Canadian Auto Dealers Take Advantage Of Strong Loony

Autos & TrucksCars

  • Author Anthony Fontanelle
  • Published February 7, 2008
  • Word count 427

The United States economic downturn has resulted to the increasing strength of the Canadian loony compared to the US greenback. This is a good thing for Canada as the country's economy is getting better. But the drawback is that automakers like General Motors, Ford, and Chrysler are no longer as interested in manufacturing vehicles in Canada as they once were.

The reason for this is that they will no longer be able to manufacture their vehicles in Canada at a low price and sell them in the United States for a large profit. In fact, a lot of assembly plants of the Big Three have been shutdown much to the dismay of the Canadian Auto Workers union led by Buzz Hargrove.

But the auto industry is Canada is not that bad. It has been reported last year that more and more Canadian auto buyers are going into the United States to purchase their new vehicles. The strong loony means that they can purchase vehicles in the United States at a much lower price than in Canada. But what has been left out of the report is that auto dealerships are doing this, and not just consumers.

Patrick Priestner, the chief executive officer of AutoCanada Income Fund, an auto dealership in the country, said: "What people are kind of missing is that dealers are bringing the majority of those cars up, it's not really the consumer." Priestner also pointed out that they are expecting to see an increase of vehicles they will be taking into Canada from the United States. "This year we're going to do a lot of it," he added.

AutoCanada only bought a handful of vehicles south of the border last year. Considering the strengthening value of the loony, the company has accumulated enough profit to realize that their strategy is working well. This is even if the vehicles they import from the United States do not use Canadian-made auto parts such as CV boot Canada.

This year, the company reported that 10 to 15 percent of the vehicles that they will market in Canada will come from the United States. "We see a real opportunity in 2008," said Priestner according to the Financial Post.

Tony Raybould, the president of Jim Pattison Auto Group meanwhile said that this trend is not expected to last long. "If the American economy recovers, then that will dry up. But in the meantime, yeah, there's great opportunity to bring those things in," he said. "As long as our dollar is around US$1, then it's certainly going to be a source that's valuable."

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Anthony Fontanelle is a 35-year-old automotive buff who grew up in the Windy City. He does freelance work for an automotive magazine when he is not busy customizing cars in his shop.

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