Are Car companies in Canada Gouging?

[benyl]

http://www.canada.com/nationalpost/f...6f545f&k=90454

This has been the case for years...

Although, from 1998-2002, it was the other way around... haha

[hampstor]

Originally posted by benyl
http://www.canada.com/nationalpost/f...5f&k=90454

This has been the case for years...

Although, from 1998-2002, it was the other way around... haha

I'm not entirely sure how car inventory works at a dealership, but if it's anything like computers the product wouldn't be at the dealership on consignment from the factory. The car would have to be paid for first at the FX rate at that time. If the FX rate dropped later, the dealership would've already paid for the car at the higher rate and unless someone else moves the price down first, they won't be dropping it.

Of course i could be wrong and the car may be at the dealership on a 'consignment' type deal

[grocko]

Definately an interesting read..wonder if you can make an argument for a $4000 price drop on a new car here at a dealership...that would be great!

[RickDaTuner]

Originally posted by hampstor


I'm not entirely sure how car inventory works at a dealership, but if it's anything like computers the product wouldn't be at the dealership on consignment from the factory. The car would have to be paid for first at the FX rate at that time. If the FX rate dropped later, the dealership would've already paid for the car at the higher rate and unless someone else moves the price down first, they won't be dropping it.

Of course i could be wrong and the car may be at the dealership on a 'consignment' type deal

thats exactly how it works,the factory sells the car to a suplier/broker, then the dealer buys the car from the suplier/broker wich then is sold to you..

dealers make about 3-6k on each car sale on cars priced between 20-50k dollars, after all is said and done the price gap from factory to buyer is about 10k....

greedy greedy people

[hampstor]

Originally posted by grocko
Definately an interesting read..wonder if you can make an argument for a $4000 price drop on a new car here at a dealership...that would be great!

I don't know if they'd 'drop' the price $4k because that'd come out of their own pocket. Remember, they are in business to make a profit - if they don't make a profit then they won't be selling cars. Is it greedy? Sure it is, however in the same situation i doubt any of us would do any different.

Think about it like this, FX rate is 1.20/1 (CDN/USD) and a dealer buys a car in at $10000USD, or C$12000. Suppose FX rate changes to 1.10/1. The USD price of the car is still $10000, and if a dealer was to bring in the car at that moment it would be C$11000. Most dealers are NOT going to drop the price because of that on existing inventory - but they will average it out and drop it with current inventory purchased.

They can either choose to sacrifice margin and sell at lower margin or maintain margin.There are 3 ways the dealer can maintain margin at this point. 1) do not drop the price, 2) do not stock inventory and only order as required. 3) the dealership gets back end dollars from the factory. I don't know much about this end of the car industry but i know in the computer industry the manufacturer tells you tough luck because the price changes has nothing to do with them.

I wonder what would happen if you offered to buy the car in USD?

Another thing to consider, the FX rate between Canada and the US may change, what if a car comes in from another country such as Mexico and the dealer is paying for them in Mexican Pesos? It gets a bit more compliacted

[googe]

You guys are talking as if the price variance happened over a few months. Sure you can understand some lag because a dealer might have bought at a higher exchange rate or whatever, but as soon as that stock is gone it should catch up. This has been going on for a few YEARS now, so that isnt the case.

But, thats not how it works anyway. The dealers have nothing to do with the exchange rate, because they dont buy from overseas. A Nissan dealer buys from Nissan Canada, who sets all the costs and sources allocations and such. Subaru, same thing. Subaru of Canada sets absolutely retarded prices on STIs (as just about all subaru owners know by now) and the dealers here have no exposure to US pricing in any of their dealings.

Its probably more a case of, "well we already know they'll pay this higher price, so lets just keep doing what we were doing and benefit from the bigger margin".

[benyl]

Originally posted by RickDaTuner


thats exactly how it works,the factory sells the car to a suplier/broker, then the dealer buys the car from the suplier/broker wich then is sold to you..

The dealers get their alottement from the factory and normally have at least 1-2 months to sell the car before they have to pay the factory. That is why there is more incentive for a dealer to sell you a car off the lot rather than order something from the factory.

Cars will usually go "on sale" at a particular dealership if they are moving slow and are getting close to being "paid for."

The dealerships are a franchise, the corporate headquarters set the prices, not the dealers.

[hampstor]

Originally posted by benyl


The dealers get their alottement from the factory and normally have at least 1-2 months to sell the car before they have to pay the factory. That is why there is more incentive for a dealer to sell you a car off the lot rather than order something from the factory.

Cars will usually go "on sale" at a particular dealership if they are moving slow and are getting close to being "paid for."

The dealerships are a franchise, the corporate headquarters set the prices, not the dealers.

ahh thats right - thanks for the clarification

[RickDaTuner]

Originally posted by benyl


The dealers get their alottement from the factory and normally have at least 1-2 months to sell the car before they have to pay the factory. That is why there is more incentive for a dealer to sell you a car off the lot rather than order something from the factory.

Cars will usually go "on sale" at a particular dealership if they are moving slow and are getting close to being "paid for."

The dealerships are a franchise, the corporate headquarters set the prices, not the dealers.

back in the day when i worked for Nissan, the new car Manager explained it like that to me, maybe things have changed since then?

[benyl]

Nissan may be different, but that is the way it works at most other brands.

[Tik-Tok]

Originally posted by benyl
Nissan may be different, but that is the way it works at most other brands.

Nissan is the worst IMO, the cost of a 350Z in the USA is approx. $33,000 canadian. What do they actually sell for? $45,000 or something?

[googe]

Originally posted by Tik-Tok


Nissan is the worst IMO, the cost of a 350Z in the USA is approx. $33,000 canadian. What do they actually sell for? $45,000 or something?

no. track version is 38,500 cad in the usa, 46k here. still pretty bad though. sti is way worse.

[xrayvsn]

Originally posted by googe
sti is way worse.

Or better, if you're willing to travel and do some paperwork

[Toma]

Well think about it.... gas prices are the same deal...

Oil is hovering at about $71 a barrel for seems forever now, and gas prices are going UP....yet our dollar has gained big time strength against the US.

So, while the yankees bitch about $2.70 a gallon, we are paying $4.10 per gallon....

And WE ARE the net exporter for fuck sakes.

[benyl]

You can thank government taxes for that.

Breakdown


Taxes based on country


It is just that the US doesn't tax gas very much. The US promotes the usage of fuel...

Be glad you don't live in Van or Montreal:

[Tik-Tok]

Is anyone here a vehilce sales-person? Im curious if the government puts it's own hidden taxes on the car (asides from a/c, and tire tax), and that's why it's so much more here.

[SwitchBlade]

Originally posted by RickDaTuner


back in the day when i worked for Nissan, the new car Manager explained it like that to me, maybe things have changed since then?

Dealerships buy and finance their vehicles on a program called a floor plan. I think they finance them from the bank or the manufacturer directly. When a vehicle is sold it has the dealership has to pay the bank on the same day for the vehicle.

Additionally, if you look at some of the dealerships they are stocked up on more inventory because they can get cars keep cars on the lot for 0% through the manufacturer. As far as I know all dealerships finance their cars with a floor plan.

[SwitchBlade]

Originally posted by Tik-Tok
Is anyone here a vehilce sales-person? Im curious if the government puts it's own hidden taxes on the car (asides from a/c, and tire tax), and that's why it's so much more here.

To my knowledge their is not any additional taxes that the government benefits from. Although, I am not a 100% certain. I will double check with my dealership finance teacher and ask if they have any insight to your question.

[barbarian]

Originally posted by hampstor


I'm not entirely sure how car inventory works at a dealership, but if it's anything like computers the product wouldn't be at the dealership on consignment from the factory. The car would have to be paid for first at the FX rate at that time. If the FX rate dropped later, the dealership would've already paid for the car at the higher rate and unless someone else moves the price down first, they won't be dropping it.

Of course i could be wrong and the car may be at the dealership on a 'consignment' type deal

There's no excuse anymore when the Canadian dollar has been on the rise for 3 years straight.

If no one bought a single new car for 30 days, you can bet this would be rectified in a hurry.

When these guys do their, "Employee pricing for everyone," they are just cutting some of this fat out.

[frostyda9]

Originally posted by googe
Its probably more a case of, "well we already know they'll pay this higher price, so lets just keep doing what we were doing and benefit from the bigger margin".

Option 1: do nothing, continue gouging
Option 2: drop profit margin (for example) 50% and try to sell twice as many cars to make the equivalent profit.

No brainer.