Ups rebates, cuts lease, finance rates as analysts see focus on incentives rather than retail prices
Nov 01, 2007 04:30 AM
Tony Van Alphen
Chrysler Canada Inc. is the first major auto maker in the country to jack up incentives in response to the soaring dollar and a recent consumer uproar over lower prices in the United States.
Starting today, Chrysler will increase incentives for most models by as much as $5,250 on cash purchases during the next month and slash monthly financing and lease rates by equivalent values over the payment periods, the auto giant said yesterday.
``We've heard the concerns in the media from dealers and customers about the differences in manufacturer's suggested retail prices (MSRPs) in Canada and the U.S.,'' said Stuart Schorr, Chrysler's senior manager of communications.
Online shoppers have reported prices more than $10,000 lower on popular models at U.S. dealer websites in the past month even though the loonie reached par and is now worth more than the U.S. greenback.
Industry analysts have said in the past few weeks that they expected auto makers to push up incentives rather than lower retail prices in reaction to huge price differences on the same vehicles sold in the two countries. ``These are significant incentives,'' said industry watcher Dennis DesRosiers. ``It shows the market is working.''
He also noted auto incentives in Canada are already at record levels.
Analysts expect other big Canadian auto makers to announce their own new incentive packages during the next week.
Auto makers traditionally don't like to lower retail prices temporarily during the model year because that creates volatility in the marketplace.
Spokespeople for General Motors of Canada Ltd. and Ford Motor Co. of Canada Ltd., the two other biggest auto makers in Canada, could not be reached for comment.
Honda Canada and Toyota Canada hinted earlier this week that they were considering moves to address the price problem.
In the past two weeks, two luxury auto makers, BMW and Mercedes-Benz, have boosted incentives for cash buyers in reaction to price differences in Canada and the U.S.
In view of the increasing value of the Canadian dollar, shoppers have expected more bang for their buck in the marketplace but haven't experienced it. The surging Canadian dollar closed yesterday near a 50-year high at $1.0585 (U.S.).
The price difference in the two countries has triggered consumer criticism of the auto makers in Canada for not reducing their prices here. That criticism has intensified because many automakers also refused to sell to Canadians who wanted to buy south of the border.
Automakers said privately in recent weeks they feared that consumers would begin to stay on the sidelines and not shop until prices came down.
In addition to huge incentives for cash buyers and lower financing charges, consumers will have the choice of a $1,250 rebate or Chrysler will make three monthly financing or lease payments of $500.
Among the incentives, the company is increasing the rebate for the 2007 Chrysler 300C by $4,250; financing amounts will drop by $65 a month and the lease rate by $130 a month.
The total cash incentive on the company's 300C flagship model will now be a stunning $9,250.
The incentive on the 2008 Grand Caravan minivan will climb by $1,250; financing will decline by $10 a month and the lease rate will drop by $25 a month. That will increase the overall cash discount on the model to $2,250.