Weak U.S. economy and strong currency send buyers stateside
Fiona Anderson
Sun
The slump in the United States economy and the strong Canadian dollar are good news for Canadian car buyers who have been snapping up U.S. vehicles twice as fast as they did a year ago.
By the end of June, 151,169 automobiles had been imported into Canada from the U.S. — more than two times as many as during the first six months of 2007, according to numbers provided by the North American Automobile Trade Association, an Ontario-based association of dealers who buy and sell cars across borders.
While numbers aren’t broken down by province, in the past two years about 20 per cent of imports from the U.S. came to B.C.
The strong Canadian dollar and the faltering U.S. economy are two major reasons for the influx of cars, NAATA’s president and CEO Brian Osler said in an interview.
With the weak U.S. economy, there is less demand for cars, so manufacturers have to charge less to make the sale, Osler said.
Even if the car is actually built in Canada and then shipped to the U.S., it still could have a lower sales price, “because the manufacturer can get a higher price in Canada,” Osler said.
In fact, the latest numbers show that in June, cars sales in the U.S. dropped more than 13 per cent falling to a 15-year low, according to BMO Capital Markets senior economist Sal Guatieri.
But what is also fueling cross-border purchases is Canadian awareness that not only are cars cheaper in the U.S., they’re not that hard to import, Osler said.
While some purchasers may make the trip south themselves, many will buy through a local dealer that specializes in importing cars. And those who do buy themselves can hire companies to do the importing paperwork for them.
Advantage Trading Ltd. in Burnaby helps customers bring their newly-bought cars into the country.
Business this year has been booming, Advantage’s Jennifer Hunter said in an interview.
And the main reason is cost.
“The Canadian consumer is sophisticated,” Hunter said. “With access to the Internet they can do research and they can see that the exact same vehicle in the States with minor differences . . . is considerably cheaper. We’ve had people say [they’ve saved] sometimes $15,000 to $20,000 on high-end vehicles.”
But while Advantage doesn’t help clients find cars, they do recommend people do a few things to make sure they don’t have problems down the road.
First they should buy through an authorized dealer or authorized auction, both of whom would guarantee the car is as advertised.
Buyers should also check the car’s history on Carfax, and ensure the car’s warranty will still be valid. The Automobile Protection Agency’s website apa.ca has a list of cars and whether the warranty will be honoured. Many won’t, according to the website.
“But the best thing to do is call the manufacturer directly,” Hunter said.
Another good website is http://www.riv.ca/english/html/how_to_import.html which lists what has to be done to get a car into Canada, and what cars are importable. Modifications often need to be made to the cars — such as switching on the daytime running lights — to ensure they comply with Transport Canada regulations.
Westport Motor Cars in Vancouver specializes in finding high-end slightly-used cars in the U.S. which the dealer resells in B.C.
But it’s not just a price issue, it’s also an issue of availability, owner Todd Macdonald said.
“The problem is there is only 30 million people in Canada and [these high-end cars] are not readily available,” Macdonald said.
“Where can you find the Bentley and the Porsche that are a year old and have a few thousand miles on them here in Canada?” Macdonald asked. “We just didn’t have the allocation to the dealers here in Canada. Nor, a few years ago, did we have the economy where people were buying stuff like that.”
In the U.S., on the other hand, people were buying high-end cars that, with the downturn in the economy, they may no longer be able to afford.
But not all cars are sufficiently cheaper in the U.S. to make going south worthwhile, Osler said.
“When you import you have to pay to ship the car up, you might have to do these modifications to the car, you certainly have some paperwork at customs and paperwork with Transport Canada,” Osler said. “So there has to be a big enough price difference to make it worthwhile.”
For cars built outside North America there is also an import duty of 6.1 per cent.
“The bottom line is, if you’re looking for a car, it’s worth finding out what the price is in the States . . . because you might end up saving a lot of money,” Osler said.
© The Vancouver Sun 2008