Porsche Lowers Canadian Prices… A Bit
Yesterday, we reported on a Canadian class action lawsuit claiming carmakers and dealers conspired to violate “competition and consumer protection laws” to artificially inflate new car prices. Today, the National Post reports that Porsche is lowering prices on its 2008 models in Canada by more that 10 percent– plus an additional 2 percent on an “equipment adjusted basis” when compared to an ’07 model. "We cannot ignore our customers and dealers in Canada who can look to the U.S. and recognize a substantial price difference," says the president and CEO of Porsche North America. Yes, but– the price of a new Porsche will remain higher than those sold in the US. Assuming the loonie is at parity with the US dollar, a 2008 Cayenne will still cost some 27 percent more in Canada (C$55,200) than German sport trucks sold south of the border (US$43,400). Still, Porsche’s Schwarzenbauer's back remains patted: "We listened to the market and did what is best for our customers in Canada."
Speaking as a Canadian, I was very happy to buy a car when our dollar was down to 65 cents and the manufacturers had not raised the price commensurately. I thought they were dumb and stupid not to raise the prices. Every other item went up, so I could not fathom why car prices did not. Now, however, our dollar has gone up to a level not seen in 30 years, trading at more than par with US currency. Inherently, due to geography and a small population, Canada is less productive economically per capita than the US, so I presume our currency will slip again to about the 85 cent mark at some point, particularly if the US manages to weather the current credit problems associated with flogging housing to people who couldn't afford it. If cars were sold in Canada at the equivalent of an 85 cent US dollar today , I wouldn't complain. Take an Acura TSX. $28200 in the us with $700 freight and PDI, manual or auto. In Canada $36300 manual, $37300 auto with a $1700 freight and PDI. The pricing figures for a Subaru Forester XT are almost identical. It does not take a mathematical genius to see that this disparity is way more than 15%, even if one factors in the 4.2% import duty difference between the US and Canada on Japanese imports (no doubt on some mythically low trade price). Local taxes are not included in this comparo. This is what Canadians are fundamentally complaining about. However, everyone also agrees that the car companies or any company selling anything can attempt to charge whatever price they want. Forgive me if I decline to do so at what I personally regard as extortionate pricing. Forgive me also if I feel like taking a week off and going to the US to purchase a vehicle, and saving 10 grand on a not particularly upmarket car. Now, however, car companies such as Porsche are attempting to prevent their US dealers from selling to Canadians, eh? This is blatant restraint of trade under the NAFTA rules, and also meets the test of collusion to prevent individual Canadians from purchasing a vehicle in the US. That is the basis of the lawsuit that is being pursued, and to me it looks like a slam dunk winner. All these car companies are admitting to doing it. Calling it "taking the high road" is a statement so farcical, it could only come from someone who is toeing a corporate line and avoiding reality. Imagine, if you will, my going into a US WalMart store to purchase some underwear and being forced to sign a no-export agreement, because they are half-price compared to the price in a Canadian WalMart, and WalMart doesn't want to upset the sweetheart deal it has flogging underwear in Canada at ridiculously high prices. In principle, there is no difference whatsoever between between my analogy and the car situation. None. I could go on and talk about the ripoffs we face in Canada on things like the vehicle freight/PDI charge, printed book prices and sundry other items, but that is the way it is. Meanwhile, the issue would go away if prices were adjusted reasonably. A token 10% of Porsche munificence is not going to do it. The nearest vehicle I can find to my 85 cent mark is the WRX. $33K Cdn against $28K US for the same options. Right at 85%. Except for an extra grand of freight to pay for the monthly champagne parties at the dealerships.
Canada is a huge ripoff country... You essentially wind up paying 40 grand OTD for same vehicle that costs 25k stateside on the road.
Is this any different than Americans importing German Mercedes-Benzs to the US because they can (or at least used to) be purchased much cheaper there. What is considered a taxi there (such as a E320) is flogged as an expensive luxury car in the US. I know the MBNA is totally against US citizens being able to buy their Benz in Germany for prices that Germans pay, instead of the big markup the US dealers want. What it boils down to is the question: Can a private company impose a tariff on their own products that are purchased in one market for consumption/use in another market?
Didn't Canada get the R3x Skylines? I think its a fair trade. You get the better cars, we pay less. Works well for me.