Topic: Exchange Rates

[sailor723]

I've seen several posts in recent weeks arguing that it isn't that the Canadian dollar has gone up so much as that the US dollar has dropped against most international currencies and that the Japanese,Korean and European makers probably weren't making windfall profits from the strong Canadian dollar.

I thought the following 5 year data was interesting

CDN $ VS  Japanese Yen:

5 yr Low....1$ CDN.....78 yen
Today 1$ CDN.....118 Yen             Increase of approx 64% in CDN $

CDN$ vs  Korean Won:

5 yr Low....1$ CDN.....775 Won
Today.1$ CDN.....928 Won             Increase of Approx 20% in CDN $

CDN $ vs Euro:

5 yr Low....1$ CDN.....0.595 Euro
Today.1$ CDN.....0.7214 Euro         Increase of approx 20% in CDN $

Source....finance.yahoo.com/currency

[AVToller]

I did a similar check and was shocked to see how wrong I was in regard to the yen (BTW, that's ~ 51%, not 64%). 

[sailor723]

I did a similar check and was shocked to see how wrong I was in regard to the yen (BTW, that's ~ 51%, not 64%). 

Whoops....you're right. Obviously being able to subtract 78 from 118 and get 40 instead of 50 isn't one of my skills!

BTW...I just checked and similar numbers hold true for the British pound vs the CDN dollar as well ($ is up about 25% vs the pound from it's 5 year low) Not sure how many cars still get imported from the UK...Jag?...Mini?

[Zombie]

Wow math is fun!

[random006]

To Zombie, Ottawa and all the others outraged at the seeming differences at car pricing,

Yes, there is a problem but it is not as simple as looking at the exchange rates.  To illustrate this fact, I will repeat what I posted many months ago on this very topic.  Cast your mind's eye back to 2002, when the dollar was hovering around 65 cents US or so.  Pretty dire stuff, no?  Well, if exchange rates were all that mattered, any car coming in from the States - or anywhere else for that matter - should have seen its price go through the roof in order to maintain pricing and profit parity.

A funny thing happened, though.  Prices were actually cheaper than in the US for the equivalent model!  So cheap in fact that some US dealers tried to buy Canadian bound cars and resell them to Americans!  How could this be so?  Obviously, factors other than the exchange rates were at work and not all of them are easy to see.  The other possibilities to which people point would actually increase the cost beyond parity.  Items such as higher taxes, smaller market, differing safety standards and language come to mind.

So what caused this difference in prices?  I didn't know then and I still don't know now.  The point is that exchange rates will only explain part of the story.

[Zombie]

To Zombie, Ottawa and all the others outraged at the seeming differences at car pricing,

Yes, there is a problem but it is not as simple as looking at the exchange rates.  To illustrate this fact, I will repeat what I posted many months ago on this very topic.  Cast your mind's eye back to 2002, when the dollar was hovering around 65 cents US or so.  Pretty dire stuff, no?  Well, if exchange rates were all that mattered, any car coming in from the States - or anywhere else for that matter - should have seen its price go through the roof in order to maintain pricing and profit parity.

A funny thing happened, though.  Prices were actually cheaper than in the US for the equivalent model!  So cheap in fact that some US dealers tried to buy Canadian bound cars and resell them to Americans!  How could this be so?  Obviously, factors other than the exchange rates were at work and not all of them are easy to see.  The other possibilities to which people point would actually increase the cost beyond parity.  Items such as higher taxes, smaller market, differing safety standards and language come to mind.

So what caused this difference in prices?  I didn't know then and I still don't know now.  The point is that exchange rates will only explain part of the story.

I agree that the exchange rate doesn't effect the cost of cars but I still think that it should. The Canadian car market was and still is priced for a %20-30 difference in the Can/Am exchange rate, @ 65 cents on the dollar there was only a %5-10 difference in the Can and Americans prices (after rate conversion). Now with the exchange rate on par with the US the differences are still %20-30 I feel this is an unacceptable rate difference to ignore.

It baffles me that most Canadians are willing to except this, but in the end they are free to spend there money were they wish or in this case over spend.
Cheers Zombie

[random006]

I agree that the exchange rate doesn't effect the cost of cars but I still think that it should. The Canadian car market was and still is priced for a %20-30 difference in the Can/Am exchange rate, @ 65 cents on the dollar there was only a %5-10 difference in the Can and Americans prices (after rate conversion). Now with the exchange rate on par with the US the differences are still %20-30 I feel this is an unacceptable rate difference to ignore.

I don't think you're "hearing" me and are therefore missing my point.

It does not matter what you or I think "should" be the causative factors here; what matters is what they in fact are.  The only way for the situation to be reduced to one of exchange rates would be to make the two countries' economic, legal, social and political structures functionally identical.  I don't see that happening anytime soon, paranoiacs and their North American Union notwithstanding.