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What does the recent devaluation of the Canadian dollar mean for vehicle prices?

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What does the recent devaluation of the Canadian dollar mean for vehicle prices?

What does the recent devaluation of the Canadian dollar mean for vehicle prices?

At the time this article was being written the Canadian dollar sits at just 75 cents American for each Canadian - and that's not good folks. It's not just about the surge in costs for some simple imports in the grocery store, the complication of a low Canadian dollar, one, we might add, that marks the lowest it has been in over a decade, mean less opportunities for crossing the border for vacations for many on top of price leaps for products and goods we're getting from our neighbours to the south.

In a recent report, the Bank of Canada has stated publically that they expect consumer prices to be 1.5% higher in 2016 than in 2015. This doesn't entirely recognize the rise in the overall inflation effect - and, when taken into account, the price surge may look quite a bit higher than that already horrifying 1.5% figure.

What does the recent devaluation of the Canadian dollar mean for vehicle prices?

In an interview with Vancity Buzz, UBC Sauder School of Business associate professor Werner Antweiler laid out in impressive detail what Canadians can expect during this period:

"When we look at the overall effect of exchange rates on consumer prices, the items that are mostly of concern are essentially what you buy in the grocery stores."

Werner went on to point out that despite the fact the loonie is being affected, that this will have an inverted impression on Canadian produced goods - making them more competitive in the international market.

"Whenever the Canadian dollar is depreciating, it makes Canadian produced goods more competitive in international markets and in particular, of course, the United States. We've already seen a little bit of the positive effect of that on output in some of the key provinces for manufacturing in Ontario and Quebec."

Similarly, more Americans will likely be spending their hard-earned cash here thanks to the depreciation of the Canadian dollar - and, along with this, an increased film and television industry presence.

What does the recent devaluation of the Canadian dollar mean for vehicle prices?

Of course, we can point to some of the roots of the problem - with crude oil futures being a particularly offender to these recent woes, but we're here to get down to a specific point - how will this affect your decision to buy a vehicle?

Imported goods, a category that includes everything from furniture and household appliances, to cars and select clothing lines tend to take a little longer to feel the currency burn - in some instances only taking on a noticeable difference in price over a year later when local suppliers have exhausted their inventories before the price increase is applied.

Thanks to all of this we can anticipate the possibility that MSRPs will be going up to reflect this - especially if the dollar maintains its current position for much longer. In this same practice, the expectation is likely to cross over into the used-car segment, but it unlikely to be as apparent as it will be for newer models (particularly those that have not been released yet).

Further Reading:

https://www.vancitybuzz.com/2016/01/how-declining-canadian-dollar-affects-you/

https://www.thestar.com/business/2015/12/07/lower-dollar-means-higher-costs-for-canadians.html

https://www.theglobeandmail.com/report-on-business/top-business-stories/blame-the-low-canadian-dollar-for-prices-15-above-where-they-should-be/article25517594/

https://www.huffingtonpost.ca/2016/01/06/five-things-to-know-about-the-low-canadian-dollar_n_8925320.html

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