BMW Canada hopes cash rebates will keep buyers out of U.S.
GREG KEENAN
From Saturday's Globe and Mail
October 20, 2007 at 12:36 AM EDT
BMW Canada Inc. is offering cash rebates to some customers in an effort to keep Canadians buying vehicles here amid the perception that people can save thousands of dollars by buying cars in the United States.
The BMW program involves rebates to buyers who pay cash or finance their purchases through non-BMW sources. It comes as consumers and dealers put pressure on auto makers over perceived and actual price gaps between Canadian and U.S. vehicles, with the Canadian dollar trading above the U.S. dollar.
Porsche announced last month that it will cut prices on 2008 models by 10 per cent or more from 2007 levels, but the action by BMW – which sells more than 20,000 vehicles a year – will spur other auto makers to make similar moves, dealers and industry sources said.
“BMW is a lot more mainstream than Porsche,” said one dealer, who suggested the program will be successful. “They're giving that cash buyer the disincentive to even think about going south.”
The Canadian unit of the Germany-based BMW AG has been setting sales records regularly for several years – including in September, when the clamour about the dollar discrepancy in auto prices began taking off.
“We've had a policy of ‘extend the lead,' ” said Joe Lawrence, director of sales at BMW Group Canada. “We want to continue to extend the lead.”
The rebates amount to $3,000 for cash buyers of 2007 model year cars in the company's best-selling line, the 3-series, Mr. Lawrence said.
They represent the difference between the standard BMW loan rate of 8.25 per cent and the company's subsidized rates, which range from 3.9 per cent to 6.9 per cent for 2008 model year vehicles.
The gap between U.S. and Canadian manufacturers' suggested retail prices is greatest in the luxury vehicle segments, according to an analysis done by DesRosiers Automotive Consultants Inc. earlier this year.
A class-action lawsuit has been launched in Canada against General Motors Corp., General Motors of Canada Ltd., American Honda Motor Co. Inc., Honda Canada Inc., Chrysler Canada Inc., Chrysler LLC, Nissan North America Inc., Nissan Canada Inc., along with the Canadian Automobile Dealers Association and the National Automobile Dealers Association in the U.S.
For their part, auto makers have said that simply comparing MSRP levels in the two countries does not reveal the true pricing picture.
Some incentives – including federal rebates on fuel sipping vehicles introduced in the March budget – are not available to Canadians who buy U.S. cars.
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