BMW’s C$/US$ Pricing Difference Continues
When D4V and I visited the Calgary Autoshow I opined that the 2009 BMW X6 was a “hit” with “super aggresive styling” and “Longer and lower than the X5″. What I didn’t know at the time was the price of a 2009 X6.
Today I come across an article in the Globe and Mail which specifically cites a BMW Canada spokesman talking about the X6 prices.
The xDrive35i with the inline-six starts at $63,900 and the xDrive50i with the V-8 starts at $78,100, not including destination and delivery charges. In the United States, the XDrive35i starts at $53,275(U.S.) and the XDrive50i starts at $63,775 — with both figures including a $775 destination and delivery.
Whoa whoa whoa. US$52,500 vs. C$63,900? Right now the USD/CAD fx rate is 1.01. Someone is getting screwed here and I think I know who it is.
BMW Canada spokesman Jochen Frey says the price differential is something the company has been grappling with since the Canadian dollar surged in value against its U.S. counterpart. He says pricing in Canada is set in the Canadian market, based on competitive conditions. “The prices in Canada are made for long-term planning, not necessarily today’s exchange rate,” he said. He also added that there is about $2,000 in additional content in the Canadian versions of the X6.
Ok fair enough on the $2k in “options” on the Canadian version which come standard. That makes it US$54,500 vs. C$63,900 or the Canadian model coming in 17% more expensive whereas on an exchange rate parity basis it should be ~1% more expensive. I call bs on the “long term planning, not necessarily on today’s exchange rate”. The car is a 2009, it will be sold next year, various forecasts for the C$/US$ have the C buck staying around par +/- 10%. The Canadian dollar has been with 5% of par on either side for the last 10 months, this is not a one month pop. The spokesman elaborates:
Distribution costs are also higher in Canada. Individuals who wish to import vehicles from the United States also must deal with extra costs and requirements associated with bringing in a vehicle from the U.S.
Yeah so, distribution costs are 15% higher? Don’t think so. Mainly the price difference is about “competitive conditions” as evidenced in his first quote. BMW has the choice to set their price based on how they see the Canadian market shaping up. Perhaps the fact that it appears the US is going into a recession while we will likely avoid one in Canada is causing prices to drop for luxury goods in the US. That may be the case, but when you’re starting to get up to $10,000 difference on the price of a new car, the option of purchasing it in the US and then filing out the paperwork and driving it back to Canada starts to look pretty attractive. Then maybe BMW Canada will recognize they need to consider more closely the C$/US$ pricing difference.
