Canadian Vehicle Pricing Dropping ?

[Mike Jung]

1st it was Porsche: Porsche cuts Canadian prices (http://www.grandamgt.com/forum/showthread.php?t=71035)

He also noted auto incentives in Canada are already at record levels.

Analysts expect other big Canadian auto makers to announce their own new incentive packages during the next week.

Auto makers traditionally don't like to lower retail prices temporarily during the model year because that creates volatility in the marketplace.

Spokespeople for General Motors of Canada Ltd. and Ford Motor Co. of Canada Ltd., the two other biggest auto makers in Canada, could not be reached for comment.

Honda Canada and Toyota Canada hinted earlier this week that they were considering moves to address the price problem.

In the past two weeks, two luxury auto makers, BMW and Mercedes-Benz, have boosted incentives for cash buyers in reaction to price differences in Canada and the U.S.

So how about it, GM Canada ?

[Tonyyank]

Where's the Yugo :D

[Mike Jung]

Chrysler Lowering Canadian Pricing (http://www.grandamgt.com/forum/showthread.php?t=71690)

[Mike Jung]

Announced yesterday...
Ford joins incentive parade with 'allowance,' GST cut

Follows lead of Chrysler, BMW and Mercedes-Benz amid uproar over lower prices on autos sold in U.S.

Tony Van Alphen
Business Reporter
TheStar.com/wheels.ca
Nov 03, 2007

Ford is offering consumers big auto incentives worth several thousand dollars in response to a consumer uproar over much lower prices on the same vehicles in the U.S.
"We hear what people are saying – they prefer to purchase in Canada," Bill Osborne, CEO of Ford Motor Co. of Canada Ltd., said yesterday. "To continue to give Canadians good reasons to shop at home, we are providing additional savings on most of our vehicle line-up."

Ford will offer a $1,250 bonus on almost all Ford and Lincoln cars and trucks starting today in what the company calls its "Get in and drive year-end clearance" event.

Furthermore, Ford is adding a delivery allowance of up to $7,000 and a 1 per cent reduction of the federal goods and services tax.

During the last month, on-line shoppers have seen prices more than $10,000 lower on many popular vehicles at U.S. dealer websites, even though the Canadian dollar is now worth more than the American greenback.

As well, the ire of consumers increased when many automakers told U.S. dealers that selling to Canadians violated their franchise agreements.

Ford's move follows major new incentives by Chrysler, BMW and Mercedes-Benz in the last two weeks.

Earlier this week, Chrysler announced discounts of up $5,250 on cash purchases plus cuts in monthly payments for consumers who finance and lease vehicles.

At Ford, the incentives will drop the price of a 2007 Focus ZX5 by $3,250 to $15,749; a 2007 Ford Fusion by $5,570 to $18,749 and a F-250 super duty pickup truck by $4,500 to $24,499. The prices do not include freight or taxes.

[Mike Jung]

U.S. deals still a waiting game

Mark Richardson
Toronto Star/wheels.ca
Nov 02, 2007

After publishing last weekend's story about buying cars in the U.S., we received a dozen or so letters from readers telling us that we were obviously in league with the auto manufacturers and/or dealers.

We get such accusatory letters just about every week, whatever we publish, but in this case the letter writers scolded journalist John LeBlanc and myself for making the process of buying a car in the United States sound harder than it really is.

We were discouraging the public from crossing the border for bargains by mentioning the pitfalls of cross-border shopping when we should have been leaning on the manufacturers or dealers to drop their Canadian prices on par with U.S. prices, we were told.

The fact is, we don't need to lean on anyone. Manufacturers and dealers are thick-skinned, but the real way to make change is to hit them on the bottom line – and that's what's happening now. Potential customers are waiting for prices to drop before committing to buying a new vehicle, and the figures will soon show it.

"People are coming in and saying, `Have you dropped the prices yet?'" one Chrysler dealer told me. "When we tell them that we haven't, they say, `Okay, we'll come back next week.'"

August was a record month for auto sales, before the loonie hit the magic parity with the greenback. September figures were to come out just after this column was written and were expected to slip though not too dramatically. October sales are expected to be a disastrous plummet.

However, Canadian manufacturers will never drop their MSRP prices in a meaningful way. To do so would ransack the value of vehicles coming off their leases with guaranteed residual prices not much more than adjusted new prices. And most important, if and when the loonie's value slips against the greenback, it will not be easy to bump Canadian prices back up to current levels.

They can, however, adjust prices by offering no end of rebates, financing incentives, easy payments and cash-back offers against the MSRPs that will bring the final price more in line with American stickers.

This has already begun. Chrysler offered massive incentives this week, reacting to the empty showrooms, albeit at a cost to its own workforce. BMW and Mercedes are offering rebates, Audi is stepping up the standard items available, and Toyota has been rumoured for a week now to be about to do something significant with its price structure. Everyone else will soon follow.

The ads in today's section will tell more of the story, but I don't get to see the ads before publication, so they're as much news to me as you.

The beauty of this is that incentive plans are completely flexible. They change from week to week to reflect market conditions and can be adjusted up or down to keep pace with competition.

The other advantage is that there is still a penalty for those who want to buy a new car in the States because financing plans there are not valid for Canadians, not to mention the additional paperwork that, frankly, many buyers are hesitant to undertake.

As many as four out of five Canadian auto buyers prefer to finance their vehicles, and they're the people who will take advantage of the various incentive plans.

Right now, manufacturers are using a stick and carrot approach: many will not allow their U.S. franchises to sell to Canadians, while they 're trying to sweeten the pot for deals available up here without selling the farm.

This week, I called up some U.S. dealerships to find out who could still sell me a car. The situation is changing almost daily, so I suggest you make your own calls.

However, a salesperson at a Ford dealership in Niagara Falls told me that he hasn't closed many sales to Canadians. Of every three serious buyers who enter his store, he said, he'll close the deal to one of them. But among Canadians, he'll only close the deal to one in 10.

"I can't finance you!" he said. Those prospective buyers go away, crunch the numbers and find the savings just aren't always that great on affordable cars.

There are plenty of websites out there that offer advice, including carburner.com and redflagdeals.com as well as our story from last year that's just as relevant today as ever, and available to read at wheels.ca.
.

[Mike Jung]

Soaring loonie hits Canadian showrooms
Car shoppers have 'unrealistic' demands, says sales manager

Mark Toljagic
Toronto Star
Nov 02, 2007

A funny thing happened to Peter on the way to the dealership to buy a car: he flexed his consumer muscle.

He had been keen to buy a new coupe – the BMW 3 Series and the just-released Infiniti G37 caught his fancy – when the uproar over the U.S.-Canada price disparity stopped him in his tracks.

"I'm not willing to spend my money now," he says, citing the massive gap between sticker prices and the "obstructionist" tactics manufacturers are using to keep Canadians out of American showrooms.

"I had been in touch with a BMW dealer in Buffalo who told me that he was prevented from selling me a new car," says Peter (he doesn't want his surname disclosed because he works in the car industry).

So he's decided to wait it out.

"I'm convinced that if their sales numbers start to decline, manufacturers will have to make price adjustments as a concession to Canadian buyers."

He's not alone in exercising his consumer might.

Anecdotally, dealers are reporting quieter showrooms these days, despite the launch of next-generation models during what is the traditional start of the new model year – a development that has spooked the industry. Incentives such as those announced this week by Chrysler and Volvo are the latest way that the industry is hoping to turn the tide.

One General Motors new-car sales manager, who asked to remain anonymous, blamed the present hysteria around the strong Canadian dollar for consumers' "unrealistic" expectations by demanding deep price cuts to match American stickers.

"Consumers are ill-informed about buying in the U.S., and they think if everyone's doing it, it must be a good thing," she says. But she admits even her own sales staff don't fully understand the issue.

"We get a lot of customers who talk about buying in the U.S., but they're a little confused. They don't realize they have to pay cash," says Eastway Chrysler new-car sales manager Mike Popescu, one of the few dealers willing to let Wheels use his name.

"They tell me they can buy a Jeep Compass for $15,000 down there, a model that can cost $26,000 here. I tell them go ahead and try – you're going to be back in two months."

He says the currency brouhaha has made customers uncertain, so they're not committing to anything.

"The word is out there. It prolongs the decision to purchase – and that's the problem," says Popescu.

Mohamed Bouchama, executive director of CarHelpCanada.com, says dealers have been complaining to him about consumers' reluctance to sign on the dotted line.

"Dealers are screaming. Their showrooms are quiet. They tell me: `The manufacturers are being stubborn; we wish they would do something about pricing.'

"A Toyota dealer confessed he only sold eight cars last weekend; he would usually sell 18 or 20 vehicles on a Saturday."

Bouchama believes dealers are reluctant to speak out publicly, afraid to jeopardize their allotment of popular, profitable models assigned by the manufacturer.

Indeed, a Toyota dealer refused to talk when reached for comment and referred all media inquiries to the Canadian headquarters.

"Toyota sent a notice today telling all of us (dealers) not to speak to reporters. You'll have to call them," said a voice on the line.

Mike Karim, dealer principal at both a Chrysler and Mazda store and who writes the Dealer's Voice column for Wheels, confirms business has slowed significantly this fall as buyers investigate the ins and outs of purchasing in the U.S., or have withdrawn from the market altogether until prices drop.

"Three things can happen to address the present market: our dollar falls to previous levels; Canadians give up this notion they can shop in the U.S.; or manufacturers make their products more affordable in Canada," he says.

"Frankly, I can't foresee either of the first two things happening anytime soon, so our best bet is seeing some price adjustments coming from the manufacturers."

Karim points to encouraging signs: Porsche's 8 per cent price drop as well as BMW's recently announced rebate programs and favourable lease rates. And earlier this week, Chrysler and Volvo have rolled out larger incentive packages.

Karim is adamant that the blame rests squarely on the shoulders of the manufacturers, who dictate the invoice prices dealers pay for their products.

"We retailers don't have much say in it (pricing). Please direct your wrath at the manufacturers."

If dealers are grumbling, they're not showing it.

When Chrysler CEO Robert Nardelli and president Jim Press spoke at a recent company meeting in Las Vegas, the executives told their 460 Canadian dealers they will not be getting pricing relief to address Canada's rising loonie.

The Canadian dealers responded with standing ovations, reported the trade website WardsAuto.com.

One dealer who isn't complaining is CanadianCarsDirect.com, a website operated by a Mitsubishi/Hyundai dealer in Michigan. "I've had 50 calls from Canada today alone," says a sales rep over the phone.

Yet despite the high interest, only a small percentage of shoppers actually take the plunge.

"We've sold 150 cars into Canada so far," the rep adds. "I call them `pioneering Canadians' who venture across the border. It's not for everyone."

The firm uses an intermediary in Sarnia to deliver the vehicles into Canada, where customers can pick them up as they would any new vehicle. "Just bring your licence plates and away you go."

CanadianCarsDirect.com looks after the paperwork, federal compliance, safety inspection and all duties as part of its pricing.

"I had one customer from Toronto who came to pick up his new Hyundai Veracruz for a savings of $7,000," the salesperson relates.

"He told me he made $1,000 per hour that day, since the round trip took him seven hours."

Like the others, the rep is loath to give out his name, fearing retribution from the auto companies. In fact, he corrects himself by saying he does not sell new cars, but vehicles with "ultra-low mileage."

"If I was selling 1,500 cars a year to Canadians, that would definitely arouse suspicions," he says about the prospect of being found out by head office. "But with the Metro Detroit economy tanking, what choice do I have?"

A competing Canadian service based in Halifax, BuyUSAcars.ca, has also garnered plenty of interest from prospective buyers, but most don't qualify because they're shopping inexpensive models.

"If the savings are less than $3,000, we tell people to just drive a harder bargain with their local dealer," says Jack, who did not want his last name published.

That's because the firm's brokerage fee is $2,400. Jack notes that 200 inquiries may result in 10 quotes, of which only one eventually becomes a sale. That one sale will likely be a luxury-car buyer who will save significantly.

"I just delivered a loaded Lincoln Navigator to a customer, a truck that costs $86,000 in Canada, taxes in. The U.S. model ended up costing him $62,000 delivered."

BuyUSAcars.ca is a sideline business of Auto Rail Forwarders, an established transportation company that ships vehicles across North America by train.

"We have an American company that approaches U.S. dealers to purchase vehicles on behalf of our customers," explains Jack.

But he admits the supply chain is shifting daily as manufacturers clamp down on the practice.

"Manufacturers are threatening dealers in the U.S. not to sell to us, which sounds kind of illegal to me. These dealers are independent businesses that have invested a lot of money to sell a brand of vehicles, and now the factory is dictating who they can sell to."...
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[Mike Jung]

...George Iny, president of the Automobile Protection Association, knows the frustration of working in an ever-changing environment.

The Montreal-based consumer group has been brokering deals to buy vehicles in the U.S. on behalf of its members.

Last month, workers loading Toyotas onto an APA-contracted truck at a Scranton, Pa., dealership were stopped when head office threatened the dealer.

"The carmakers are going out of their way to make it difficult," says Iny.

"The rules are changing weekly; new barriers are being thrown up all the time."

Consumer advocates Iny and Bouchama agree there's an easy way out of the present mess: manufacturers could announce substantial cash rebates, rather than lower MSRPs, to protect the residual values of leased vehicles on the road.

"Offer short-term incentives, like cash back, for the next six months to help dealers move their product," Bouchama urges.

It's a simple solution, but one that some manufacturers are reluctant to adopt after decades of favourable exchange rates.

When Nissan unveiled its all-new Rogue for 2008, it priced the compact SUV at $24,998 in Canada and $19,250 in the U.S. The difference is actually $8,548 – a markup of 44 per cent – when the all-wheel-drive models are compared.

"Our pricing is based on the Canadian competitive set and is not based on American pricing," wrote Nissan Canada spokesperson John Lindo in an email.

A new model with no "legacy" pricing to contend with (which can impact residual values on vehicles already leased to customers), Nissan could have addressed the U.S.-Canada gap by pricing the Rogue closer to its American counterpart.

But it chose not to, explaining that (as many makers recite like a mantra), it pays no attention to markets beyond the Canadian border.

"But if they're adamant the U.S. market doesn't matter to them, why are they meddling with import restrictions and asking their U.S. dealers to block sales to Canadians?" asks Iny.

He suggests car sales have been too good in model year 2007 for manufacturers to respond to the price issue, and the actual number of vehicles crossing the border is relatively small (an estimated 160,000 units, many of them used).

One benefit Canadians are beginning to see is the impact of used American cars being sold beside Canadian cars on lots here.

Andrew Gorman, general manager of Gorrud's Auto Group in Milton, says the pre-owned U.S. vehicles that Canadian dealers are importing are putting downward pressure on all prices. "The used American Toyota Sienna minivans I'm selling are around $3,000 cheaper than the Canadian vans."

He's had to adjust pricing on the latter to keep them moving.

What Gorman won't do is import new U.S. vehicles for resale. "I will not compromise our new-car dealers' livelihood."
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[Mike Jung]

& now Honda Canada annouced they will be offering price incentives...
Honda and Ford to lower car prices due to strong Canadian dollar

Monday, November 05, 2007 - 10:02 AM EST
By: Katie Simpson and 680News staff

Toronto - Buying a car in Canada is getting cheaper by the day, as two more automakers will be lowering their prices to keep Canadian shoppers from heading south.

Ford Motor Company of Canada and Honda Canada Inc. will offer major rebates to ease angry consumers.

There will be incentives of as much as $5,500 to people who pay cash for a Pilot Crossover utility vehicle, $1,500 to buyers of the compact Civic and up to $4,000 on some models of the Accord.

Ford will offer rebates that will lower the price of certain models by up to $7,000.

The strong dollar and outrage over U.S. sticker prices were cited as reasons by officials from both companies, who are trying to keep consumers in Canada.

In addition to the Canadian dollar's strength, October was a slow month for sales as many people seemed to be putting off buying a car until the GST cut takes effect in January.

Some Canadians, who were trying to get a deal this weekend dealt with a lot more frustration than they bargained for.

Customs agents stopped and inspected the luggage of hundreds of shoppers travelling by chartered buses as they tried to get back into the country, which caused major delays.

[Mike Jung]

& finally GM Canada joins the game...
GM joins rivals with incentives

November 09, 2007 4:30 AM EST
Tony Van Alphen
Business Reporter
TheStar.com

General Motors of Canada Ltd., the country's biggest automaker, is offering consumer new incentives worth several thousand dollars in response to the soaring value of the Canadian dollar.

GM said yesterday that it will cut the goods and services tax by one percentage point until January and give cashbacks ranging from $1,500 to $10,000 on select models.

"We know consumers have been focused on the high Canadian dollar," GM said as it also launched a contest offering the chance to win a new car or up to $10,000 toward the purchase of a new car or truck.

GM's moves follow major new incentives in the past two weeks by rival automakers, including Chrysler Canada Inc., Ford Motor Co. of Canada Ltd., Honda Canada, Inc., BMW Canada Inc. and Mercedes-Benz Canada Inc.

Recently, online shoppers have seen U.S. dealer websites that undercut Canadian new car prices by $10,000 or more, even though the Canadian dollar is now worth more than the U.S. dollar.