Loonie's Dive Spurs U.S. Imports of Used Autos to 13-Year Highby
`They switch going each way, very quickly,' DesRosiers says
Almost 200,000 vehicles imported as wholesalers reap bargains
The U.S. imported almost 200,000 used vehicles from Canada in 2015, a 13-year high as the dive in the loonie spurred a cross-border rush for bargains.
"It’s price, price, price, price," Dennis DesRosiers, president of Richmond Hill, Ontario-based DesRosiers Automotive Consultants, said in a telephone interview Thursday after issuing a report. "It starts to pick up when the dollar gets into the low 90s and it becomes an explosion as it gets into the low 80s, and even now, into the 70s."
A 2013 Honda Civic four-door sedan, for example, has an average asking price of about C$14,902, or $10,370 in U.S. dollars, according to the Canadian Black Book website. The same vehicle would sell for an average price of about $12,328 in the U.S., according to the Kelley Blue Book website. The difference is about $1,958 per vehicle.
The Canadian dollar fell about 16 percent in 2015, and is currently trading at about 70 U.S. cents, the lowest since 2003 when used vehicle exports to the U.S. were at their previous peak.
The market for these used vehicles is primarily made of up wholesalers, who purchase vehicles in Canada at a discount and resell them in the U.S., he said.
While there are expenses related to importing the vehicles, such as duties, and modifications that need to be made to make them roadworthy, the wholesalers are experts at the game and can turn a profit with the currency where it is, DesRosiers said.
There are wholesalers out there who operate in this space and they’re very nimble," he said. "They switch going each way, very quickly. It wasn’t that long ago we were importing 150,000 vehicles."
The most common vehicles exported to the U.S. are light trucks and compact vehicles because they’re the cheapest to buy. When the currency is in Canada’s favor, it tends to be luxury vehicles that flow across the border, he said.
The vehicles are typically under eight years old, he said.
The downside is that consumers don’t see much of a price discount because the savings go into the pockets of the wholesalers, he said. He said most consumers don’t import vehicles themselves because of the regulatory burden.