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.
I remember when we were walking about this years autoshow and concluded that car manufactures don’t price the car against any real sound reasoning.. More like, “I wonder if people will be this at said pricetag”.
And hey, BMW isn’t the only one at fault.. Last time I checked everyone was still dropping the ball on this.
TANGENT!
I picked up a magazine the other other day and it was priced at 3.95usd/3.95cdn *COUGH*
Agreed - all auto makers are in cahoots (implicitly).
Until the Canadian market pushes back against this and stops buying these vehicles from Canadian dealers, what motivation does the manufacturer have in lowering the price? Absolutely none. Not only this, but if you do import a BMW from the US, all modifications and recalls must be done by a Canadian BMW retailer, who can charge an arm and leg to get your car up to snuff for import. Oh yeah, I wonder how easy making warranty claims ( if warranty is available) through said dealer are when you decided to give them the big FU and took your business down south. I am sure all service appointments slots quickly dissolve when you try to book and they run your VIN and see that you didn’t buy your car from them.
Ducati:
That is a very good point. Maybe you could make up a story about moving from the US or something. I don’t think they’d pass up a service appointment, but you’re right on the general customer service attitude. However thinking back, when moving my car from province to province I didn’t have a service issue as the new dealership seemed to like me picking them to get the work done. I actually never spoke to anyone but the service guys and they didn’t seem to care where the vehicle originated (it was only about 6 months old when I moved).
Here is some warranty info: http://www.importcartocanada.info/tools/warranty-coverage-check/#more-560 Seems like BMW does accept warranties for US cars.
Bringing up the price differential to the salesmen doesn’t do anything - I have had a guy say explicitly, “go buy it in the US”. So consumers are kind of hamstrung.
Oh and one other issue - if your car was manufactured outside North America, you could get dinged with duty as well as tax, which obviously makes it less attractive to import cars.
Ha, you want to know what the $2k in “extras” actually are? The KM/hr gauge cluster, metric computer, and daytime running lights.
In other words, exactly what you have to fork out for when bringing the thing across from the US. So you can buy it at $53k in the states, pay the $2000 to get it to where BMW Canada is happy, and still save amost $8k.
Just to clarify my perspective, I was generalizing on all US purchased vehicles, not necessarily manufacturer specific so thanks Max for calling me on it. It would be a good experiment, to see how easy it would be to get service. I know that some of my family own BWM’s and they said that getting service even at the dealership they bought at is difficult and the service itself is slow. Unfortunately, I don’t have an extra 55k laying around to test it out, although maybe one of the wealthy members of the readership might ‘loan’ me the money to complete the experiment. I also wonder about financing, I suppose a Canadian couldn’t finance a US car without a US address.
Yeah I think it’d need to be a cash purchase, and I agree, BMW’s service in Calgary has historically been weak. Perhaps the new south dealership with the much bigger service area (larger than 2x the size I hear) will help.
I know the border states may have “residency requirements” on purchasers of new vehicles (the legality of which are being challenged), but if you went down to LA for example, showed up with $55K cash and went into the BMW dealership in Malibu or something, there is no way you’re not walking out with the X6.
Then it is just a nice drive up the coast to get it back. Apparently Canada Customs has “informational sessions” for free on all the info you need so that you can bring cars back easily. They prep you for what is required at the border. Also Transport Canada has a decent page here:
http://www.tc.gc.ca/roadsafety/importation/menu.htm
I believe you would deal with financing in Canada so that you can pay in cash when you go south.. Or screw the banks entirely! :)