Ambitious But Rubbish

One of my recent pet peeves has been the discrepancy between car prices in Canada compared to the situation in the USA. It seems an especially good subject to write about these days, as the Loonie has (for all intents and purposes) reached parity with the US dollar. While this has provided much of Canada with, well, much to gloat about at the office on this Friday, the rise in the value of the dollar is quickly leading to a sort of revaluation of shopping patterns. Because in terms of everyday purchasing within Canada, prices are simply not changing.

This is leading to certain practices becoming more common, such as buying American. The cross-border shopping trip, thought killed by poor exchange rates and the lowering of cigarette taxes in the early 90s, has become an instant tradition once again. Only this time customers are thinking bigger — they’re buying cars south of the border.

Now, unlike their counterparts from the 80s, car buyers are declaring and legally importing their purchase. It’s a fairly light bother if the buyer purchases a new car (because it is known to meet our national requirements), and you do have to pay tax on the car plus some import fees, but if you’re buying an upscale vehicle you could potentially save many thousand dollars by shopping south of the border.

So I started wondering, if I were in the market for a car for myself, how much could I save by heading to Plattsburgh, or to Vermont? As it turns out, I could in fact save thousands by not buying locally.

The experiment, part one.

I know what I want when it comes to cars. Essentially I want a “entry luxury” four-door sedan with four-wheel drive. Options are difficult to “equalize” between countries, and sometimes vary locally, so their price is not taken into account; for comparison purposes I am only looking at the base price of the vehicle within the same (or equivalent) trim level on US- and Canada-targeted car configurators located on the web sites of each vendor. If there is no configurator the price list is used.

The cars considered are the following:

• Audi A4 2.0T Quattro, manual transmission
• BMW 328xi, base configuration
• Ford Taurus SEL AWD
• Mercedes-Benz C300 4MATIC
• Subaru Impreza WRX 5-door
• Volvo S40 T5 AWD, base configuration

Audi A4

US Price: $32,000

Canadian Price: $40,900

% markup: 27.

BMW 328xi

US Price: $34,300

Canadian Price: $43,600

% markup: 27

Ford Taurus SEL AWD

US Price: $25,095

Canadian Price: $33,399

% markup: 33

Note that the Taurus SEL AWD is in fact the old Five Hundred with a bigger engine. The price discrepancy is pretty shocking here because as a Ford vehicle built in Chicago it’s probably made half from Canadian parts!

Mercedes-Benz C300 4MATIC

US Price: $35,215

Canadian Price: $44,700

% markup: 27

Subaru Impreza WRX 5-door
US Price: $24,850

Canadian Price: $33,895

% markup: 36

Volvo S40 T5 AWD
US Price: $28,990

Canadian Price: $39,995

% markup: 38 (!)

I’m very disappointed here! I thought Volvo was supposed to be a “nicer” company, but that’s almost 40% for no discernible reason! WTF?

Stage 2

So, we’ve established that there are thousands of dollars to be saved by going out of one’s way. I decided to send feedback to the makers of the cars listed above and express my concerns.

The following message was sent to each of the carmakers using their own email feedback application, or email:

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I’ve been curious about one thing for some time — why are cars, of the same model and trim level, so much more expensive in Canada then in the USA when the C$ is practically at par with the US$?

I realize that prices do not change as quickly as the value of currency, but there is consistently a 30-to-40 percent markup for the same car with the same option, and for no reason that I can identify. The days when a 30+ percent markup was warranted are long past (the C$ has been within the .90 US range for a long time now).

[Note: I put in a maker-specific comparison at this point. Also, in the case of BMW I was not able to add text past this second paragraph]

As you may have heard there is a trend afoot, especially in recent days, for Canadians to go to the US, buy a car there, and import it themselves. No doubt you guys are upset about this, as it “robs” you of business. Something you guys should ask yourselves is, what are you doing to prevent this situation from happening.

I’ve been following car prices for a while now, and I know pretty well that you’ve taken no action whatsoever on the pricing front to prevent this sort of behaviour. I think that’s unfortunate.

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I’ll post the responses I get (if any) in the upcoming Part 2 of this exciting experiment.