 US. When you're selling as many Silverados as GM does, this is big money.

And it's not just the 3 examples above. Every single model of vehicle out there has this discrepancy built into it. Now, I'm not advocating that car manufacturers change their pricing structures on a month to month basis depending on the level of the dollar- but we're talking a more than 20 cent swing in the last 5 years, and not a single one has done anything to rectify the situation. Would a yearly evaluation help? Every 2 years? Even more amazing is that no one is doing or saying anything in Canada right now. No consumer groups have made a peep and no one is writing into their local newspaper griping about it. And yet it's plastered in front of us regularly if we read any information from an American source. Yes, there are some border dealers who specialize in importing American cars over, but really, this is a quiet 'epidemic' that is getting no play.

I guess the only question is- who will be the first to sacrifice some profit in order to make an artificial price play in the Canadian market? Or even more out there- who will be the first automaker in the US to RAISE prices to reflect the weakness of the greenback?

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