Why does GM Canada rip the Canadian customers off?

3602 Views 13 Replies 8 Participants Last post by mkaresh, May 7, 2008

Canuck

Discussion Starter · May 11, 2007

I know most of this forum is US consumers but maybe someone has some incite on why the big difference in costs. I have shown the various exchange rates current, recent and what exchange rate it would take to make the markup close to zero.

Below is a comparision of an Enclave loaded. Only way to compare due to how the cars are packaged in Canada fewer options and mostl of the options built in on the CXL model.

When I made some slight comment to the sales person he made a comment that the difference was about 10% and he did not know why.

I live right on the border of Michigan so why can I not purchase the vehicle in the US?

Enclave CXL AWD CXL AWD Markup
Canada US
Base $51,295 $36,990
Options $6,465 $7,180
(Nav option)

Total $57,760 $44,170

Current Exchange 1.14 $57,760 $50,193 $7,567

Recent Exchange 1.20 $57,760 $53,217 $4,543

Required Excahnge 1.31 $57,760 $57,863 -$103

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coopermine

· #2 · May 11, 2007

You should come and buy it from here

I know many Americans were doing it for the Pathfinder about six years ago when I was in market for that. There was a USD 4000 difference between US and Canadian prices. The only thing would be converting miles to kilometers.

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Centurion

· #3 · May 11, 2007

Canuck, are there Canada taxes that already incorporated into the Canadian price for the vehicle? Might that account for some or all of the difference? In many U.S. states, we must pay a state/local sales tax on top of the purchase price, so perhaps the prices are more comparable if all taxes are factored in.

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Canuck

Discussion Starter · #4 · May 11, 2007

Centurion said:
Canuck, are there Canada taxes that already incorporated into the Canadian price for the vehicle? Might that account for some or all of the difference? In many U.S. states, we must pay a state/local sales tax on top of the purchase price, so perhaps the prices are more comparable if all taxes are factored in.

Oh another sore point. I was not going to bring that up.

We pay an additional 14% total = 6%GST(value added tax) federal plus 8% provincial tax.

So anything I can reduce in the final price in Canadian doollars is additional savings. Say the price is $7,000 less in Canadian dollars at the border then I will be charge 14% of 7,000 less than I would have if I stayed in Canada. Another $1,000 less. No import duties etc due to free trade act.

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Canuck

Discussion Starter · #5 · May 11, 2007

coopermine said:
You should come and buy it from here I know many Americans were doing it for the Pathfinder about six years ago when I was in market for that. There was a USD 4000 difference between US and Canadian prices. The only thing would be converting miles to kilometers.

The KM are normally in smaller letters on the speedometer. I'm old enough to have grown up with both so not a problem.

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mkaresh

· #6 · May 12, 2007

It's because the U.S. dollar keeps weakening. The auto manufacturers stabilize prices as the exchange rates move about. Sometimes it helps, sometimes it hurts. But it guarantees that as a percentage of your paycheck the payments stay about the same.

Otherwise you'd be buying a Buick one year, and a stripped Chevrolet a few years later, and then perhaps be back to the Buick.

Oddly, I don't recall Canadians complaining nearly as much when cars were much cheaper there, back when the Canadian dollar was worth about 65 U.S. cents.

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Canuck

Discussion Starter · #7 · May 12, 2007

mkaresh said:
It's because the U.S. dollar keeps weakening. The auto manufacturers stabilize prices as the exchange rates move about. Sometimes it helps, sometimes it hurts. But it guarantees that as a percentage of your paycheck the payments stay about the same.

Otherwise you'd be buying a Buick one year, and a stripped Chevrolet a few years later, and then perhaps be back to the Buick.

Oddly, I don't recall Canadians complaining nearly as much when cars were much cheaper there, back when the Canadian dollar was worth about 65 U.S. cents.

I purchased a Honda Accord in 1998 and saved 5% as compared to the exchange rate. Remember all cars are not made in the US alot of cars are made in Canada. Cars made in Canada have the same discrepancy in costing.

The conversion rate has not been at 1.3 in my example in almost 3 years.

The car companies are no different than any other business if they can do it they will.

I'm looking for par but why the large shift or better yet how does the system actually work?

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mkaresh

· #8 · May 12, 2007

Logically, the prices on cars imported into the U.S. should be shooting up, but they're not. It really does work both ways to a large extent. What we're observing is a much faster and more drastic change in the U.S. dollar than people expected. I remember when the Euro came out at parity and then sank to 85 cents. Now it's worth $1.35.

In general, the companies make assumptions about what the average exchange rate will be long-term, for at least five years, maybe more. You'll see prices start to shift when these long-term estimates change. Right now everyone importing cars into the U.S. is probably assuming, or at least hoping, that the U.S. dollar will strengthen.

Similarly, GM hasn't raised U.S. prices on models assembled in Canada, even though those cars cost far more to make than they did a few years ago.

Overall, manufacturers aren't so much overcharging outside the U.S. as they are undercharging inside the U.S. The current pricing cannot continue indefinitely. If the U.S. dollar continues to weaken, or simply stays put, prices will have to increase, and this won't be good for auto sales in the U.S.

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Canuck

Discussion Starter · #9 · May 12, 2007

Well said. I'm just looking for a break to compensate for the high taxes in Canada.

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bcameron

· #10 · May 7, 2008

Just picked up a Loaded CXL AWD in the US for about $20K off Cdn MSRP. This one was slightly used but even taking that into account, I saved more than $10K in the deal. The additional total cost of the transaction:
$460 for currency (the dollar is nearly at par) - use Globex foreign exchanged... saved almost $2K from the banks
$300 for RIV
$100 for gas to drive to the border and Crappy Tire for the RIV inspection
10 hours of research into the topic - to find the best site describing everything www.carburner.com

I don't know why anyone would buy in Canada until GM wisen's up. Intellectually, I understand why they are doing what they are doing (protecting their margins on the residuals from all the cars currently on lease) but they are missing the boat on new sales. I would have bought a new one here in Canada but just couldn't justify spending close to $20K for the priveledge of driving the first 2000K. I guess with the strikes, they haven't had to worry about selling inventory.

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shoeperson

· #11 · May 7, 2008

I purchased a 2004 T Bird in Buffallo a few years back ,did hours of research as well at the time saved about $10,000 at the time as well ,but what was required at the time even with all the research I did ,took a month to get the car licenced,the recall letter ,was the hardest part to get from ford .I have thought about doing it again .Did you need to get DRLs installed or was it all legal as you bring it over ,and just need the letter ,and form 1 and 2 filled out as well as the typicall inspection at Crappy Tire.

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womps

· #12 · May 7, 2008

Something you need to remember, if you run this vehicle into the ground and don't plan to sell it your okay. But if you try and sell it 3 or 4 years down the road you will take a big hit because it is a U.S. auto. In November I brought a 2007 Hyundai Azera into Canada. Before I purchased the car I checked with Hyundai Canada about warranty. No problem I was told. A month later Hyundai Canada dropped all warranty on imported vehicles unless you were moving into Canada permanently from the U.S. So $1800.00 later I now had warranty from Hyundai. I told them I should be grandfathered because my car was imported before their decision. I can still hear the laughter. I have now tried to sell this car (which is like brand new) with 11,000 miles on it. The dealers will give you less than U.S. wholesale and when trying to sell privatley everyone wants a deal because it is a U.S. car.

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Tin Man

· #13 · May 7, 2008

I haven't met a dealer in the US that doesn't offer to pay less than wholesale. Usually at least 10%. This may have nothing to do with the origin of the car.

Warranties are often not worth the paper they are printed on, IMO, since most cars do very well until after 100,000 miles have accrued.

Sorry to hear about Hyundai Canada not having the sense to back their customers, wherever they may be buying from. I'm sure they won't hear from you again.

TM

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mkaresh

· #14 · May 7, 2008

Dealers essentially look for anything that might justify a lower trade. I've heard of them measuring paint thickness to see if the car has ever been repainted. Let's face it, they're not going to tell potential buyers that the car has been repainted. So if you can't tell by looking at a car that it has been repainted, why deduct for it?

Because they look for any reason.

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