Interesting. Good for you, but potentially bad for us.
They've talked at length about the effect on the car market in Canada. But I wonder, have used car prices gone up in the US as a result of this added demand? Granted, the appetite for used cars in Canada is a small fraction of that in the states, but most of this demand would be centered on the border states. For example, I've been cruising the cars and trucks section of craigslist for Seattle and Portland recently, and I bet they get a lot of Canadians calling on ads and buying used cars that way. We also have seen US dealers advertising used vehicles in our local papers in Vancouver.Updated Mon. Nov. 26 2007 1:31 PM ET
The Canadian Press
OTTAWA -- A record number of Canadians imported vehicles from the United States this year and economists say the automotive shopping spree south of the border could drive down prices in Canada.
Scotia Economics, citing data from the Registrar of Imported Vehicles, said Monday that Canadians imported a record 137,000 new and used vehicles from the U.S. through October as the loonie overtook the slumping greenback during the summer.
Scotiabank auto industry specialist Carlos Gomes said Canadians imported 24,873 vehicles in October alone -- twice as many as in October 2006 and a 68 per cent jump over the 14,832 imported this September.
Most of the imported vehicles are used, although Gomes said he didn't know the exact number.
But as more Canadians venture south to buy vehicles, selling prices for new and used automobiles north of the border are falling. The bank's used car price index fell five per cent from a year earlier, which Scotiabank said mostly came from a drop in the price of year-old models.
Canadian new car prices also fell by five per cent so far this year after largely remaining flat between 1998 and 2006, Scotiabank said.
If the loonie continues to outpace the greenback and Canadians keep flocking to the States, Gomes said, selling prices could drop more in the coming months.
"If ... we have the Canadian dollar roughly where it is now, then the attractiveness of going to the U.S. to buy a vehicle obviously increases,'' he said.
"What that says to me is it's likely to mean further pressure on used vehicle prices going forward.''
Economist Jim Stanford of the Canadian Auto Workers union said that represents a two-pronged problem for Canadian automakers and retailers.
"It turns into a double-barrelled problem: they lose on the manufacturing side because of high costs and they lose sales on the retail side because of cross-border shopping,'' he said.
Gomes attributed the import surge and the gap between U.S. and Canadian selling prices to the loonie's rapid appreciation, and not to increases in the manufacturers' suggested retail price in Canada.
Canadian automakers are hesitant to drop their suggested retail prices because of an impending flood of vehicles coming off-lease next year, the Scotiabank report said, with the increased supply pressuring sale prices.
In 2008, an expected 550,000 vehicles -- up from a five-year low of 470,000 last year, and nearly triple the current level of imports from the United States -- are expected to return to the market after leases expire.
That represents 14 per cent of the entire Canadian market of new and used sales, the bank said.
So, instead of dropping the suggested retail prices, Canadian automakers have begun dangling carrots in the form of better incentives and lease and financing deals to entice consumers to shop at home, the report said.
Canadian companies made those moves to counteract lower prices south of the border, which Scotiabank said could be $4,000 to $5,000 lower.
Ontario and British Columbia made up the bulk of used-vehicle imports, Scotiabank said, accounting for two-thirds of overall imports from the United States.
Meanwhile, Atlantic Canada and Quebec have shown only moderate gains in U.S. vehicle imports.
Gomes suggested the import numbers are largely population-driven, with Ontario and B.C.'s larger populations translating into more U.S. vehicle purchases.