$1B a day in cross-border shopping

This is the time of year that Fleet managers are thinking about their final purchases of the 2007 model year. They’ll continue to be paying a huge premium if they are on the northern side of the Canada-US border (except, of course, the funny inversion you get with Detroit being north of Windsor). Last summer Canadian Driver, published this article, suggesting that prices in Canada, normalized for such things as exchange rates and trim levels, are 17% higher for the same vehicle. As with any study like this the actual amount varied dramatically by vehicle, here’s a chart produced for their article, the source is credited on the image, but I can’t quite make it out.

The article normalized for currency exchange between January-July 2006. Here’s a look at the monthly average exchange rates between 1999 and 2006, from the Bank of Canada (and their currency exchange page).

This price differential across the Canada-US border is going to vary by category of good or service, but cross border economic activity is above $1B per day. If you’re not benefiting from exchange rate/price arbitrage, odds are good that your supplier is benefiting. As always, market knowledge can go a long way to evening the odds, so don't just look locally for price benchmarks; your suppliers view their markets globally, so should you.

Cheers,

David Rotor