Wednesday, December 12, 2007

Of Southern Shopping and Dealer Survival

I've read a few magazine editorials lately about the motorcycle industry's rising concern with cross-border shopping. It seems more and more dealers are going into panic mode as they see their clients going South-of-the-border to buy their new (or used) motorcycle.

First off, I’d like to say that I sympathize with the dealers in this case. I spoke to a rep at our local Yamaha/Ducati/BMW dealer and he told me that the retail price on some models in the ‘States is actually lower than the dealer cost here in Canada. So to remain competitive, he’d have to sell certain models at a loss! It’s an unfair situation, and the dealers aren’t the ones holding the big end of the stick; although in the end, they will be made to pay.

Problem is, you can’t exactly blame the consumers either. I mean, let’s get real for a moment... If you’re in the market, say, for a new Kawasaki Concours 14. You’d have to be nuts to pay $19,099 CDN when you can hop across the border and get it for $13,799 USD. Either that or you’ve got way too much “disposable income”. Even at the current exchange rate (which is close to par), that comes out to a 27% difference – over one quarter the price of the bike!

Some manufacturers have started adjusting their prices to more closely reflect the climbing loonie, while others are trying to offer incentives to keep their buyers from making that trip down South. But the real truth is in the numbers. I’ve yet to see one case where a motorcycle model was priced the same in Canada as in the US. Now I’m sure that manufacturers will be quick to point out how the market is different in Canada, or how shipping may cost more up ‘ere in the North; and most of these arguments do hold a measure of truth. However, the basic fact remains that as long as buying a bike in the States is considerably cheaper than buying it in Canada, that’s what’s going to happen.

Motorcycling is one of the last bastions where brand loyalty rules (ex. how many die-hard HD owners do you know?); but Canuck consumers can still stay loyal to the brand, while dumping the dealer. In the end, Canadian motorcyclists may end up being the biggest losers of all. As more and more local dealers are closing shop, who will we turn to when we need support? A trip to the ‘States may be easily justifiable when buying a new bike, but I don’t think it makes much sense when you need to get that front wheel balanced.


irondad said...

So you are actually still alive!

I'm with you on supporting dealers. I try to buy as little as possible via the internet, for example. Still, that extra 5 grand or so would be hard to get around.

Maybe instead of reducing prices to such low levels they could do some negotiating on service after the fact. Kind of a "pay a little more now but get it back later" thing.

If I had the great answers I'd be in a different line of work. Just a thought.

Lucky said...

Hey irondad - yup, I'm still kicking! After having moved-in to the new (old) house this past summer, I spent most (or all) my time doing renos before Jack Frost reared his ugly mug. Dust has settled now, things are slowly getting back to normal (whatever that is).

I always try to support my local dealers, I'll only order stuff off the 'net if I really can't get it locally. And for accessories, I've always found that the local dealers will really make an effort to match whatever price I find online.

With bikes, it's a bit different. If I was on the hunt for a new (or used) bike, I'd be willing to shop locally if a dealer "makes it worth my while". Some people don't realize that there are costs involved with buying a bike South of the border (ex. hotel room, meals, getting there, etc.). I figure if a local dealer can come within 10% of the price, I'll buy it from him just to save the hassle of cross-border shopping. Not to mention that it gives me someone to nag when I run into problems ;-)


Giest said...

I'm really not a big fan of going across the border and if a dealer can come reasonably close, I have no problems with buying local. Heck I'd be happy if they would toss in some freebies with the purchase. Give me a bike cover, gloves, discounts for tires down the road and I would be quite happy.

Lucky said...

giest - I agree. Heck, during winter I spend way too much time hanging out at the local dealers just waiting for spring to come along. That's got to be worth a little mark-up compared to the US pricing ;-)