Ask anyone who belongs to the North American Automobile Trade Association (NAATA), and you'll hear this refrain: As the Canadian loonie climbs to par and perhaps beyond with the American greenback, imported American cars get cheaper and cheaper.
And so do all sorts of other goods. Take suits. As the Globe reported this week, clothing retailer Brooks Brothers said it is trimming prices to get them more in line with U.S. retail outlets.
If you believe the experts, the economists, the gurus who read the tea leaves of currency markets and economic health, we should all get accustomed to a loonie of equal or better value versus the greenback.
"Parity is the new reality," Scotiabank's currency strategist Camilla Sutton told the Globe.
No one can say with certainty if the loon will hit its all-time high of $1.10 (November, 2007), but the general consensus seems to be that a long list of economic factors are conspiring to bulk up the Canadian dollar. Scotiabank believes the loonie will hover at around par for longer than it did in 2007-2008.
When the loonie hits par, Canadian car shoppers no longer need to do the math to see that in many cases new vehicles are more expensive in Canada than in the U.S.
"It's a nightmare; it's all we're talking about in the office right now," one representative of a high-end vehicle manufacturer says, asking not to be identified.
The nightmare has to do with outrage among Canadians who take the time to comparison shop U.S. prices versus Canadian. It also has to do with the need to lower prices to close the pricing gap. Lower prices mean lower profits, of course. Manufacturers and their dealers selling in Canada also worry about buyers heading south to purchase a new vehicle, thus losing sales to dealers across the border and creating the potential for other issues - disputed warranty coverage? - down the road.
Naturally, there are dealers willing to help Canadians go south. The NAATA, a group of vehicle dealers who buy and sell vehicles across borders ( naata.org), keeps a long list of self-described "cross-border vehicle specialists." Business is on the upswing.
Often a vehicle imported from the U.S. is cheaper, even after fees, taxes and other costs. And that's why the number of Canadians purchasing vehicles across the border will likely rise with the at-par loonie. For the record, the number of U.S. imports peaked at 239,929 in 2008, but fell to 124,421 last year.
In a good year, Canadians will buy about 4.4 million light vehicles new and used, therefore 200,000 or so imports from the U.S. represent a fairly small percentage of the overall vehicle market.
Despite the risk of losing customers, as the loonie has climbed these past months, auto makers have avoided wholesale price reductions and/or increases in lock-step with currency fluctuations. One way Canadian manufacturers respond is with various incentives, including cash rebates and inexpensive financing and lease offers.
Auto makers can also increase the value of the equipment content on models sold in Canada. Their goal is to create something close to price parity on a monthly-payment basis between Canada and the U.S.
Nonetheless, the cross-border option exists and for car shoppers interested in it, we'll have more on this topic next week in Globe Drive. In the meantime, if you're looking at importing a new vehicle from the U.S., you will find the process outlined by the Registrar of Imported Vehicles at riv.ca.
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Jeremy Cato will be here to take your questions about cross-border car shopping on Friday, April 9 at 3 p.m. ET. To leave your questions now, please use the comments field on this story.