Strong Canadian dollar weakens satisfaction with Canadian car sites

The Canadian dollar’s rise against the ever-weakening greenback was one of 2007’s news items of the year in Canada. The loonie’s increasing strength was a source of pride for Canadians, but also of frustration. Across many categories, prices did not change to reflect the increased purchasing power of the Canadian dollar, and many Canadians frequently looked south with an envious eye to see that Americans were still enjoying significantly lower prices on many goods, notably cars. The perception that Canadian car-buyers were getting a raw deal was widely-held and was well-documented by the mainstream media.

But did this backlash against a perceived pricing imbalance go so far as to affect customer satisfaction on Canadian automotive sites? I looked at the movements in the cumulative iPerceptions Satisfaction Index (iPSI) score for 9 Canadian auto sites from mid-October to the end of December and compared that against the movement of the C$/USD$ exchange rate. The results are eye-opening:

Some conclusions:

1) Customer satisfaction, as measured by the iPerceptions Satisfaction Index, plummeted from 7.2 to 7.0 during the week that spanned October 29th to November 5th, when the loonie hit its peak against the US dollar.

2) Even when the Canadian currency began to lose ground against the US dollar, the collateral damage to auto site satisfaction continued unabated, as the iPSI held at 6.9 through the first three weeks of December. According to published reports, auto sales slowed 5% in the month of December, despite generous discounts and incentives.

3) Interestingly, a stronger Canadian dollar in the latter half of December correlated with higher satisfaction on the Canadian car sites. The composite iPSI for the 9 sites closed December back up at 7.0. This could be evidence that Canadian car marketers are now being more proactive, offering bonus programs targeted at achieving fairness, if not full pricing parity.

4) Finally, take a look at some verbatim feedback culled from one of the studies during the time period I looked at. These reflect the frustration of ordinary car buyers, as well as their collective sense of being taken for a ride

- “Bloated prices based on the old Canadian dollar.”

- “Finding how much Canadians are being ripped off as compared with the USA.”

- “MSRP pricing is still completely out of line with US pricing. I am now considering importing a vehicle from the US if Canadian auto retailers don’t adjust MSRPs or offer exchange rate rebates of some sort.”

Powerful stuff, indeed.