Friday, November 02, 2007

Canadian Car Showrooms are Empty

Looking for a quiet place to spend a Saturday afternoon, try the showroom of a car dealership north of the 49th parallel. No Joke.

Canadian dealers are reluctant to complain publicly for fear of retribution from manufacturers but their sales have dried up. They are caught between angry consumers and stubborn manufacturers. Consumers aren't stupid although they may not totally understand the intricacies of cross border pricing. They can see how much lower car prices are in American dealerships and would shop in the U.S., that is, except that the manufacturers are being obstructionists. Although it is perfectly legal to sell cars to Canadians, American dealers are being prohibited from doing so. This is only making Canadians more angry. They understand the concept of price elasticity so they refuse to buy and instead waiting for prices to drop.

Already Chrysler has announced incentives and more companies will likely follow, although reluctantly. Meanwhile a class action suit against the manufacturers is humming along. But as I mentioned in an earlier post, the most effective tool to bring down prices is the "empty showroom".

No comments: