Canadian Dealers OK with Price Disparities

Las Vegas — Chrysler LLC's Canadian dealers will not get pricing relief to cover the competitive disadvantage posed by the country's rising currency, the loonie, nor will they get a reprieve from a volume-incentive plan dismissed as unworkable in the U.S.

Yet, they couldn't be happier.

Representatives of the auto maker's 460 Canadian stores here gave standing ovations to Chrysler Chairman and CEO Robert Nardelli and President and Vice Chairman Jim Press, each of whom was attending his first dealer meeting since joining the Pentastar company.

Earlier, Press tells journalists Chrysler will not respond to the rising Canadian dollar, which has magnified the pricing disparity between Canada and the U.S.

Partly to accommodate an historic 10%-40% difference between the loonie and the American greenback, price stickers on Canadian vehicles are inflated.

Parity between the two currencies only was reached last month, ending three decades of dominance by the U.S. dollar. But a knee-jerk response, such as lowering U.S, prices, is not the answer.

“I don't think anybody watches the currency and as soon as it moves, they start changing the price,” Press says. “You can't do that. Currency is a long-term move.”

Canadian dealers appear unfazed.

“There is, obviously, a big difference between American and Canadian pricing, but that's how it's always been,” says John Skelton, sales manager of Provincial Chrysler in Windsor, ON. If pricing were adjusted immediately, “something would happen with the dollar, and you'd be right back at square one,” he warns.

He has not received customer backlash.

Meanwhile, Steve Landry, executive director-North American sales, tells Ward's he warned U.S. dealers against selling vehicles on the gray market.

“We do have some Canadians coming to buy U.S. vehicles to take back to Canada, but it's fraught with complications,” he says. (See related story on page 46.)

Meanwhile, Chrysler Canada tells its dealers that an incentive program tied to volume sales will be allowed to remain. American dealers decried the system because 60% rarely achieved the sales targets that triggered the bonuses.

However, a Chrysler spokesman says Canadian dealers like the program, because at least half meet the required targets. Once a target is achieved, dealers are rewarded $400 for every vehicle sold over a pre-determined period of time.

The new U.S. program eliminates the target and pays dealers for each sale.