21 September 2007

It's Starting To Hit The Fan

Almost a month ago, I wrote an article commenting on the growing disparity between Canadian and American car pricing as the Canadian dollar continued its climb to near parity with the US buck.

What's funny to me in reading that article was this part-

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.
Well, one month later, and the Canadian dollar is no longer at 95 cents US, it's now at par. The day I never thought I'd see has arrived, and over the last couple of days, the Canadian dollar has been more or less trading 1 for 1 with the greenback. Incredible.

And now, finally, major media in Canada is starting to take notice.

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 4x4 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?

Source- The Toronto Star, Wheels

Think the issue is going to go away? Think again. Most automakers (and representatives from other industries) are either sticking their heads in the sand on the issue, or making absolutely ridiculous statements that will only serve to bite them in the ass as time goes on. Some have gone off the record stating that Canadians were getting great deals back when the dollar was valued at 65 cents, so now it's only right that automakers milk parity for as long as they can. Others have done stupid things like cite the higher cost of operations in Canada. A country I should remind you, that has an open border with the United States, is part of a huge free trade agreement, where the majority of peole live 100 kilometers from the US/Canada border, and whose inhabitants largely speak the same language as the people of the United States outside of one province (well, two if you count Newfoundland). The excuses simply don't make sense. At all. And it's only going to get more infuriating as the Canadian dollar continues to climb. Some analysts are predicting it to rise to $1.10.

What then?

So I'm left to repeat what I said before- the first automaker to bite the bullet and stop skimming profits off of the Canadian consumer will have a homerun on their hands. My pick? Chrysler. Excess inventory, new management, low brand perception at present time- they're the perfect company to do it. Now they (or someone else) has to pull the trigger.

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