Chrysler Goes Loonie; Cuts Canadian Prices
First Porsche, now Chrysler. The Toronto Star reports that Chrysler has drastically boosted its incentives on Canadian vehicles. The move comes in response to the soaring loonie, which has inspired thousands of new car buyers to journey south of the border for cheaper wheels. The Pentastar's Canadian franchisees will now sell vehicles with up to CA$5,250 on the hood. Even the wildly successful (ahem… in Chrysler terms) 300 sedan has not been spared; Canadian dealers are offering CA$4,250 in incentives for the base model and a jaw-dropping CA$9k for the Hemi-powered 300C. The article notes that even BMW and Mercedes, two brands that have been traditionally allergic to the idea of discounts, have been forced to throw down the cash. With 95% of Canadians living within 160 km (100 miles) of the U.S. border, it was only a matter of time before the market would begin "adjusting." Meanwhile, Canadians who bought their cars in country at full whack can't be too happy about the hit to their car's residual values.
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Interesting twist on all of this. As in the US, there are many non-branded dealerships, buying and selling whatever comes there way. Some of them are even pretty respectable. In any event, one of them is advertising heavily...their pitch? Cars fresh from the US! They are buying up used cars, demos, and off lease cars from American dealerships and shipping them here. Presumably, they are doing what the law says they have to to make them legal here. And it appears they can do that and still turn a profit.
The day before Chrysler announced these incentives, I was checking out the prices of the Ontario built LX cars, (Charger, 300, and Magnum) because I wondered how far off their prices were from the US. A 300C was almost $10k more expensive in Canada, where it is built. Now the 300C has a $9,500 incentive sitting on the hood to level the playing field. My question is, what about people that purchased cars in the last few months, before all this currency s**t hit the fan? I would be mighty pissed if I paid full price on something last week that is $10k cheaper this week.
I'm not sure that Chrysler can cure its dollarwoes with a few incentives. Giselle Bundchen just announced that she will no longer accept Dollares Americanos as payment for her work - "they're just losing value too fast."
Jeff in Canada: Every difficult decision brings casualties with it. Chrysler would rather earn future sales than worry about past ones - and can you blame Chrysler really? The loonie's rise provides the early-moving automakers and incredible opportunity to come in and scoop the market away from the slower monoliths who refuse to adjust prices.