Dealerships see profits tighten as loonie soars
By Brad Herron
The Eagle
With the Canadian loonie climbing above the U.S. dollar, Cochrane dealerships are taking a hit.
Rodger Woodhouse, general manager at Cochrane Ford, said local customers are buying vehicles in the U.S.
“I know two that have done it, or have said they will,” Woodhouse said, adding he can’t speculate how many people stop to check prices then shop elsewhere, but he knows it is happening.
They can’t lower its prices because the dealership purchased vehicles at higher costs.
“I pay a certain amount for a vehicle and if I go under that it is going to be a loss, so there’s nothing I can do,” Woodhouse said.
Although the difference between the U.S. and Canada can be as high as $9,000 for big-ticket vehicles, Wood-house said he doesn’t have “$9,000 of profit in a vehicle.”
“It’s not uncommon to sell a $75,000 truck and make $1,000,” he said.
If this trend continues and Ford doesn’t change things, Woodhouse said it will impact the number of new vehicles on the lot “sooner or later.”
“I’ve got quite a few vehicles here right now and we are paying some serious interest on them,” Woodhouse said. “I hope they do something soon.”
Alex Baum is in the same situation at Cochrane Dodge. Because the price gap has been so large, he has gone to the U.S. and purchased used vehicles to sell locally.
Given the dealership’s history in town, Baum said local customers are still loyal.
“Our sales have been strong and that is a testament to our community,” Baum said.
Already realizing the challenge Canadian dealerships are facing, Dodge has adjusted interest rates so vehicles can be sold.
Baum said Dodge also has a policy where if a new vehicle is bought in the U.S., its warranty is void.
Baum believes the financial ship will right itself, and he sees a day — if the loonie stays at its current level — where Canadians are paying the same amount as Americans.
“It will be a gradual move to parity with the dollar,” Baum said.
Wayne Hilland has operated Bow Ridge Sports since 1968 and was in business when the loonie was above the U.S. dollar in the 1970s.
Although many of his snowmobiles and all-terrain vehicles are not as expensive as cars or trucks, he has already seen the impact of lost sales. But Hilland said there is little he can do.
He said the “margin or end-washout on most products is two to three per cent, some higher,” so he cannot go much lower.
“We could lower our prices five per cent and not make a profit,” Hilland said.
Saying “every time we lose a sale it hurts,” Hilland knows the only way to keep dollars coming in is to convince people to buy locally.
“If everyone does it because it’s cheaper, you won’t have any stores.”

