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D Rosenberg article

We think it’s about time - please read this article by David Rosenberg “Don’t loathe the lofty loonie” in which he explains the pros of a fair value loonie.  The best part of the article for CWB is:  “our purchasing power and our standard of living are actually going up”.

CWB’ s agrees….

Now I’m confused a bit - Canada thinks its dollar is going up too fast and that this is not good for the country.  And on the other hand I am reading that the CEO’s in the US prefer a stronger dollar in the USA as it protects against inflation, gives credibility in the world etc. 

Here is a direct quote from one CEO -

“Long term, the economic welfare of the country relies on a stronger dollar,” said Norfolk Southern Corp. CEO Wick Moorman. “While shorter-term weakness may accomplish certain things, it’s not a good long term monetary policy.”   (note extracted from globeinvestor.com)

Why does Canada want to have a weak dollar?  Weak dollar to help our exports, a weak dollar to keep Canadians buying in  Canada.  Two countries - same long term goals but different recipes.

Here is an article that appeared on October 14 in the Post:

Cross-border shopping for a value car

Nicolas Van Praet, Financial Post  Published: Wednesday, October 14, 2009

Story tools presented by

When Mohan Aravaudhan went hunting for a new Volvo in Ottawa recently, the 35-year-old telecommunications sales rep didn’t like what he found.

Prices for the luxury SUV he was after started at $51,000. And local dealers did not have an abundance of choice.

So he did what many Canadians have done when the loonie punched up toward parity with the U.S. dollar. He went cross-border shopping, snapping up a 2008 metallic green XC90 model from a Boston dealer with the help of a Canadian import broker. Estimated amount saved: $5,000.

“Cars in the U.S. are cheaper,” Mr. Aravaudhan said Wednesday. “There’s no surprise to it. I have four friends who did the same thing.”

Canadian buyers imported a record 240,000 vehicles from the United States last year, both new and used. The market slowed when the dollar sank well below US90¢. Only 18,800 vehicles were imported in the first quarter of 2009.

But with the loonie’s 21% surge since then, it threatens to make life a living hell again for Canadian auto sellers and other retailers alike. The dollar last traded at par with the U.S. greenback in July 2008.

“The timing couldn’t be worse, given that this is unfolding just as we’re heading into the most important shopping season of the year,” said Doug Porter, deputy chief economist at BMO Capital Markets. “On balance [for retailers], it probably puts a bit more pressure on them.”

Some 85,318 vehicles were imported from the United States through the first nine months this year, according to figures obtained from Transport Canada. Imports were almost twice as high in September than in January.

Several brokers specializing in cross-border sales contacted Wednesday said they’ve seen an uptrend in sales, but not as much as last year or the year before.

“You would expect the run to be heavier than what it is,” said Dan Bernard, an import specialist for U.S. Auto Import in St.Catharines, Ont. “I would attribute the fact that it’s not, business is not increasing as fast as I thought it was going to be, to probably the economy, the uncertainty in some people’s employment situations.”

In July, Mr. Porter analyzed the price of a number of different retail goods sold in Canada versus what they cost in the United States. He found that while things like a Dell Inspiron laptop computer was 16% more expensive in Canada and barbecues were 37% more expensive, a sample of eight cars and trucks including the Toyota Corolla and Ford F-150 yielded a mere 1% price difference on average.

Consumer groups like Montreal-based CarsWithoutBorders have challenged those findings, showing examples of other cars that are much pricier in Canada.

Interest in importing is growing again and will rocket once the loonie smashes through the psychological barrier of US$1, said Michael Aldred, owner of Advantage Trading Ltd. in Burnaby, B.C., one of the largest importers on the west coast. But a shortage of available vehicles in the United States in some makes and models will limit the numbers compared to last year’s record, he said.

“I think it’s going to be a struggle. There are not the huge numbers of vehicles coming back off lease in the U.S. And because of the financial situation over the last year, lots of rental companies held their existing inventory,” Mr. Aldred said. “The demand is definitely there. It’s just whether we can fulfill it.”

Financial Post

nvanpraet@nationalpost.com

Now a high dollar can be said to be bad for Ontario and Quebec.  Bad for our exporting companies and then bad for the employees who work for those companies.  However we have free trade with the US and part of this free trade is to let the Canadian $ fluctuate and let the market dictate the value of the currencies.  Now today, our dollar is worth more-over $0.97.  It could be said by American companies that when the dollar is too low that Canadian exporters are getting an unfair advantage over its US competitors.  So the fact of the matter is the dollar is back up again - some are predicting parity by year-end - I say parity by the end of October, just like in 2007.

If you are shopping for a car, tires, car parts - do yourself a favor and check out the US pricing.  In most cases there is an advantage and many times a LARGE benefit.   At CarsWithoutBorders we are trying to help consumers to level the playing field.  Companies are scaring Canadians into buying at home at higher prices but you know several hundred thousand cars are imported from the USA every year,  so it is something that is doable and worthwhile.

Stay tuned.