CAD/USD parity – What are Saab Canada gonna do?

Autoblog have a story on site today about a class action lawsuit being prepared in Canada. It’s being brought by a Canadian law firm on behalf of four customers, but is open to anyone that wishes to join and it’d be party time if they won as they’re suing for $2 Billion. They’re claiming that they’re paying too much for their cars there now that the Canadian dollar is at parity with the US dollar, and that certain parties are conspiring to keep Canadians paying too much.

Good luck with the $2B part of things, but they do have a legitimate beef. Let’s do the Saab comparison, shall we?

A 2008 Saab 9-3 2.0T with 210hp is listed on the Saab USA site with an MSRP of USD$28,385.

The same Saab 9-3 in a 2007 setup will cost my Canadian extended family CAD$35,135

That’s a $6,750 difference for what is essentially the same car. And remember, that’s a 2008 model from the US, so the price is slightly higher than the 07 – around $600 or so – so an apples with apples model year comparison would be even further apart.

I’m unsure as to equiment list differences between the two countries, but I’m confident they’re going to be fairly close in terms of specification. And in any case, if one model is better specced, it’s likely to be the US model, so that just makes the difference more obvious.

From comments in that Autoblog post, we learn that Porsche have decided to listen to their market-savvy customers and prevent a backlash by lowering their Canadian prices 10% accross the board.

Can Saab Canada do the same?

National Saab entities do have some power in terms of determining model configurations, etc. I’m pretty sure they have the authority to decide on pricing, too. They may have to prove a case to GM Canada first (maybe) but Saab Canada’s customers are every bit as market savvy as Porsche’s customers, and they’d do well to consider the move, I think.

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In case you’re wondering why Canadians don’t just go south of the border and pick up their car, well, some do. But there’s issues with that, that I’m not overly familiar with. Perhaps some Canucks can chime in and fill us all in.

My basic reading of it is that occasionally, there’s no-export clauses imposed by some manufacturers that make it difficult. There can also be warranty issues, with the Canadian company not covering the warranty on a US vehicle.

Finally, even if those aren’t issues with a person’s manufacturer of choice, you’ve still got to deal with your local dealer’s indignation about the fact that you went south to pick it up. This could make service-time a little uncomfortable.

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16 Comments

  1. I have been thinking about ordering a Turbo X from Buffalo myself. It’s a $10K difference we’re talking about!

    There are no warranty issues as GM Canada honours warranty on vehicles originally purchased from the U.S.

    You have to pay 6.2% duty on all vehicles produces outside of NAFTA, and you also pay GST. There is also a bunch of paperwork that needs to be properly filled out.

    Complete information is available at the site of the Registrar of Imported Vehicles.

  2. GM has told its dealers in the USA that they must NOT sell carts to Canadian customers. This issue regarding the price differentials is a hot issue here in Canada. Take for example my ultimate dream car – a BMW M5 – it costs CA$116000 here and in the US$83000. I would have thought that Saab prices would have come down here judging by the strength of our $ against the Swedish kroner alone.

    I doubt very much that GM will reduce prices here but you can bet that a lot of people will be buying second hand 9-3s at ridiculous prices over the border. All it takes in an import insurance certificate and enough cash to pay the duty and you are away.

    Some woman here in Vancouver saved CA$12000 by importing a MB ML350 from the USA. All it takes is a little work.

  3. Thanks for the details, gents. Always helps to get some local input.

    So whilst GM Canada will honor the warranty, the dealers are reluctant to sell, yes? Or have been directed not to?

  4. Swade, our local news station says that GM has told its US dealers not to sell to Canadians but has info that seems to contradict that. Having said that the media gets things wrong all the time so maybe I will call a US dealer to see what their policy is and let ya know for interests sakes.

  5. As a Canadian as well, I can also say it sure feels bad to be robbed in this way. It is really a big opportunity. Any company that wants to make make it’s customers really happy and impress potential customers should bite the bullet and respect the fact that our currencies are now at par. The CDN dollar has increased 50% in the last couple of years….

    Here’s hoping!

  6. I would say it is highly unlikely Saab Canada and GM Canada overall will do something unless overall competition (Audi/Volvo/Inifiniti etc) in Canada does the same. A quick surf on the web shows the same price disparities USA and Canada for all makes so I would shock me if Saab and GM on their other brands can afford to lead the pack in re-pricing and be the first.

  7. Canadian 9-3’s have a slightly higher spec because heated seats are standard. That explains a few percent of the difference.

    On the other hand, Canadian incentives tend to be much less generous than the US ones, so the actual price difference can be much higher than the list price difference.

    I’ve also heard that Eastern-Canadian warranty costs are among the highest in the world due to a combination of bad roads, bad weather and our addiction to road salt.

    If you figure-in the higher cost of selling Saabs in Canada (small market, higher transportation costs), it makes sense that some cars are more expensive here. It just makes no sense that they are 25% more expensive.

  8. Since Subaru is another one of the many brands under the GM umbrella, I thought I’d share this response I recently received from an inquiry with Subaru Canada on this same pricing differential between the US and Canadian markets:

    “Historically, vehicles have always been less expensive in Canada compared to the United States. However, with the abnormal strength of the Canadian dollar this year, the price gap between the United States and Canada has become a concern for many Canadian consumers. Nonetheless, the exchange rate is not the only factor that we consider in determining our pricing; otherwise, automobile prices in Canada would constantly fluctuate throughout the year whenever the value of our dollar changes. It is important to note that this situation is not exclusive to Subaru. Rather, it applies to the entire auto industry.

    Canadian Subaru vehicles are priced to be competitive within the Canadian market and in part are driven by market conditions. Subaru Canada, Inc. will continue to monitor and adjust prices competitively to those key competitors in the Canadian market.

    With regards to your question about warranty, there exists a reciprocal warranty agreement between Subaru of America and Subaru Canada, Inc. This agreement covers US vehicle owners who have purchased US vehicles and currently reside and/or are traveling, transferred, or vacationing in Canada. The intent of the reciprocal warranty agreement is to allow US visitors the benefit of emergency warranty repairs while in Canada.

    As it is an uncommon practice and only meant to offer assistance to US citizens vacationing or in transit through Canada your dealer may encounter difficulties determining if a repair is warrantable which may in turn delay the repair process. This program was not designed to accommodate Canadian residents who have purchased a Subaru vehicle in the United States for the purpose of importing the car into Canada.

    Yes, we do honour the US warranty. However, as the reciprocal warranty agreement was not designed for Canadian residents that purchase new US Subaru vehicles for the sole purpose of being operated in Canada, as such you may encounter some delays having warrantable work completed as we do not keep records of US vehicle information in our database and US warranty coverage is not the same as Canadian coverage.”

    I believe the points brought up can probably be applied to Saab Canada’s position. But I have issues with their response:
    1. Even before the Canadian buck’s recent surge to parity, we were still getting screwed with the pricing even after exchange rates were factored in. I had checked Saab and a couple other imported vehicles when our CA$ was around 80 to 85 cents to the US$. So that’s not a valid point to me. I do understand pricing to Canadian markets, but reading between the lines, that sounds to me like “if they’ll gullible enough to pay it, we’ll charge it”.
    2. Warranty coverage. Quite a carefully worded point they make – but basically saying what has already been said: Canadian dealers make take offense that you didn’t purchase from them and provide sub-par service to you and your vehicle. This may differ among dealerships as some are better than others. Buyer beware on that front.

    It is definitely not a difficult process to import a vehicle from the US. There is duty and the 6% GST to pay (plus a $100 aircon tax the gov’t had dreamt up). But even with those fees, there is still significant savings to be had. Considering that 80% of Canadians live within a five or six hundred kilometres of the US border, they need to consider that there are many who would consider this option as this price gap widens. But as was mentioned, it is also unlikely GM will lead the way with any price changes unless others follow suit.

  9. A friend of mine bought a 2004 9-3 south of the border. Saab’s are some of the easier cars to import into Canada as they already have daytime running lights, etc. He did this last year before the big rise in the CAD$ and saved around $3000.

    The bad thing is even though GM Canada said they would honour the warranty, the dealer has not been very good about it.

    I’ve been pricing out new and used Saabs. For a 2006 9-5 Aero Wagon, $26k in the US. For a 2006 9-3 Aero Sportcombi in Canada.. $37k. Both from dealers.

    I’m usually into supporting Canadian stores but I think for $10k there is no question that I’ll be importing my next car from the US. I’m not too worried about servicing.. as $10k buys a lot of service!

  10. A friend of mine and I were talking about this the other day. According to him, the taxes that they charge at the border to bring a car into Canada are very high, plus, you have to spend $3000 to ‘Canadianise’ your car (install daytime running lights, change out the speedo, etc). Given that we’re both in Quebec, taxes on a $30k Saab would be $5400, plus the $3k, and duty… so your $30k ‘great deal’ becomes a $50k ‘oh why did I not buy this back in montreal!’. However, if you’re buying say, a BMW M5 ($116k Cdn), you *can* save a bit of money buying it in the states for $80k and driving it up.

    Interestingly enough, at one point when my mother (in the states) was in need of a minivan, she bought one through the dealer, brand new, from Canada (Honda Odyssey- when they first came out you couldn’t get one anywhere, so they started bringing them in from Canada). They sold it to her with a ‘used’ title, and she never had any additional fees to pay on it.

  11. Richard, it sounds like Subaru have mastered the art of spin as well as any other car company.

    It sounds like it’s worth it on a high value purchase, but if the savings are minimal on a 35K purchase then is it worth the grief you’ll get from your dealer? If it were a good dealer, I think I’d go local.

  12. Richard,

    GM sold its stake in Fuji Heavy Industries which is the parent company to Subaru, over a year ago. And GM sold it to Toyota. This is why there is no new 9-2x to go along with the new Impreza and as such Subaru cannot be said to be under the GM umbrella.

  13. Dinger, thanks for that reminder. I think I had heard and known about the Subaru selloff, but had forgotten. An interesting sidenote, the few 9-2s in my area are holding their resale value quite well.

    Swade, I think if we load up a nice 9-3 ride with all the goodies, the savings might be there. But I would certainly seek out other “early adopters” who have bought in the US before doing so myself.

    Great discussions guys. This is a big issue in the news here in Canada with the recent parity of our buck, and applies to not just cars, but pretty much anything we import.

  14. Haven’t any of you heard about Saab of Canada’s new American Delivery Program? You fly to the U. S. city of your choice, take delivery of your new Saab, and drive it back across the border. Just like the European Delivery Program without the boat and the rainy weather. ;o)

  15. Does anyone have any experience in importing a 2003 E320 Mercedes from the states?

    What modifications were needed and how much did that cost?

    Overall what were the savings?

    Also which car/SUV is worth importing that has the highest cost diffretial between US and Canada?

    Your responses will be greatly appreciated. Thanks!

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