Auto Manufacturers Reacting to Changing US/CDN Exchange Rate?

By: Jack Mason | Thu, Jun 14, 2007
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This essay brings attention to the pricing differences of automobiles in Canada and the United States. It is not intended to be a definitive source of information, but rather to bring awareness to the marketing strategy of automobile manufacturers selling cars into North America. It will be more important to those living near the 49th parallel, as transportation costs will diminish the savings as you move away from the border.

When the Canadian Dollar was losing ground to the US$ in the mid-late nineties, I ordered a new Mercedes M series SUV from a local Canadian dealer. Because currency-poor Canadians couldn't afford to pay as much as their wealthy friends to the south, Mercedes-Benz Canada gave Canadians preferential pricing (about a $10,000 discount) - with a hitch - you had to sign an agreement, as part of the order, to NOT sell the vehicle to the United States for a period of time (I remember it as one-year). I wondered recently if this had changed.

Here is the pricing today:

** Mercedes-Benz Model
* Base price
Adjusted Canada
Base Price
*Base Price
ML350 4MATIC $58,300 .935 $54,510 $43,455 $11,055
ML320 CDI 4MATIC $59,800 .935 $55,913 $44,455 $11,458
* I have not verified if Dealer prep, transportation costs, etc. are included in the base price.
** Each manufacturer has a different pricing strategy between the two countries.

A 180° reversal! It is now very much in favour of the United States. Mercedes-Benz has responded to the changing exchange rate aggressively. As a Canadian, I wonder if Americans are now signing a "Don't Sell To Canada" agreement.

We also wonder if the recent Mercedes-Benz sale of Chrysler is a simple business decision, or if it is more reflective of the long-term European view towards the United States.



Jack Mason

Author: Jack Mason

Jack Mason

Jack Mason is a retired investment professional.

Don't take his 'huff' and 'fluff' as investment advice, nor a solicitation to buy or sell anything. Only an investment advisor licensed in your jurisdiction can do that.

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