I was recently browsing a major electronics site’s selection, and just for fun decided to see if the Canadian dollar’s current upward trend had caused pricing to equate across borders. Turns out there’s still about the same disparity there’s always been (somewhere between 20%-30%).
I have to assume there are more factors at work than just dollar strength, but since our dollar has been steadily gaining strength, shouldn’t we start seeing price reductions? Or am I hopelessly naive when it comes to cross-border economics?
first of all, there are factors that will never change :
transport fees
custom fees and other taxes (although a free market should not have any - in theory)
simply these factors make it impossible to have the same price (considering exchange rates of course) on both sides of the border
but also note that the prices you’ll find in new york, LA or vancouver won’t be the same for the exact same product, also because of local inflation (namely: employee salaries)
to answer your main question : “shouldn’t we start seeing price reductions?”
we should have a long time ago, and I think we did for some products - but with no proportion to the CAD variations
although keep one thing in mind : there are no reasons for resellers to lower their prices if they’re able to sell the same products at the same price, that is an easily gained margin of profits
(obviously : competition should logically make the prices go down, I guess it depends on the market)
Book prices would probably take a year to equalize, since they’re printed on the covers. By the time they change them, the dollars will have changed too. I’ll probably have my folks buy any books that aren’t impulse purchases and ship them to me.
Apparently (and this might actually be a “fact” that I read on these boards) it is currently cheaper to buy a car in the US, have it converted to Canadian specs, pay the customs/duty/whatever fees, than it is to buy a car in Canada.
I’m told that it’s usually in the 3000$ range to do that move of a new car to Canada, but many auto sellers still have a good 20-25% difference in pricing, so on a 20 000$ car… well, you do the math
I don’t know anyone who has pursued that car buying path, but then, I don’t know anyone who recently bought a new car, either. There are garages and agents that will handle the whole purchase for you, if you want to do it.
I do, however, know several people who cross the border into New York or Vermont to shop, particularly for electronics. Though he didn’t buy it, my husband was recently looking at a digital camera in the US, priced at 270$, while it was 380$ here. He should have bought it… he was on a business trip, and could have bought it without paying anything else at customs. He’ll likely pick one up on his next trip down.
I hope prices begin to even out soon. I did see a travel agency advertise a vacation package to the US at par… I guess it’s beginning to level out in some industries.
It’s always been 20-30%?? About seven years ago Cdn$ prices were damn near double US$ prices.
The disparity has shrunk dramatically. Now, you won’t see any results from the recent tear the Loonie’s been on right aways. You have to wait for lower prices to trickle through from manufacturer to distributor to retailer, which can take a while.
Remember too that lots of stuff is imported from places other than the US, and the Loonie hasn’t been gaining nearly as much against other currencies. Some price discrepancy may remain there because US distributors can import more cheaply due to economies of scale in a larger market, etc - so that the price in, say, Yen gets “converted” to Cdn$ at a higher rate than to US$, because the Canadian distributor for Yokomishubatsu has a higher percentage-wise overhead than the US distributor because of the volume difference.
The good news? In this day of discount online vendors, pressure to match US prices will be higher than ever before - especially for Canadian online vendors, but the pressure on them will spill over to brick and mortar stores too.
I get the volume discount aspect, but is the CAD$ strengthening against the world market, or solely against the US$? And if the CAD$ is strengthening against the US$, but not against the international market, isn’t that really just a drop in the value of the US$?
Anecdotally: I just checked the Canadian and U.S. Best Buy sites; a Sony KDL32S3000 TV is about 12% more expensive in Canada. With a bank spot rate of 0.9863 USD to the CAD, there’s no real difference in conversion (although consumer rates and commercial transaction rates will reflect a bigger spread). Keep in mind that this is a Japanese brand, assembled in China some weeks or months ago.
The USD is expected to rebound in the next two to three months, but the CAD will almost certainly go over 1.000 USD before then (for the first time since 1976). Unless oil prices come down, there’s nothing really to hold back the Canadian dollar, especially as oil production continues to ramp up. Any international intervention is going to be aimed at propping up the USD, not reining in the CAD. It is therefore reasonable to expect that Canadian prices will briefly achieve parity with American prices, although it’s likely that the CAD will be below 1.000 USD by the time consumers see them.
I heard the same thing from a Canadian friend just the other day, actually. As an example, he showed me the pricing of the Volvo S80, sold for 38,705 USD or for 54,995 CAD. Granted, this is a luxury car, so the disparity is more striking; but still, that’s a 40% gap between the two.
That’s not an apples to apples comparison, either. In the U.S., the S80 comes in V6 front-wheel drive, turbo V6 AWD and V8 AWD models. In Canada, it comes in V6 AWD (no turbo) and V8 AWD only.
Both prices I quoted were the “starting at” prices for the V6 AWD. The V8 starts at 49K in the States and 65K in Canada, which isn’t as big of a percentage-wise gap but is still substantial.
Of course, the base models might have slightly different features as well, which might also account for some of the differential; but they do seem to be substantially the same car.
The recent jump is the US dollar tanking against all other major currencies in the wake of the sub-prime mortgage disaster and most recently the Fed cutting US interest rates - which means that right now if Canadian and US prices on stuff imported from Asia become equal it will be because of US prices rising rather than Canadian prices dropping.
That said the Loonie has gained a fair bit on currencies besides the USD over the past few years. It’s mostly about oil.
