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Identical Cars, Clothes, Books Come Cheaper in U.S.

By Paul Waldie and Greg Keenan

Canadian-dollar prices are on average 24 per cent higher than U.S.-dollar prices on the same items, according to a study.

When Huck Baldwin was looking for a new car a couple of weeks ago, he headed to Seattle and saved about $13,000.

"The savings are huge," said Mr. Baldwin, who lives in Vancouver. "I think everyone should do it."

Mr. Baldwin saved so much on his 2008 Subaru Outback that he has already put it up for sale in Vancouver and plans to buy another one in Seattle with the proceeds. "I figure I've got nothing to lose," he said. "If I sell it and make a couple of grand, I'll do it again."

With the loonie hitting parity with the U.S. greenback yesterday, before closing at 99.87 cents, Canadians are starting to compare and question the price they pay for everything from cars to magazines, books, clothes and even comics.

According to a study released yesterday by Doug Porter, deputy chief economist at the Bank of Montreal, Canadian-dollar prices are on average 24 per cent higher than U.S.-dollar prices on identical goods.

"I'm not a political person - I'm not an activist - but this particular situation has me so riled up for some reason that I talk to my friends and my blood starts to boil," said Sam Gonchor, a Toronto businessman who recently bought a Subaru Tribeca in Buffalo, N.Y., for $32,122.50 (U.S.). The same car sells for a suggested $41,995 in Canada. "Why should there be a [$10,000] difference on the exact same vehicle?"

Mr. Gonchor related his experience to his neighbour, who will pick up a 2008 Hyundai Sonata mid-sized car in Buffalo next week and save about $6,000. In general, as long as the cars are made in North America, there is no duty and buyers only pay GST and PST.

"People are getting tired of paying the huge prices here," said Zabin Somani, a Victoria entrepreneur who recently created UCanImport.com to help people buy cars across the border. Since the dollar closed in on parity this week, her site has been flooded with hits. "I am overwhelmed. It has taken on a life of its own."

Cars are among the easiest items for comparison shopping and some auto makers are taking note.

Toyota dealers in Canada said the cross-border issue dominated a recent dealer meeting, prompting that company to put a notice on its website outlining why Canadians should buy cars here. Only Toyota vehicles earmarked for Canada are eligible for rebates and other incentives offered by Toyota Canada Inc., the company said. But it also noted that it will honour warranties on new vehicles purchased in the United States.

Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc., argues that Canadian car prices are not out of line. He issued a study earlier this week which said that on about 75 per cent of the vehicles sold in Canada, the price gap was insignificant. Vehicle companies in Canada are adjusting prices by offering rebates, low-interest loans and other incentives to Canadian buyers, he added.

Other retailers are also starting to feel a push back from customers. The price gap "scares me," said Jason Guralnick, who owns the Swank Boutique in Winnipeg.

Mr. Guralnick said he can control the price on clothes he imports from the United States, but he has to buy many top American brands from Canadian distributors who have not adjusted their prices to reflect the stronger currency. As a result, he has been trying to sell jeans at $400 even though they cost $300 (U.S.) online.

"Right now some of the price differences are way out of line," said Mr. Guralnick, who watches customers come in, try on clothes and then go home to buy them online. "It's definitely a concern. I'm just going to have to bite the bullet - because I don't want to be stuck - and lower the price."

Booksellers face a similar dilemma because most books, magazines and greeting cards are printed with a suggested Canadian and U.S. price. The Canadian price can be as much as 20 per cent higher.

"I've stopped buying at the local store," said Hervé St. Louis, an animator in Calgary who runs a website called comicbookbin.com. Mr. St. Louis said the latest issue of the Justice League of America comic carried a price of $3.50 U.S. or $4.25 in Canada. He said he now buys all his comics and magazines online.

Jacqueline Hushion, a spokeswoman for the Canadian Publishers' Council, said publishers have cut suggested Canadian prices on new books but it will take time to adjust all prices. The industry may also rethink printing prices on books, she added. "This is all going to settle out. It just takes time," she said.

Diane Brisebois, president and chief executive of the Retail Council of Canada, said overall prices have been falling as the dollar strengthens, but there is a lag.

"The stuff you're seeing in the stores today was purchased by most of the retailers back in January, so it was purchased at a different exchange rate," she said. "If the dollar continues to remain strong, for those retailers who are sourcing outside of Canada, they will, in the quarters ahead, be able to pass on those savings."

With a report from Virginia Galt.

A comparison of popular purchases north and south of the border shows only a Starbucks coffee is cheaper in Canada:

MIKE FAILLE/THE GLOBE AND MAIL

GAS PRICES: M.J. ERVIN AND ASSOCIATES