Filed under: Car Buying, Government/Legal, BMW, Mercedes-Benz
Canadian leasing companies sue gov't and automakers over high car prices
Due to a slumping greenback, the Canadian Loonie and the U.S. dollar are worth roughly the same amount, but the price of most new cars in Canada haven't made the adjustment. Two leasing companies are suing the Canadian government, BMW Canada Inc., Mercedes-Benz Canada Inc. and Mercedes-Benz USA LLC for a cool billion dollars, but not because of the uncompetitive pricing in the United Province.
The leasing companies have filed suit because strict import rules are preventing the companies from buying cars in the U.S. and selling them in Canada. The many fees, procedures and restrictions allegedly resulted in a 20-30% increase in the sale of more expensive Canuk cars. One example is a $350 admissibility charge to import a Bimmer, and a far more ridiculous $500 fee will be levied for bringing over a BMW that has received a recall repair in the States. The leasing companies allege the all those fees and fines enable BMW and Mercedes to sell vehicles that cost between 20% and 35% more than similar US models.
Rather than these two leasing companies, it seems like customers in Canada are the ones who are losing out the most with high vehicle prices. At least the Canadians still have plenty of other cars and trucks that they can import from the U.S.
[Source: Report On Business via Winding Road]
Reader Comments (Page 1 of 3)
Zerk 5:51PM (2/29/2008)
US citizens should sue Canadian automobile companies for the price difference for the 40 years when cars were cheaper in Canada than the US.
Reply
tankd0g 10:44PM (2/29/2008)
US citizens were always able to buy Canadian cars virtually without penalty.
AlexP 5:53PM (2/29/2008)
Why is it that everytime you talk about Canada you have to sound ignorant...
United Province? What the f*ck.
Several manufacturers are lowering their prices or offering discounts to compensate for the lower US prices, Honda is part of a minority that doesn't (27 GRAND FOR A BASE CR-V, COME ON (Suzuki offers their V6 Grand Vitara for 25)), aside from them, I don't know any others that don't, but I haven't exactly ventured in exotic brands and such.
Reply
Seoultrain 6:00PM (2/29/2008)
I think it's a play on the fact that they have provinces, not states,
America:United States :: Canada:United Provinces
no need to accuse AB of ignorance.
As for the price cuts, they help, but Americans still enjoy much cheaper cars.
Ben 12:36AM (3/02/2008)
AB was being ignorant and retarded by saying "United Province" and will join my countryman in asking AB, what the f*ck?
AlexP 7:49PM (2/29/2008)
Provinces aren't nearly as independent as States are, we don't work under the same political system, Ottawa isn't a District nor is it a Province (I think it should be though, would fix a lot of problems between Gatineau and Ottawa).
Chris is a fine guy, but his knowledge of our country, like the one of most Americans, is extremely poor, and it always shows in his posts about what's going on in Canada. I know you guys aren't journalists, but seriously, looking up what you're talking about wouldn't hurt a bit, especially when most of the readers see you as such.
A perfect: example you show (not quite sure who did the post) a Euro Mazda 6 liftback/sport to show that the NA spec. model is going to different and everyone thinks it's the sedan model, while it isn't. Of course the NA spec. is significantly different from its JDM/Euro counterpart, but the image was misleading.
ChrisL 6:03PM (2/29/2008)
The price difference issue is even worse with cars manufactured in Canada that sell for less in the US than in Canada...and that's for "domestic" car companies.
Show your displeasure by not purchasing a new car. If we Canadians all delay purchasing by a year, or two if you can hold out and don't NEED a new car, they'll get the hint.
If consumers realized how much power they really have...
Reply
iam25boy 6:03PM (2/29/2008)
I am a Canadian living in US now. Man, even I am Canadian, can those live in Canada stop whining about high prices?? gosh.. Canada has 1/10 of the population and much smaller market. The cost of doing business is higher than US. C'mon, just common sense the price is higher. I don't think anyone is deliberately charge higher price. If they do, someone can always undercut their prices. It's a free market!
Reply
Me Too 6:45PM (2/29/2008)
Higher prices because of the higher cost of doing business? Sure, about 3-5% difference.
MB and BMW charge 25 to 40% premium, imposing restrictions that make it impossible to import without incurring a huge loss.
Don't play stupid. Historically $CAD was was $0.70 US, meaning that in Canada car prices had to be 30% to compensate for the exchange rate. Now $CAD = $1.02 US, and German manufactures somehow "forgot" to adjust the price. Even with 3-5% premium Canadian prices should be pretty much the same as those in US, not 35% higher.
John B 5:55PM (3/01/2008)
"If they do, someone can always undercut their prices. It's a free market!"
That's the problem, it's not a free market. A class action suit is attempting to proceed in Canada based upon collusion amongst various auto companies and dealers to keep the price differential.
"Lawsuit accuses car industry of inflating prices"
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20070926/automobile_lawsuit_070926/20070926?hub=Canada
Everett 6:39PM (2/29/2008)
The cost of doing business doesn't justify 20-30% These car companies are banking on the 'mellow' nature of Canadians; we aren't as litigious as Americans. As soon as a few more class action lawsuits are initiated, those billion$ lost might help them change their tune.
Reply
jimmyjjames 6:41PM (2/29/2008)
Have you seen the disparity in the price of a Porsche...let's look at the Cayman S. Not my first choice but a great example. Canadians pay $75,300 with no options just a plane Cayman S. Our friends down south pay $59,100. Assume absolute parity in the dollars and that is a $16,200 difference.
Now, look at a GT3 RS it is $155,100 in Canada...in the US $124,900. A difference of $30,200.
The cars travel on the same boat across the pond they arrive at the same ports, so what is the difference here. The Canadian Government taxes the hell out of German Cars, why?
Reply
Me Too 6:56PM (2/29/2008)
Taxes on GT3 will be approximately $2,000 higher than these in the US. The rest is call "producer surplus" in economics terms, and overcharge in everyone else's.
dan 6:41PM (2/29/2008)
iam25boy: Thanks for leaving you traitor. You just made the Canadian population that much smarter. It is quite obvious you have no knowledge of even the simplest economics. What you just said was so wrong and ignorant its really unbelievable you can manage to get dressed in the morning.
Reply
Gardiner Westbound 7:09PM (2/29/2008)
Canadians also get seriously ripped-off on destination charges. An Alliston Ontario manufactured Acura MDX carries a $1,855 Canadian destination charge. The destination charge for the same car shipped to the furthest reaches of the U.S. is $715. Other manufacturers are similar. Somehow the fat city civil servants in charge of preventing price collusion never notice.
Reply
TKE 7:23PM (2/29/2008)
canuk? You didn't watch Vancouver play the Colorado 'Avalance' the other night, eh?
the pricing makes no sense. it's as simple as that. automakers seem to be dealing with it on new models, with the price of the second-gen smart fortwo dropping dramatically, for instance. as for current models, you can't expect companies to drastically alter their pricing based purely on currency exchange when even the much-higher-than-it-used-to-be CDN$ still fluctuates. the price of doing business, though? give me a break. When Volvo took notice they took relatively small steps to cure the ill, but at least they did something -> http://www.goodcarbadcar.blogspot.com/ 2007/11/volvos-big-incentives.html
Reply
Me Too 7:37PM (2/29/2008)
CAN$ was over $.80US since mid 2004, going to $.90 in 2006. I think 4 years will be enough to gradually reduce that 35% premium that MB and BMW charge?
Rocketboy 8:49PM (2/29/2008)
Boo hoo. Get a real country.
When your gov't has to stop mandating that a specific amount of Canadian Content HAS to be played on the airways, let me know. Untill then, keep sucking off of the US's teats.
Reply
psarhjinian 9:00PM (2/29/2008)
Oh, I'm sorry. Were you using all that oil and electricity?
:)
dan 9:05PM (2/29/2008)
Rocketboy: Im so sorry to hear your countries economy and social conditions are tanking so bad. Its ok well keep sending that oil, water, lumber and power down to you just to make sure you're ok for another few years. Don't take Canada for granted you ignorant yank.
(My apologies to all the Americans with brains).