As the Canadian dollar strengthens against its U.S. counterpart, U.S. dealers, through importers, are increasing their sales of high-end vehicles to Canadian dealers.
Such transactions are growing even though automakers discourage franchise dealers in the United States and Canada from buying new vehicles built for the other country's market.
The exchange rate makes many niche vehicles, both new and late-model used, significantly cheaper in the United States than in Canada. As a result, vehicles such as the Hummer H2 have become desirable candidates for shipment to Canada.
Other examples are the Porsche Cayenne, Cadillac Escalade and Hemi-equipped Dodge Magnum.
Brian Osler, president of the North American Automobile Trade Association in Richmond Hill, Ontario, estimates that 60,000 to 70,000 high-end new and used vehicles intended for the United States will roll into Canada this year via a back channel.
That number is up from roughly 42,000 vehicles last year and about 18,000 to 22,000 a year from 1999 to 2002, says Osler, whose group represents Canadian importers. These totals include vehicles brought by people who have moved from the United States to Canada.
Osler estimates about 10 percent of the exports are new vehicles. Such vehicles move across international borders outside the franchised dealership-factory channel.
"We're seeing a lot of interest and activity in dealers bringing American cars back to Canada," Osler says. "That's something that wasn't around as much in 2003."
Last week, the Canadian dollar was worth about 84 U.S. cents, up from about 62 U.S. cents in January 2002.
Two years ago, 211,797 new and used vehicles were exported from Canada to the United States. Last year, as the Canadian dollar strengthened, the number of vehicles brought from Canada to the United States plunged 54.3 percent to 96,621. Industry analysts expect that number to shrink this year.
Most automakers sell new vehicles to Canadian dealerships for less in U.S. dollars than they do to U.S. dealerships.
Incomes in Canada generally are lower than in the United States, and sales and excise taxes are higher.
But for some high-end vehicles, prices are higher in Canada. Sales of the gas-guzzling H2 in Canada, for example, are low. Through October, 411 new H2s were sold in Canada, compared with 872 in all of 2003.