Canadian Car Buyers Calling BS on Higher Prices

The internet is a wonderful thing.

graph120In the last 5 years, and particularly in the last few months, the Canadian dollar has rocketed in value against the US greenback. It doesn’t seem that long ago that a Canadian dollar was worth about 60 cents American. Now, we’re pushing the $1.08 range, and there seems to be no end in site. In the last 120 days alone, our dollar has gained over 16 cents against it’s American counterpart.

Now, as you might imagine, this has a number of implications for Canadians. It’s good for cross border shopping, but terrible for exporters. One area that wasn’t so good was car buying. When the values of our respective dollars were flipped, we could understand why we had to pay 10 to 15 thousand more for the average vehicle. It was a simple exchange rate calculation. But why did the price gap remain when our dollar started to rise?

Just today, I went to Toyota’s Canadian website (toyota.ca) to see what a fully loaded Prius would cost, delivered and ready to drive. The price tag came to just over $41,000. The exact same vehicle, just across the border in Spokane, Washington? $28,000. And remember, that’s $41,000 Canadian. If we calculate at current exchange rates, that’s $44, 300. Everytime we buy a vehicle, Canadian’s are getting screwed, in this case, to the tune of over $16,000.

Now, thanks to the transparency of the web (it took me about 4 minutes to figure out the extent to which Toyota was screwing us) Canadians figured out pretty quickly that we were being had, which lead to a flurry of cross border shopping. Suddenly, vehicles were flying off the lot, headed north for the border. The manufacturer’s answer? Certainly not to consider a pricing change. No, they forbid US dealers to sell to Canadians. Of course, in today’s world, for every wall you put up, a dozen holes are quickly rammed through it. The auto brokership business is thriving, thank you.

Now, as a Canadian, that makes me furious. There’s no excuse for it. The media have started to pick up on this and there is some pressure on the manufacturers, all of which have remained stonily silent. I suspect that if the reverse were true, and American’s were being fleeced out of $16,000 everytime they buy a vehicle, they’d be a little more responsive. I did hear Buzz Hargrove, spokesman for the Canadian Auto Workers Union, say that this wasn’t about pricing, it was about keeping jobs in Canada by supporting the Canadian auto industry. What? Like the Canadian auto industry is supporting us by giving us clear, fair and transparent pricing? Buzz, you have your head up your ass. This is about not treating customers like a bunch of stupid sheep. It’s about doing the right thing and valuing us. And if you can’t do that, you don’t deserve your jobs. I want Canada to be able to compete in a fair and open market place, not by slipping a fast one past your neighbours.

By the way, this is not just about cars. We’re paying more for pretty much everything. If you’re in Canada, pick up a book and see the Canadian price, relative to the American price. We’re paying about 40% more. A friend of mine actually had some US cash with him and tried convincing the seller to give him the US price if he paid in US cash. It didn’t work.

Now, there’s are somethings that will always be more expensive in Canada. We’re a big country, a lot of areas are fairly remote and we have a different tax structure. I’m not expecting parity with the US. I’m expecting fair pricing. I’m expecting a frictionless marketplace that let’s the customer decide.

What the manufacturer’s, like Toyota, don’t seem to understand is that in today’s world, the customer isn’t ignorant. We know when we’re being screwed. And we don’t like it. Why would you expect us to react differently?

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