Why Do Canadians Pay More For Sleds?

Question:

Dear Motorhead:

You guys claim to “tell it like it is” and for the most part, I agree with that statement. Maybe you can answer this for me: Why do all the OEM’s think that Canadians are satisfied paying anywhere from 12 – 20% more for their iron than our American counterparts?

The exchange rate isn’t what it once was, so why do they want to screw with us? This is even more of a shock when a Canadian mfg. does the same.

Seems like a silent agreement between the four to pad the bottom line.

Your comments please.

Stitty

Reply

Thanks for your email!

The issue you have raised is among the most contentious we are hearing right now from Canadian snowmobilers.

We agree with your assertions – the dollar is now even – actually better than par last week. We believe now this pattern is established – and it would appear the loonie is not going to slide back much – as long as the US Fed continues to excessively overprint their currency (over $1 trillion more paper US dollars were printed in Nov 09) the issue of US vs CDN MSRP is only going to become more profiled. If this assertion is true then I believe we will see the price of sleds – US vs CDN – continue to move closer.

In defense of the OEM’s they have responded before. Back in 08 the loonie crested the USD for a brief period and they did respond with price adjustments. However, when the loonie dipped back MSRP’s went the other way in Canada.

This issue has been on our RADAR for some time now. It would appear the marine and RV business along with the auto biz have followed currency trends somewhat faster and to this end I believe that is why snowmobilers are becoming increasingly more frustrated and agitated.

The real gut wrencher in this situation is what happens to our CDN dealers. They are suffering from price disparity as many more consumers simply drive across the border and buy the sled they want at the price they want (actually even cheaper than they could buy it here if the MSRP’s were level as a result of the over-par loonie). This creates hardship for OEM branded CDN dealers.

One thing we do not agree with is badgering consumers for doing this – albeit it is not good for our CDN dealers. The world is rapidly moving to a more globalized view of consumer pricing and snowmobilers are no different. In fact, some CDN provinces make it ridiculously easy to import a new or late model used sled – actually assisting buyers at the border when they import. These issues will ultimately drive prices in Canada closer to the US MSRP’s over the next year.

One downside of all this currency induced price adjusting is the effect it has on CDN used sled values. Obviously a used snowmobile in Canada has commanded a higher $ on trade or private sale in the past.

This is rationalizing now and some sellers are finding out the hard way. CDN dealers will be more and more reluctant to put big bucks in trades if they suspect new unit MSRP’s will be dropping by next fall.

While we do not know what the OEM’s will do about this in the short term, the pressure they are getting from both consumers and their own CDN dealers will no doubt cause much debate and hopefully some change in the future.

Great question!

Motorhead Mark

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