US Vehicles not the True Bargain consumers think

Since the dollar has reached, and since surpassed parity with the Greenback, there has been a surge in the media about how much cheaper every product is south of the border. This obviously affects high ticket items to a much greater degree than it does every day products such as beer and toilet paper.

Unfortunately, Cars and Trucks are high ticket items that at face value do appear to be much less expensive in the United States due to the market pricing strategy of the vehicle manufacturers. While the MSRP to MSRP prices that people look at are certainly drastically different in the case of more expensive vehicles, (anything under about $30,000 doesn't really present enough difference to make importation worthwhile) there are many factors that come into play which the consumer is either unaware of, or chooses to ignore in making their decision.



1. The only people who benefit from purchasing a "new" vehicle in the states are the people that can actually write a cheque for it. Between 80 and 90 percent of all vehicles in Canada are either leased or financed using highly subsidized interest rates, as low as 0% for 5 years, and enhanced lease end values. Cross border shoppers who purchase will not be able to take advantage of these incentives which can add up to as much as $20,000 in interest savings on higher end vehicles. The lease and finance payments in Canada are in many cases lower than the payments available to consumers in the US.



2. Barriers: There are barriers in place from purchasing new vehicles with some manufacturers disallowing dealers to sell new vehicles to Canadian customers, as it is in contravention of their franchise agreement and the dealers could be shut down. Your planned trip to the dealer across the border could be a big waste of your time.



3. Warranty issues: Depending on the manufacturer, the new vehicle warranty may not be valid in Canada, (Chrysler, Honda, Acura, Mercedes to name a few) or may havea time and mileage limit before it is eligible for warranty, so if anything goes awry in that time, you are out of luck, or you may not have warranty for the life of the vehicle.



4. Taxes and Fees: may consumers think that they can just drive across the border and bring a vehicle back the same day. The fact is that there is a long process involved including a full inspection of the vehicle in the US, which is at the cost of the ourchaser, the acquisition of an outstanding recall letter to assure the vehicle is eligible for import into Canada, up front payment of GST and PST at the border,and in the case of full size sport utilities, which are some of the most common vehicles coming north, the eco-auto rebate of up to $4000 which is built into the price in Canada, must be paid up front at the border. There is also customs brokerage fees. Also: vehicle amnufactured outside of the US or Canada are subject to a 6.1 duty whan they come into canada.



5. Vehicle History: While the vehicle sales industry is highly regulated in Canada, it varies widely from state to state in the US. Finding the history of a used vehicle can be daunting if not impossible, and evewn the information that you can find is only as good as what has been reported. There is no regulated insurance company like ICBC to rely on for damage claims, and even then, much damage is not reported.



6. Long term value: While you may save on a vehicle from the US, you must also take into account the re-sale value when you trade it back in or sell it. The used vehicle market will adjust to the currency differential quickly, so you will very soon be able to buy used vehicles at very close to US prices, yet when the vehicle is traded or sold, the value will undoubtedly be significantly less for vehicles originating in the US than for Canadian vehicles. I recently appraised a Porsche 911, and when it was discovered it was a US vehicle, the value dropped by over $20,000.



7. Hassle factor: While there are certainly cases where you can save on used vehicles in the US, you must weigh the time and hassle factor waiting for 2-3 hours at the border in each direction for every time you need to go, and the whole process of bringing the car back into Canada.



In summary, the US vehicle market is not the panacea it occurs to be. In time, the market always wins and adjusts, and while consumers may save that extra dollar in some case, one must ask if it is really a long term saving. So unless you have a big account balance, take advantage of the great dealers and the great deals that are available right here at home.