There are countless pros and cons to a strong Canadian dollar but we don’t have to worry about that at the moment – the Loonie is down in the dumps.
What does this mean for the Canadian car business? I’ll give you two very concrete consequences.
1) The Americans are coming north across our border, fishing for some incredible used car deals. In fact, used car exports to the US have grown nearly 20-fold since 2009. Back then, it was we Canucks that were laughing all the way to the bank.
Now, what do you think this does to used car prices? If you guessed that they would rise then you’re correct. Not only are many of the good ones leaving the country, but also the remainder, because of lower supplies at dealerships, will tend to have inflated values.
Likewise, this could increase the resale value of the car you’re looking to offload so it might not be all bad. Or so you would think…
2) Canadian new car prices could rise as well. Remember when the Loonie was at par? We used to complain to OEMs about unfair pricing and, in time, most if not all obliged and reviewed their sticker prices. Today, they wished they hadn’t.
For example, a new 2016 Volkswagen Golf Sportwagen starts at $22,795 CDN. In the US, the window sticker says $21,625. That’s a very small difference considering the gap between the Greenback and the Loon.
As the US’ currency is essentially the almighty dollar, car making countries such as Germany are weary about pricing their offerings to hastily especially as the downward trend continues, or at least it did at the time of writing these lines. It is therefore for this reason that the new Alltrack’s pricing has yet to be fixed.
If the barrel drops to the forecasted $20 then the Canadian economy is going to continue to take a beating. I’m about as good at predicting economical trends as a rock is at floating on water but it might be time to shop for your new car sooner rather than later.
New car prices could soar before the end of the year. By the same token, that could slow down new car sales, which could cause further damage to our economy…
A gloomy Loonie is a bummer.