Canadian Vs U.S. pricing – Part 3

It’s been a whole year since we did our first analysis of how Canadian pricing of motorcycles compares to that of the U.S. And what a difference a year makes!

It’s been a whole year since we did our first analysis of how Canadian pricing of motorcycles compares to that of the U.S. And what a difference a year makes!

On November 6th, 2007 the Loonie was at an all time high, commanding 1.08 US Greenbacks for one Canadian dollar, which made for some large (and obvious) differences between what you could get for you dollar south of the border and what you’d get here.

It was all over the chat boards so CMG decided to do an analysis comparing a selection of bike MSRPs from here and compare them to the US. The attention grabber was the new Kawasaki Concours 14, which came in at a whopping 38% higher in Canada!

Funny thing is, if the dollars were still on par, that difference would still be a significant 33%. However, factor in a Canadian dollar is currently at 78 cents, and the difference is now a mere 5%.

SPRING INCENTIVES

In the spring of this year we did an update on the situation to see what the importers had done to try and entice consumers to shop in Canada rather than spending south of the border. The dollars were still at par, so they were left with the option to either drop pricing and/or add some sweeteners to try and close the gap.

Most did just that and in our sample we saw the Europeans bring their pricing to effectively within 14 to 17% of the US, apart from Ducati that is, which still charged an inexplicable 24% more for their bikes up here (particularly odd, because the Canadian bikes actually come up from Ducati US).

Harley and Buell did the biggest cuts and also did them most often to keep within a very respectable 8-10% difference, whereas the Japanese tended to resist price cutting (save for some cruisers) relying on incentive packages that still left them with a rather big discrepancy range of 22% to 37% depending on model/manufacturer.

SETTING THE STANDARDS

But all this was before we witnessed the mighty fall of the Loonie, which yo-yoed all over the place in the summer before plunging in October to its current 78 cents on the US dollar. We’re hoping that it has settled around this mark, but to see how the numbers work out, we’ve worked out differences using an 80 cent Loonie as our standard as well as for a 75 cent Loonie and an 85 cent Loonie, for reference.

BTW, this can get a little confusing (especially if you’re thick) so to give you the gist of how the math works. The lower the Loonie goes, the less the discrepancy between Canadian and US pricing. There’s also a point where a certain rate will mean that a certain bike in Canada is effectively the same price as it is in the US. For example, for the Concours 14, that would be 75 cents. Go any lower than that, and unless Kawasaki Canada or US change their prices, the bike now becomes cheaper in Canada?

Confused? Good, let’s carry on then …

We’ve also crunched the Canadian numbers for 2008 and 2009 to show us just how the importers are dealing with the looming recession.

And finally, as with the previous articles, we’ve chosen a selection of bikes from European, North American and Japanese manufacturers to see how each area is reacting (or not) and to see if there are any trends showing between types.

FYI, all pricing shown is published MSRPs. Some manufacturers have been dropped from the survey and some models changed, where we were not able to get the info we needed, or where the model did not continue over into 2009.

Alrighty, let’s get to the figures …

THE STATE OF THE NATION(S)

A) The Europeans

BMW

For this update we looked at the F800GS and the R1200RT. Both bikes keep their 2008 MSRPs into 2009 with the GS coming in 9% lower and the RT 12% lower than in the US!

Yes, it’s currently cheaper to buy a BMW up here (if only those Americans had any money to spend!). Even an 85-cent Loonie would still see them cheaper, though only just.

Ducati

We kept with the two super-sport bikes; though the 1098 is an 1198 for ’09, the 848 remains the same. Despite the upgrade, the 1198 keeps the same price as the 1098 from 2008, although oddly the 848 goes up by almost $500. On the 80-cent Loonie both bikes are marginally cheaper than in the US.

KTM

We picked the 690 Enduro and 990 Superduke, but since the 690 was replaced by the slightly higher spec R in 2009 it’s difficult to draw much from the fact that the price went up by almost 11%, as we’re not comparing apples to apples. Suffice to say that maybe they figured they were selling the regular 690 too cheap and so managed to tweak it up a bit on the process.

The Superduke saw a modest hike of $100, but KTM seem to figure that the economy will be okay with that. As for how they compare to the US, well despite the hike, the 690R is a bargain for Canadians with a massive 20% difference on the 80-cent Loonie. We’d have to see the Loonie get back up to 95 cents before the price matches.

The Superduke is a little less dramatic at about 7% cheaper, though the US is still selling off their ’08s (no 09s), so again maybe not an apple-to-apple situation.

Triumph

So how do the Sprint ST ABS and Rocket II Touring fare? Well, the Canadian prices actually dropped from 2008, with a 3% drop on the Sprint and a more significant 7% on the Rocket III. As for the US, the 80-cent dollar translates to a dramatic 15% saving for Canadians on both models, requiring a 91-cent Loonie before the difference disappears.

B) The North Americans

Buell

We decided to look at the 1125R and XB12Ss, which considering Canadian importer Fred Deeley’s willingness to cut pricing in the last 12 months as the Loonie soared, it’s no great surprise that they have just this week decided to push prices back up again by about 10% across the board.

For the 1125 and XB that translates to a 13% hike and 5% respectively over 2008, but despite this the 80 cent dollar still shows them one and a half to six and a half percent cheaper than the US models.

Harley-Davidson

With the 883 Sportster Low and the Cross Bones, the picture is similar with a 6.5 and 9.5% hike from 2008. And likewise, they still come in cheaper than in the US at about minus 4%.

C) The Japanese

Unlike for the European and North American markets, which tend to specialize, for the Japanese we’re able to select a large capacity supersport, tourer and cruiser from each. which also allows us to compare across brands by type.

Honda

We were hoping to get pricing for Honda’s new CBR1000RR ABS in time for this article, but alas it was not meant to be, so we’re left with the ST1300A and VTX1300C (since the VTX1800 is no longer around for 2009).

The price for both these bikes remains at 2008 levels with the ST coming in half a percent up on the US and the VTX 6 % down.

Kawasaki

ZX10R, Concours 14 ABS and Vulcan 900 Classic (the new 1700 Vulcans are not yet priced). Like Honda’s bikes, all three remain at 2008 pricing levels and differences with US pricing are slight with the ZX10 and Vulcan coming in slightly lower than US pricing.

The Concours tries to hold on to its reputation with a 9% higher rate, meaning that the Loonie would have to hit 75 cents before we had parity. BTW, that still makes it the most Canadian-expensive bike in our survey.

Suzuki

For the big S we took a look at their new-for-’09 GSXR1000, the long-lived Hayabusa and the sporty M109R cruiser. Suzuki reckon that the new status of their GSXR is worth an extra $200 over 2008, but oddly think the same for the M109 while leaving the Hayabusa static.

Despite the hikes, the M109 is still 6% down on the US and the Hayabusa 4%. The new GSXR is 2% up.

Yamaha

And finally to Yamaha. They too have a new supersport in the shape of the R1, with the FJR1300 and XV1900 Raider returning unchanged. Only the R1 sees a rate hike of $300 over 2008.

Surprisingly all three models are still slightly up on US pricing, with the R1 at 3%, the FJR at 7% and the Raider at 5 and a half. We’d need to see a 78-cent dollar to equal out the differences.

CONCLUSIONS

Who would have thunk that in the space of nine months we’ve gone from seeing differences of close to 40% down to pretty much parity across the board?

From our limited survey, the Europeans appear to be offering the best deals to Canadians with an average 11% cheaper than the US. The Canadian dollar would have to rise to 88 cents before the difference was wiped out.

The North Americans models too come in under US pricing with an average of 4%, requiring an 83-cent dollar to match pricing, and this despite the recent price hikes.

Finally, the Japanese are almost bang on with an average of 0.4% up over Canadian prices.

Of course, things can still change though so far pretty well all of the importers have shown a trend of sticking to the prices they announce at this time of year, with the option to add incentives if they feel the need to narrow the gap.

The exception to this is Harley/Buell, who because the units are produced in the US are more closely tied to the dollar relationships. As a result they have opted to adjust prices as they go, which would likely continue over the coming year if required.

Looking back at the previous articles we wrote on the subject, one thing does stand out. When asked why Canadian rates were so much higher than our US counterparts’, various explanations were offered.

Everyone pretty well pointed out the disadvantage in the buying leverage of a small market like Canada compared to the larger US. The Europeans added that the mother factories generally set their prices and so their hands were tied.

However, a common thread among the Japanese importers was that they had to buy a year in advance. In late 2006 the Loonie was still relatively week and so they effectively paid high for the 08 models. The opposite occurred in 2007 (very strong Loonie), so they would have scored.

What this may mean is that there’s going to be a bit of profit taking after what may have been a tough 2008, but we wonder if it’s more likely padding for the year to come. Canadian importers may be finally off the hook from the threat of consumers heading south to buy their new bike, but what does a looming recession hold in store?

If they actually did buy when the dollar was at par, then they should have a 20% cushion in which to maneuver. After all, they might just need that …