Sunday, September 23, 2007

E-mail from "Pissed Off Car Dealer"

Comments welcomed.

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(unedited)

First Name: Undisclosed
Last Name: Pissed off Car dealer
Company: Undisclosed
E-mail: Undisclosed@undisclosed.ca

"Are you a bonded customs broker? It seems to me that you are offering the services of a customs broker, except at a higher, and inflated price and benefiting from media splashing your webpage address around. How do you think it will go over in the media when you are in trouble for acting as a customs broker without the proper credentials? You are encouraging Canadians to spend their money outside of Canada and that hurts all Canadians. I hope that you get the repercussions of acting as a customs broker without bond or license. You should have just offered this for free and it wouldn't have raised any eyebrows, instead you are in it for greed.

This will go to the attention of the CADA (Canadian Auto Dealer Association) in hopes they have the resources to know what to do with this forwarding it on to whomever regulates the customs brokers industry. I don't feel bad for doing this to you, your webpage is designed to lose Canadian car dealers business which we can't afford to lose because of your propaganda. Given the fact that new cars purchased in the US don't qualify for any 0% finance or lease options, the average car isn't any cheaper anyways, but your webpage sure doesn't care to point that out does it."

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Comments by: Zabin Somani

The e-mail above is indicative of the "scare tactics" and mean-spirited messages I am now receiving almost on a daily basis from Canadian car dealers. I guess this is a sign that we are making some headway.

Until prices are on parity with the United States, I am going to stand my ground. As I have said before, I'm a proud Canadian and I would prefer that we buy all our goods in Canada. But if we are getting ripped off, then the only way we can stop it is to vote with our purchasing power and go elsewhere to obtain our goods until the situation changes. In the case of auto sales, when Canadian dealers see that they are losing significant business to our southern neighbours, they and the auto manufacturers will hopefully elect to rethink their strategy and adjust their pricing accordingly.

As a final note, if the individual had a leg to stand on regarding any of the points above, he/she would have left a name and contact information so that we could engage in a debate on the issues. For any other dealers that would like to engage with me, I welcome your e-mails. I would like all UCanImport readers to be able to make informed decisions, so I will post ALL of your messages to this blog for everyone to read. Tell me why Canadians should be paying up to 30% more for their vehicles than Americans. And lame reasons such as "we won't honour your warranty" or "we won't service cars sourced in the United States" won't cut it. I promise you that people will see right through these comments as simply price protectionism.

I stand behind our do-it-yourself guide, our assistance services and our web site. I am also committed to bringing to you every bit of information I can get my hands on that will enable you, the Canadian consumer, to make an informed decision with your next vehicle purchase... as they say, Power to the People!

Z.S.

21 comments:

Jeff Bryan said...

I have yet to hear a credible argument from any of the Canadian car pricing supporters. Absolutely nothing I have heard (and I'm talking years here) has given any support to the way Canadian car pricing schedules have been structured. Merely claiming "that's the market" dictating the prices is the biggest piece of BS going.
Canadians have been too willing to sign off on big monthly payments mostly because there were few other options than to take it up the butt from the manufacturers. I doubt they'll be willing to recede on their pricing until shoppers truly do their shopping with their feet........like me. See you in Texas.

Jeff Bryan

Anonymous said...

Both the author's name, as well as the dealership for which he works, NEED to be disclosed here. [Complete with contact info...]

We're in a war - a war with a goal of driving down these long-standing, predatory pricing practices.

This sort of thing just simply cannot be tolerated.

WHO authored this offensive email?

UCANIMPORT PUBLICATIONS said...

Sorry I can't help you. As I mentioned, the person was willing to share his/her point of view, but not stand behind it with his/her name and contact details.

Zabin Somani

Franky said...

Zabin,

I am 100% support your view, your website and may require your assistance service to help me purchase a car from US. I am a Canadian Chinese and being here for over 10 years. Really tired for being rapped off by the car dealer on both new car price and service charges, expecially Benz.
Keep up whit what you are doing, I am proud of you.

Anonymous said...

An open letter regarding the facts and misconceptions of buying a new vehicle in the US rather than buying local.

With the recent parity of the Canadian and US dollars, there is a lot of attention being given by the media to pricing differences between vehicles designed and built for Canada and those for the US. Though it seems to be a simple comparison, it’s not indeed that simple.

The manufacturers produce the vehicles for two different market places and in turn price them for two different market places. Simply comparing the MSRP (manufacturers suggested retail price) of a model offered in both market places doesn’t qualify a proper comparison. Much as no Canadian would accept someone stating that Canadians themselves are no different than our American neighbours, we all know that there are distinct differences in our heritage and culture. The distribution and marketing of vehicles also has distinct differences. Only one of those differences is pricing. There are distinct differences in the safety and emissions standards for Canadian vehicles and American vehicles. There are many other subtle differences as well, things the average consumer looking at a window sticker, advertisement, or an internet site may not even be aware of. Things like the number of vehicles allotted to the two market places, the different financing options such as low rate financing, lease end values, & rebates, advertising & marketing, shipping, federal taxes, warranties, equipment packages, and more are all things that differentiate the two market places.

New vehicle manufacturers weigh all of these factors when doing market research to determine what the fair value of a new vehicle should be. In turn there can be differences in pricing as a result of this. The Canadian media has been reporting on savings of thousands of dollars when buying in the US rather than in Canada, but this has been reported very inaccurately. Considerations such as finance options, rebates, taxes, required modifications, trade values, and more are being neglected any mention. These important differences make the pricing gap close up to a justifiable point when they are factored in.

For instance, let’s say that a model offered on both sides of the border have a price difference of $3500 MSRP. $3500 is a lot of money, right? That seems compelling.
What a person isn’t aware of looking at this from a price point comparison, is that this vehicle in the US would not qualify for any interest rate support. A Canadian cannot take out a loan in the US, the lenders just won’t do it because of legal hassles should they ever have a borrower default on their payments. Many new Canadian models offer interest rates as low as 0%. Buying a new car from savings isn’t an option for many Canadians, most will borrow for their purchase. Today’s bank interest rates on cars can vary from 7.5% to about 10%. At the lower interest rate of 7.5%, buying an average car with an MSRP of $26000, the cost of the banks interest would be a staggering $5259! The interest charge from the Canadian side can be as low as 0%. A 0% loan is really that simple, it costs $0 in interest! So to save $3500, a consumer will spend $5259 more? It doesn’t make any sense, especially if the banks interest rate isn’t that low.

That is only the easiest example, what about if you have a trade in? The American dealer will give you a lower trade in value than the Canadian dealer will. If vehicles in the American market place are cheaper, your trade in is as well. In fact, it’s worth slightly less than the others that originated from within the US simply because the dealer there will have many of the same hassles with safety and emissions as cars going north. Then there’s the fact that in Canada, you only pay your sales taxes on the difference. If after all that, you still traded in the US, you have to pay full sales taxes when you import your new car.

Once a new car is bought in the US, there are many expensive things that need to be done before it can be out on the Canadian roads. Metric conversions, safety inspections, modifications to safety and emissions equipment, and more. Worse yet, if you bought an import brand built outside of North America, you have to pay duty on your purchase. Then you have all of the taxes and fees to be paid, at the border, where they do not accept a cheque.

So as you can see, there is a lot of hype about this price differential, but there isn’t any reasoning behind it. There are examples in the media of much higher prices differences, but they are on luxury cars and particularly high end vehicles the average buyer doesn’t consider, yet subject to the same reasoning. You read how much interest the bank charges on a $26000 car, can you imagine how much it would be on a $75000 luxury car?

Contrary to the media reports and even a frivolous lawsuit, the manufacturers haven’t conspired to rip anyone off with any kind of price fixing, they have just priced according to the individual market places. As recently as 1993 through 2000 when the dollar was at its low point, cars cost much less for a Canadian consumer than they did for an American consumer. A spin off of this, was that since Canada is a much smaller marketplace than the US, our used resale values and in turn, trade in values were much higher because of Americans coming here to buy vehicles. Yet, no Canadians complained about perceiving to be paying less than the Americans.

Very recently, Transport Canada and the registrar of imported vehicles have changed how safety and emissions compliance are handled. What’s happened, is that the manufacturer now administers the documentation to certify the vehicles admissibility into Canada rather than Transport Canada. What this means to the importer, is that they now need to get permission from the Canadian arm of the manufacturer to import an American car. The manufacturer produces these vehicles with the intent of them staying in the country for which they were intended. The manufacturer has been left to administer these compliance letters including any fee associated with them. In other words, if the manufacturer didn’t want to see a US vehicle sell into Canada for less money than a Canadian vehicle, they will be able to assess a fee to this compliance letter for however much money they choose. If it was a price difference of $1500 between the two markets, the manufacturer may opt to charge $1500 for this compliance letter. Without this letter, the vehicle is inadmissible into Canada. There goes any savings the importer may have thought he had.

The other means of manufacturers having influence to interfere in importing and diminishing the value of bringing these US vehicles to Canada are in their warranties. While some brands may have full warranty regardless, others have absolutely none, and the majority have the warranty delayed until it’s seen the fair usage a used vehicle would otherwise have. So if your brand new car has a problem, your Canadian dealer will charge you to repair it. It will not be covered by warranty until a fixed time and mileage has gone by.

Canadian dealers do truly hope to see parity in the pricing. Then, the price gap perception will end, and consumers would have no reason to feel ripped off. Ultimately, it’s beyond the control of the Canadian dealer, only the manufacturer can address this. Personally, I don’t see any unfairness in it. We benefited from the low dollar, the high dollar does have repercussions.

What Canadian dealers and in turn, Canadian consumers need, is for the smart car shopper to shop at home and support their local dealer. Through all of this, a new car isn’t much use when it has no service behind it. If the local Canadian retailer doesn’t see a normal, healthy customer base to do business, that retailer may not still be there when it becomes convenient for the importer again. The many Canadian consumers that have the common sense to shop locally and support the local dealer are owed a debt of gratitude. Thank you for shopping locally.

Zabin Somani said...

Thank you for your message and for elaborating on the price disparity. I welcome our bloggers to read this message and to comment.

Graham Wood said...

Hi there.

Thanks for your informative website. While perusing the web for information on whether or not it is possible to lease an American car for use in Canada, I came across this article from November, 2002:

http://www.naata.org/pdfs/Rip_Off_USA.pdf

It seems this pricing problem has existed in North America before. When the Canadian dollar was low ($0.63), cars were cheaper here and American dealers were crying foul. It seems to me the car companies are using - and have abused for quite some time - the exchange rate to boost profits. As the article suggested in 2002, the regulatory bodies need to address this anti-competitive behaviour. It's 5 years later and this systemic problem is so bad it's been able to completely reverse itself and still serve to solely benefit the manufacturer while leaving the consumer to hang in the wind. I never really did find any information on the ability to lease a car from an American dealer, but I feel so disenfranchised that instead of buying a car now, I'm going to wait it out, most likely until the new year, and probably past next spring.

Anonymous said...

Bottom line...........no matter what corny arguments are put forth to defend car pricing in Canada, as a consumer I will search for the 'most effective purchases' for my family and if that means I take my business south then so be it. Canadian businesses will have to evolve or go bust. Simple economics.

Case in point about the argument of long term ordering to be done by dealers; I want to order a new BMW special order but I cannot get the lower US pricing even though the dealer has not a penny of carrying costs to complete the deal. Every penny of that transaction is on my shoulders. No risk on the dealer whatsoever.

This pricing difference should have been dealt with long ago as the dollars were moving closer together, now all retailers and manufacturers have to figure out how to lower prices without tipping their hands of how much they've been screwing Canadians for years.

Anonymous said...

Dear Mr. or Mrs. "Pissed Off Car Dealer", your open letter regarding the "facts and misconceptions" of buying a new vehicle in the US is far from compelling. Actually, its probably the best example I have seen yet of Canadian Dealer fear mongering. Bringing up differences in Canadian/American heritage and culture as illustrative of why there should be differences in Canadian/American vehicle pricing? You really think Canadians are that stupid? Maybe you should talk to the 17,000+ Canadians who imported vehicles from the U.S. last month (Aug 07); I think most of them would have something different to say about the whole experience. I'd love nothing more than to be able to buy my new Toyota Tundra at a Canadian dealership, but after crunching the numbers and making an informed decision, my dollars are going South. Sorry - actually, I take that back, I'm not sorry at all.

UCANIMPORT PUBLICATIONS said...

We do not know if the Open Letter was published by "Pissed Off Car Dealer" as both were submitted anonymously.

Anonymous said...

Yes Pissed off car dealer sent the open letter, it was me, I have also submitted other valid points through this blog of yours, of course though, you didn't choose to publish them because they were completely valid and contrary to all of your 1 sided propaganda. I guess it's your webpage and you can post whatever you choose, but it affirmed at least to myself that you operate this webpage as a profit center to you and not as a service to anyone. Offering vague and 1 sided half truths. Interesting to see if you publish this as well, or just click delete.
Pissed off car dealer

UCANIMPORT PUBLICATIONS said...

To Pissed Off Car Dealer:

Usually comments that are immediately relevant to the blog are posted. If you can stick to the point and continue informing consumers of why they need to pay higher prices in Canada, then by all means keep educating us. Please keep the content clean.

Anonymous said...

A cut and paste of the relevant bits of the Desrosier report. For those outside the auto industry, Desrosier is a market analyst independent of any car company that is well known and respected as an individual who knows the car business, reporting on it to the auto industry, media, and the markets. Google him if you want more info.

Quote
Attached are new light vehicle sales for September. A respectable month but not a great month. You will see from the table that 4 times in the last eight years sales were higher and indeed sales were down 2.8 percent versus last year. The economy was still very strong in September and prices were coming down with the strong dollar and the huge incentive dollars in play so
there must be other things at work.

And I start with the weakness in the US dollar which has pushed the
Canadian dollar above par. The moment this happened I sensed the flood gates of negative consumer sentiment towards the vehicle companies opening up. I partially defended the OEMs and my e-mail box lit up with dozens of complaints from the ordinary consumer. It seems many believe there is a
boogy man in the closet and that the OEMs are ripping them off. This
certainly is not the case but a huge negative sentiment towards our
industry was unleased. This could be one of the reasons that the market was down.

With this story blasted from one end of the media to the other, I'm sure some consumers just sat on their hands. This is how markets work and why I'm not concerned about the price differentials. You see I believe in market economics. If vehicle prices are out of line then consumers will not buy.
When this happens the markets adjust. Why don't we all have more
patience?
Indeed, I'm shocked that we sold this many vehicles. If prices were
outrageously high relative to the US dollar as thousands of articles
have articulated then I ask you ... why in the devil did 131,827 consumers sign a contract in September. Oh my goodness, I know why! The reason is
that for the most part Canada - US vehicle prices are not out of line. I'm sure every OEM has a vehicle or two that needs to be re-priced but for the most part the vast percentage of the market represent a good deal and thus so many consumers went out and signed the dotted line in September.

Please have faith in the market. First of all, most vehicles on the
ground today entered Canada with a 90 cent dollar not a par dollar so comparing prices at par is not a true picture. Second, the MSRP of any vehicle is only
between 50 and 60 percent of the price at the border. So a 10 to 15
percent stronger dollar only provides half the dollar savings most are talking about and indeed there is not advantage for vehicles built in Canada. And third, OEMs have to cover their entire cost structure not just the cost of
bringing vehicles across the border. Geography, two languages, incentives, residual values etc all play into this cost structure. No one can convince me that the OEMs are taking advantage of the consumer and no one can convince me that vehicle prices can be maintained artiifically high through some sort of
conspiracy. It just doesn't happen.
End Quote

Jeff said...

Of the 131,827 vehicles sold last month, how many were by individuals and how many were by companies that get to write off the depreciation?

If over 120,000 vehicles were imported from the US last year, surely there has to be validity behind the savings south of the border. This many people cannot be fooled. And if the savings were not that great then the car manufacturers have nothing to worry about as word of mouth will finally reach everyone in Canada looking for a vehicle and they'll be more than happy to buy from the local dealer instead of going to the US.
IMHO this is a tsunami that is only just beginning. 120,000 last year...........probably 200,000 next year. We aren't that stupid.

P.P. said...

Just found your site today. Was reading the blog messages and found them to be really interesting. Long story short, keep up the good work and I wish you continued success. Will be promoting your site to friends.

C.M. said...

I would just like to voice my opinion - several people in our area have recently made large purchases in the United States - not only vehicles, but boats and RV's as well.Two things I have against this:1. Not only are you not supporting the economy of your home-town or home-city, you are not even supporting the economy of your province or country!2. Canada's economy is so strong right now partially because people are buying vehicles, boats, RV's etc. at a great pace - if we keep giving this business to the USA, our economy will struggle.Also, just as a note - when you purchase a vehicle in the USA, you cannot finance it - you will have to come up with your own cash via bank loan or whatever. If you look at the Finance & Lease rates that a dealership offers (often less than 5%), you can actually make up the money you are "saving" by travelling to the United States quickly.What I mean by this, is take the $30,000 or whatever you are going to take down the the States and INVEST it. You should easily be able to get a 10% return on your money if you invest wisely. Compare that to the 5% or less you are spending on financing the vehicle here in Canada - it isn't going to take long to make up that difference!Anyway, that is just my opinion. I respect that you have created such an informative website for the buyer who does choose to purchase south of the border.

lubbock57 said...

Hey c.m.
Canadian manufacturers and retailers have not acknowledged that there is a new and strong competitor to them and that is the US market. Manufacturers in Canada have had it pretty easy for the last 10 years while the canadian dollar was in the tank. They were capturing business from the US simply because they were so inexpensive to deal with......very little to do with how efficient an organization they were.
Once all the products in the supply chain that were stocked while the dollar was lower have been cleared out, prices will have to drop if the manufacturers and retailers in Canada want to carry on.
I've heard this line so many times in the past month that there had better be price decreases in the pipeline since that's the excuse the retailers have been using to justify the lofty pricing.
The Canadian consumers who don't wish to wait for the price decreases merely accelerate the price adjustment time frame by buying in the US and force the manufacturers and retailers to take notice and change or close their doors.
I want to buy my next automobile down the road at my 'local' dealer but I'm not going to open my wallet and ask him to take what he wants simply because I'm a loyal customer. Loyalty has another word here and that is sucker.

Anonymous said...

If you buy from an american dealer, what kind of priority do you think you'll get in your home town dealers service department? Your savings will get gobbled up if you have to keep driving back into the US to get warranty work done. I've checked and sure, I can save $2000 on my new car, but considering the interest rate support, the payment is cheaper to get it from my local dealer than it is to get it in the US with a bank loan. So my mind's made up, I'm buying at home, and getting good service. Maybe if I was buying a big Mercedes or BMW it would be worth it, but not for the normal family cars that fit my needs.

Anonymous said...

I can guarantee that I will be saving more than 2 grand on my vehicle.......closer to 20k.
As for warranty service......20k buys a lot of maintenance.
Too bad if the local dealers won't treat me like royalty, I'm sure I can use my savings to buy something that will make me happy.

Anonymous said...

Anonymous said...October 23, 2007 3:51 PM

"As for warranty service......20k buys a lot of maintenance. Too bad if the local dealers won't treat me like royalty, I'm sure I can use my savings to buy something that will make me happy."

Warranty claims are paid to the dealer by the manufacturer. Same amounts paid for the same repairs performed in accordance with the warranty - regardless of the origin. You think the dealer really cares so long as he's performing billable warranty work?

Sure, the dealer may be inclined to 'bump' your workorder to the back of the stack - but here's what ya do to alleviate that concern:

The local dealers will be quick to tell you they just can't lower their pricing as further - saying "we're only making 1,000.00 on the deal and we NEED that to survive..."

So, take a grand from your 20 saved and give it to that local dealer in exchange for a signed "Memorandum of Understanding".

Then, you're as much HIS Customer as the next guy and he'll be glad to take care of you.

The down-side, of course, is that you've only saved 19,000 dollars now ---- so maybe you'll reconsider buying in the US??

:-)


Be creative - beat them at their own game. Or, like my grand-dad so often said: "hit them with a ball of their own sh*t!!"


As for the arguments "against" -- based upon dealer financing, check the US and Canadian websites. Price identical vehicles and see what the APR is listed at. There's less than a 1% differential on my brand new Toyota.

That simply is not sufficient to make a dent in the 12,244 reasons in my 'for' column.

See ya -- have fun with it!!

J.

Anonymous said...

Even if their APR's are identical both sides of the border, you still can't use the financing offered in the US unless you have dual citizenship with an address and income on both sides of the border.