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
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
