Canada Sees Record Drop In Car Prices
The Financial Post reports that car prices in Canada have plummeted 6.8 percent last month, the biggest drop since 1956. The number comes from Statistics Canada's February inflation report, which reportedly shocked even the economists who collect the data. Vic Singh, chief economist at the Canadian Auto Dealers Association explains the phenomenon as an "accumulation of several months of falling prices, as the soaring Canadian dollar forces auto dealers to cut sticker prices in an effort to keep consumers from heading south of the border to get a better deal." A strong Canadian dollar, aggressive manufacturer incentives and increased demand for compact cars are also cited as reasons for the sharp downturn in prices. Of course, good old Econ 101 analysis indicates that this is what the textbooks call market self-correction, as Canucks have been paying high premiums on their vehicles for years compared to their American neighbors despite the strong loonie. Check out a slideshow comparing prices in Canada vs. US in November, 2007 here to see what we're talking about.
I have to disagree with you, AGR, because the US in in a recession and any car company increasing prices may as well just shut up shop and go into woodworking, or knitting. Pricing competition is intense in the US, and it will only get worse as the Chinese car companies start to arrive (and Mahindra from India) within the next few years. Why do you suppose Audi and VW are talking about manufacturing cars and engines specifically designed for the US market, in the US? It's because they can't even make a profit on the high specification Euro-designs they have now, even when built in Mexico, because of cut-throat price competition in the US. The US Dollar plummeting in value against all other currencies is killing the Europeans here.
Canada has one of the most closed markets in the world in my opinion. By closed, I mean that there is virtually no independent assessment of business practises by the media. So the manufacturers/retailers go cosily on ripping off customers, and they in general know no better. What this means is that rags like the National Post and the Globe and Mail newspapers carefully avoid controversy like the plague in case it affects advertising revenue. They're full of car ads, so it wouldn't do to rock that revenue stream, now would it? So occasionally, while you may see articles on high Canadian car prices, there are NEVER any editorials about it, just reportage. Total crap and abdication. WalMart is a pale imitation of its US parent. It didn't take them long after coming to Canada in the mid nineties to realize that they had hit the mother lode. So go to a WalMart here and find that despite bold claims of cheaper prices, it might be a penny or two less than other department stores or supermarkets. And damn near double US prices. You heard me. Predatory pricing, I call it. 97 cents instead of 99. Then, having enticed customers in, those people might find, if they were awake, that lots of other things cost a lot more, and I mean, a LOT more than other stores. I refuse to go there except for actual cheap buys, because I like to hit 'em where it hurts. Buy the specials only. However, my expeditions to WalMart and questions to customers there quickly lead me to believe that no one cares. So, hey, why not screw 'em? The customers are usually fantastically overweight from eating too many chips and cheap sawdust cream cakes anyway. You want to find the obese people in Canada? Go to a Walmart. Geezus. Now, take that link above to a "slide show on Canadian versus US car prices", as I did. Well, waddya know! Carefully picked models that have the least difference, and mostly cheapo crap cars anyway. (The Camry shows the real difference $6K on a $20K base) Typical Canadian media under business "control" trying to gerrymander the real situation, and make it look better than it really is. Wouldn't want a revolution! Do you think that they might mention that you have to add almost $2,000 to each Canadian car price for "Freight/PDI" (usually $1100 to $1600 and included in US pricing) and $500 "documentation fees", which amount to keeping some gimlet-eyed semi-bookkeeper in a glass office to vet your credit and attempt to flog you rustproofing, fabric proofing (WTF do you do to the leather for $399? I asked them -- she didn't know!), and extended warranties. Recently, I pushed that lot of crap back across the desk to the person, who then had the effrontery to want me to sign a preprinted WAIVER to the effect that she had tried to show me, and I had refused to look! Look, I'm in retail, high end audio, and our prices are almost down to US ones. Almost no difference. So I asked this woman whether she was in fact interested in selling me a car OR not. Because I can walk. Imagine, I asked her, if she came to my store, did not purchase, and I asked her to sign a waiver that I had in fact showed her equipment, but that she didn't want it. Would she sign that piece of paper? "No" was the answer. Same as mine. "Sell me the goddam car and get on with it, because I'm spending $500 just to talk to you, apparently. Or come along to my store and I'll sell you a TV and charge you a couple hundred bucks extra for the privilege of me selling it to you." They did not like me. At all. Upset the carefully crafted ripoff setup. Do you think that Canadians can buy cars at cost or, even more unbelievably, below invoice, at any of these dealers? Ain't gonna happen. Competition? They never heard of it, and anyway, some complete goof will come along and buy their stuff anyway. Makes my blood boil. It really does. Then after the sale, the salesman, who I've known for years of unreliable Audis, asked me to give them 10s on the Subaru Survey, because it was to my advantage. My advantage? Exactly how is that? Does Subaru think that your dealership walks on water? Get lost. There is only one Subaru dealer round here and the ones out in the country are so asleep, it's funny. I looked. I'm stuck. Let me summarize for the US audience, my experience buying a Legacy GT. And the real difference in prices. I was attracted by the Subaru Canada website offering $8K off on this model during January. Tiny, tiny print, and on one page only. Of course! Wouldn't want to rock the boat! Just want to offload a few Legacies quietly and only make triple the usual markup as in the US. US list price, including freight $29,495 for the 5EAT. Canadian price, $43,795 including freight and documentation. For a made in Indiana product with poorly fitting hood and left rear door, a sprung gas flap and no TMPS system on the Canadian model. Wahoo! Free trade, NAFTA. Demonic greed, more like. However, 700 bucks less than a WRX with auto, and its interior that Fisher Price would throw up at. The polypropylene moulder's delight. Plus the WRX auto is 4 speed and has no VTD centre differential or rear LSD. In fact the auto WRX has no centre diff at all, and uses the same crap automatic as my runabout 99 Impreza which I was trading in. Both cars have ESP, known as VDC in Subaru speak. So the Legacy GT was a relatively good deal, and $10K less than an Infiniti G35x. Thus the price was only $6,300 more than US list, or about $8500 more than a US shopper could actually buy the car for. After shaming them into giving me $4400 on the trade upon being offered $2300 initially, by simply walking out while they chased me (otherwise they would have wasted hours of negotiation), I feel I did about as well as could be expected in this country. An even $30K. (Hell, I met a guy this week who just spent $26K on a luxxed out Nissan Sentra including the $2K trade of an old Saturn with only 45K miles on it, that was in better shape than my old car. He bought the Sentra, because, get this, a Corolla was more and Toyota's fair deal pricing in Canada meant no dealing at all. Upside down or what? Fair deal means NO deal. That summarizes the barrel the car manufacturers have us over) The Legacy GT itself is pretty good. The shocks are softer than in my old middle model Impreza after 100,000 miles and will have to go, and the ABS is crap, far worse on ice and in snow than my non-ABS Impreza even with my $1000 worth of new snow tires. (Oh yeah, tires are 80 percent more in Canada as well!) Actual traction is phenomenal, far better than the Impreza, so the LSD actually works. The interior is great although scuff prone, and she flat out flies when extended. Floor mats in Canada, $98, US $50 at the dealer, nag at my heel as I floor it. US democracy and business competition works very well in the US itself, and I'm always impressed how folks there want my dollar and are willing to give me some real value in return. Transferring that system abroad often seems to allow the greedy to pervert the basic ideas, and to either become a dictator or jimmy the business process to their advantage. As here in Canada with business, or almost anywhere else where foreign aid is snapped up by the ruling elite and never makes it to the intended recipient. The ideas are fine, but the practise seems to only work properly in the US. And if you think Canada is bad, and I do obviously, a trip to Europe will find many more people with a hand extended out to receive money for some unknown business practise, like having butter on a biscuit (scone) -- it's extra in the UK. "Oh luv, you should've asked for buttered toast!' Jesus wept. As I did at my clamped wheel rental car in what I was sure was an actual real parking spot. Maybe my English reading skills are suspect..... I dunno. Think I'll go for a drive using our $4.60 per US gallon premium gas. A short drive, that is. Thank God for TTAC.
I share your anger wmba! It really grinds my gears! How can people be so complacent and buy in Canada at these prices? Are they that lazy to spend time researching to save thousands? Or is it b/c they've been told that prices have been adjusted and manufacturers' websites are full of "The NEW Deal for Canadians" banners? They can't be bothered to type a .com instead of a .ca in their address bar? I guess as long as stupidity, ignorance, laziness and "being nice" reign in this land, we get what we deserve. BTW, I'm all for fluctuating prices/adjusting prices every quarter.
Check out http://www.ataleoftwoprices.com/ for some interesting comparisons.