GM Canada Announces Incentives

Frank Williams
by Frank Williams

As reported here, parity between the U.S. greenback and the Canadian loonie has left many Canadian car buyers with a serious case of sticker shock. To rectify the disparity between U.S. and Canadian prices (albeit belatedly and reluctantly and only after a flood of cross-border shopping and probably more for their dealers' benefit than their customers), Chrysler and Porsche recently lowered their prices north of the border. GM is taking a different route, one with which they are no stranger: incentives. GM Canada has announced cash incentives ranging from $1.5k to $10K and a one percent reduction in the GST (Goods and Services Tax) two months before the government is scheduled to lower the tax. The press release doesn't say how long the incentives will remain in effect. Why incentives rather than price reductions? Incentives can be quietly phased out or terminated while raising prices after a few months would draw unwanted attention to the price "adjustment."

Frank Williams
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  • CSJohnston CSJohnston on Nov 12, 2007

    So as of five minutes ago, the loonie is down under $1.04 US versus $1.10 on Thursday. We've had a 5.4% swing in valuation in four days to the negative. Somehow, retailers and manufacturers are supposed to respond to this? When (and not if) the B of C lowers the prime rate, the dollar will go into a tailspin if this is the kind of speculative trading propping up the dollar. As for luxury makes, what is a manufacturer to do? If they drop prices that means the bottom falls out of the resale value of these units. Inflated values work both ways.. used prices for Canadian units are higher than US units. As I said, at a stroke Porsche slashed the value of every existing customer's Porsche in Canada by 10%, do you think they'll be happy about that?

  • CSJohnston CSJohnston on Nov 12, 2007

    $1.0309 US at the close of trading.

  • AGR AGR on Nov 12, 2007

    We are on 2 different buses here, if you agree that the price of new vehicles are too high in Canada which is the general opinion of potential customers. The exchange rate between the Canadian and US currencies merely drives the message home. The CDN dollar needs to be 1.03 to get a US dollar since most fiancial institutions charge between 2 and 4% to exchange funds. The monthly programs that manufacturers apply dilute used vehicle values, the present cash backs dilute used vehicle values. The US vehicles being imported dilute used values. The discrepencies are not as glaring with lower line vehicles, Canada has historically been a market for lower line vehicles compared to the US, lets all close our eyes and keep on driving lower line vehicles to keep the manufacturers happy with their pricing strategies. Porsche prices in Canada, have evolved from being intellectually obscene, to being insulting.

  • Samir Syed Samir Syed on Nov 12, 2007
    If an individual is considering a Fit, Echo, Cobalt, Versa, Mazda 3, the price differential is not a deterrent. The individual looking at a BMW the price differential even with a cash back is a deterrent. Not necessarily true. What if you could get a loaded Civic down south for the price of a Fit up north? What if you look at the 24,000 needed to buy a Civic EX and realize you can buy an Accord EX-L with the same money across the border? It impacts all segments, I'd say.