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Imports Bite into Luxury Car Sales

By Nicolas Van Praet, National Post (FP Posted Blog)

The effect of Canadians' cross-border shopping habit is showing up clearly in vehicle sales statistics. And the picture is not pretty for retailers selling the biggest and fanciest cars and trucks.

Sales for large, luxury and sports vehicles as a group fell 6.2% in October from the same month in 2006, according to figures released Tuesday by DesRosiers Automotive Consultants. So far this year, they're down 4%. They include vehicles like the Porsche Cayenne and Cadillac Escalade.

"The root of this decline is the cross border shopping issue," says Dennis DesRosiers, the consultancy's president. Prices for luxury vehicles can be up to $14,000 less in the United States than in Canada and wholesalers have been importing vehicles north to make a profit, he says. "Put yourself in the shoes of a wholesaler. If you wanted to go through the trouble of setting up a U.S.-based company to legalize a purchase of a U.S. vehicle and then push that through Canada's [import] program, why would you do this for a thousand [dollars] or two when there are bigger price differentials on many luxury vehicles?"

Statistics from the Registrar of Imported Vehicles shows Canada is on track for a record year of U.S. imports, expected to top 164,000 new and used vehicles. Several luxury automakers, including Porsche, BMW, Mercedes-Benz and Audi, have lowered their prices or offered cash incentives in recent weeks to address the Canada-U.S. pricing differential and boost Canadian dealership activity.