Soaring loonie makes U.S. luxury cars a bargain: consumer group

Retailers say that, in some cases, warranties on U.S. vehicles won't be honoured in Canada

Last Updated: Wednesday, September 19, 2007 | 1:48 PM ET

CBC News

With the loonie closing at more than 98 cents US on Tuesday, a consumer advocacy group is urging Canadians shopping for a car to do it south of the border.

'We have been advising consumers for the last year to go across the border and take advantage of whatever savings they can have.'—Bruce Cran of the Consumers Association of Canada

As the Canadian dollar flirts with parity with U.S. greenback, the Consumers Association of Canada said major retailers just aren't keeping up.

Bruce Cran, the president of the group, said Wednesday in Vancouver patriotism shouldn't affect where someone buys a new car.

Cran said prices, particularly for high-end vehicles, are significantly less in the U.S., even with Canadian taxes and import fees taken into account.

"We have been advising consumers for the last year to go across the border and take advantage of whatever savings they can have," said Cran. "If you can save up to twenty-something thousand dollars on a car, why would you buy it in Canada?"

Other studies have supported the conclusion that the cost saving for shopping in the U.S. is most significant on luxury vehicles. 

Industry analyst Dennis DesRosiers reported luxury sports cars are about $13,000 cheaper in the U.S., but the difference on most compact or subcompact vehicles would be less than a thousand dollars.

According to a new report, Canadian consumers could save up to $13,000 on the price of luxury sports car by shopping in the U.S.
(David Zalubowski/Associated Press)

Glen Ringdal, the president of the New Car Dealers Association of BC, said the industry is lobbying manufacturers to lower prices. 

"We ask them very strongly to acknowledge the fact we've created this disparity within the marketplace by their pricing strategy, and we would like to see it corrected," Ringdal said on Wednesday.

But Ringdal said consumers concerned about service should buy in Canada. Canadian retailers point out that in some cases, warranties on U.S. vehicles won't be honoured in Canada. As well, some U.S. dealerships may refuse to do business with the cross-border shoppers.

A spokesperson for Lexus dealership in Tacoma, Wash., has told CBC News that it has an agreement with Lexus to refuse sales to Canadian shoppers for fear of hurting sales in this country.

Border businesses say rising loonie no problem

Other businesses are finding benefits in the rising loonie.

Jeff Boag, who owns a bar in Trail in B.C.'s West Kootenay region, said the skyrocketing loonie has improved his operation. Boag saved about $17,000 buying parts for the bar's kitchen in the United States.

"I bought a makeup air unit from a California firm, rather than from the local up here. And all the stainless steel, it was quite a bit cheaper on the other side of the line," said Boag.

Meanwhile the surging Canadian dollar does not seem to be keeping American customers away from B.C. businesses along the border.

Business owners in the border communities of Trail and Rossland said the lower exchange rate hasn't frightened away U.S. consumers.

Naomi McKimmie, of the Trail Chamber of Commerce, said cross-border traffic remains healthy.

"From our numbers that we've had come through our doors this summer, we haven't seen much of a change from the American traffic that we had last year to this year," said McKimmie.

Businesses in nearby Rossland are maintaining their American customers. Blaine Benner, who runs a mountain bike and ski company, said Americans are adjusting to the change.
 
"Booking are as the norm. Our bookings aren't down at all. A lot of our clientele are repeat clientele," said Benner, "They're going to keep coming back for a number of reasons: the town, the ski hill, the people that they know and continue to have that relationship with."