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Loonie’s plunge is driving some big discounts on Canadian car lots

Tags: Economy, Loonie

PART THREE OF BNN'S WEEK LONG SPECIAL COVERAGE: THE HIGH PRICE OF A LOW DOLLAR

IN CASE YOU MISSED IT: Canadians accustomed to the lower loonie driving up the cost of everything from vegetables to clothing are getting a pleasant surprise on some of Canada’s car lots.

A 2015 Ford Escape sells for US$22,960 in Buffalo. But a similar model in Canada sells for just about $19,500. It’s a similar story for a 2016 Toyota Camry. A basic model sells for about US$23,000 compared to $24,500 in Canada – a deep discount once you factor in the currency difference.

Automakers have discounted prices on some cars to spur purchases by already-stretched Canadian consumers and now can’t afford to factor in the falling currency, says Dennis DesRosiers, founder of DesRosiers Automotive Consultants Inc.

“These are the small, high-volume cars, many are a little bit cheaper than in the United States,” he told BNN. “Factor the value of the dollar in there and a lot of them are a lot cheaper.”

Americans are taking advantage of the price gap. The number of Canadian certified vehicles being exported to the U.S. was on track to double in 2015. The same phenomenon is happening in the used car market, says Stefane Marion, National Bank’s Chief Economist and Strategist.

“Year after year, Americans come to Canada and buy roughly 50,000 used cars. Right now they are buying 200,000 used cars – it gives you a sense of how undervalued our currency is,” he told BNN.

While the loonie is expected to remain at these low levels, the vehicle price gap between Canada and the U.S. is expected to close soon, according to DesRosiers. “If you’re even thinking of getting a vehicle this coming year, get your butt out and talk to a car dealer pretty quickly.”

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