Update: Cross-border shopping

November 16, 2007 - By John LeBlanc

Grumpy consumers, overzealous border officials, grandstanding politicians, and backpedaling carmakers—hey—has the past month in the Canadian car retailing business been fun, or what?

We’re now about four weeks into this maelstrom caused by the Canadian loonie rocketing well past the sagging American dollar; a reversal in currency value that exposed some vast differences in new car pricing between the Canadian and American markets.

Since then, some Canadian new carmakers reacted to government and consumer backlash by swiftly adding cash, finance or equipment incentives to their sales programs.

Some took a “wait and see” attitude.

But judging by the number of full-page ads in last weekend’s Wheels, more and more carmakers are seemingly jumping on the pricing parity bandwagon.

From the emotional reader feedback we’ve received over this hot issue, there seems to be an underlying feeling that for once (other than at the hockey rink or comedy hall), we have a leg up on our neighbours from the south.

Yet, when it comes to buying a new car or truck, Canadians were being treated like second-class citizens.

To this point, some of the recently introduced incentive sales programs, like Acura’s “No Passport Required” or Honda’s “The New Deal for Canadians”, certainly play the patriotic card in their ad copy.

Whereas Chrysler’s “Consumer Price Adjustment” headline, is more succinct.

Others—with “free gas”, “scratch and win” or “year-end reductions”—avoided the whole cross-border shopping topic like our Prime Minister avoids internal memos.

Whether it’s thousands of dollars in cash incentives, low lease offers, or free sunroofs, car buyers still have to ask: are these new deals, well, really a deal? Or are Canadian car buyers merely being thrown a bone by carmakers wishing this whole pricing parity thing will fade from consumers’ consciousness before year-end sales quotas are due?

For example, at first blush, Nissan Canada’s recent $8,000 reduction on a 2008 Infiniti QX56 luxo-SUV (among other models) sounds generous.

I mean, eight grand—that’s nearly half the cost of a new Nissan Versa subcompact.

But based on the currency rates on the day I’m writing this column, even with Infiniti chipping in, at $71,600 (or $21,406 more expensive than an American model) the QX56 may be a tough sell to the knowledgeable consumer.

In big, bold letters, Hyundai Canada’s ad last Saturday boasted, “With 0% financing, the Americans will be coming here to shop.”

Well, maybe the Yanks who like to get fleeced.

Over the phone, a Buffalo Hyundai dealer told me I could expect a six to seven per cent financing rate on a 2008 Sonata with a V6 and an automatic transmission. Trouble is, that car is still $8,000 cheaper in the States than a comparably equipped Canadian model.

The same problem lies with Acura Canada’s parity pricing program.

It offers zero per cent financing for both leases and loans. But car buyers still have to get their head around the idea that even with higher U.S. finance rates, a TL sedan is still early $10,000 more expensive in the Great White North.

Or how about a 2008 Volkswagen Jetta 2.5L? VW Canada is offering a $1,000 rebate, yet at $22,475, that’s still $6,062 more than one bought in Boston or Detroit.

I don’t care what the lease rate is, that’s still a lot of fahrfernugen.

Now, no reasonable person would ask North American car retailers to match dollar-to-dollar MSRPs between the two markets.

It’s simply isn’t fiscally responsible or good business.

But carmakers like Chrysler and Ford have managed to offer substantial cash incentives on certain models that brings pricing more inline with comparable American market models. And further perusal of last weekend’s Wheels saw plenty of end-of-year specials.

So if you do read a patriotic ad headline boasting big savings to Canadian new car buyers, as always, buyer beware.

Oh, and make sure you plenty of batteries for your calculator.

- John LeBlanc is an Ottawa-based automotive critic and publisher of www.straight-six.com