Let's look at some facts...(I am not an economist)
Nor am I. Yet.
Item 1: Economic angle
The Canadian Dollar is soaring, and neither the Bank of Canada nor the government (which does not regulate currency movements) can do anything about it without compromising the never far away risk of inflation. Increasing imports of relatively high end automobiles will cause an outflow of $ CAN and a demand for $ US ==> this will push our dollar lower and help the US dollar regain some of its value.
Right in theory, at least partly. There are far more influences on the Canadian dollar (and the US dollar) then who's buying cars, though. The strength of our dollar right now is due mostly to the increase in commodity prices, because we're a resource based economy and the rise in prices has really been a boon. We're a net exporter of oil, for example, so when the price of oil goes up, our economic situation improves (generally speaking). At any rate, the few hundred thousand dollars being changed to buy cars in the States is only a drop in the pond, and will have very little effect on the dollar value. The Canadian Current Account and Capital/Financial Account (which measures imports/exports and money changing) measures in the billions of dollars. Cross-border car shopping will not do much to move it.
Item 2: Car manufacturers angle
Most of the folks importing cars are actually not hurthing the local high end market, as this category of folks would typically not buy in Canada due to their inability to afford the high local prices. The rise in value of the Canadian dollar has created a new class of individuals who now can spend X dollars to buy a BMW, Mercedes in the US instead of a Nissan Maxima or Honda Accord from the local dealer.
Wrong. The people buying in the States are people that can afford to buy a vehicle with cash, which is a very small subset of the population. Something like 90% of new cars are leased or financed. The majority of people buying from the States are people that would be shopping for similar vehicles at home, but can save tens of thousands by buying in the US.
A quick analysis might lead you to believe that the loss in vehicle sales for Honda and Toyota (some of which are made in Canada) would be detrimental to the Canadian economy....Well not so. If Honda , Toyota etc can manufacture a car in Canada in Canadian Dollars (remember that importing parts into Canada is now significantly cheaper due to dollar strengh) for X dollars, why would the same car be sold in US for 25 to 30% cheaper.
You ignore the fact that if Toyota sells 10% fewer cars, they also build 10% fewer cars. The reduction in capacity means people in the plants lose jobs, which hurts our local economy. Further, since most luxury marquees, which you claim are replacing those lost Toyota sales, are built outside Canada, there is no replacement of those jobs in our economy. Furthermore, when a consumer buys a car in Canada, that money is injected into our own economy. It's the trickle-down effect, and the best example is how an injection of $1 million by the government actually becomes far more than that in economical terms once it fully trickles down. Example: the government pays $1 million to a firm, which then pays its workers. Those workers spend their paychecks. The total injection into the economy is the initial $1 million, plus the amount paid out to workers, plus whatever fraction they spend that is injected, etc. There's a calculation for this called the Multiplier - if I recall correctly, in Canada it's equal to roughly 0.2, meaning that any injection of X into the local economy is actually 1.2X when the dust settles. When a consumer buys in the States, that entire process is applied to their economy, not ours, and we miss out.
It would only mean that they would have to adapt to the new reality and fewer people working in a factory in Oshawa would be replaced by more service people working at BMW, Mercedes etc.
How so? The number of cars on the road does not change in your theory, only the relative numbers of BMWs vs. Toyotas. So the mechanics would shift from Toyota to BMW, perhaps, but the autoworkers in Oshawa would be out a job because BMWs are not built in Canada.
Canadian dealers for high end vehicles could actually benefit greatly from this bonanza. At first sight, you may conclude, why would they embrace this movement. So here it is: remember that buyers of high end cars in Canada are typically well off and 5 to 15K difference is not enough of an incentive for them to shop south of the border.
The well-off buyers are the only ones who
can really afford to shop in the States, since one cannot finance or lease an American car. It must be paid cash. There might be a fraction of people who have a wad of cash at home and can suddenly spend it in the US, but they will be in the minority. Simple fact is, most people cannot afford to pay cash, so the majority of people looking at buying from the States are the same people who are well off.
Again, your servicing example is meaningless, since there's nothing to say there will be more cars total on the road, only more BMWs than there were before and less Toyotas.
Mercedes, BMW, Lexus dealers in Canadian branches should pressure the head office of the their suppliers to insure that we get the warranty coverage we should be entitled to ==> Their business would grow significantly as they now provide services for a whole new niche of customers they would not have had in the first place anyway.
They would have more customers and less profits. Basically this would amount to BMW of America getting the profit for selling the car, but BMW of Canada footing the bill for any warranty work. Totally illogical. Yes, once the cars are out of warranty BMW might have more customers in their service departments, but Toyota will have less. And we're talking about the Canadian economy as a whole here, not just what's good for BMW. Basically, what's good for BMW is bad for Toyota.
