Consumer Golf: A Tale of Two Currencies
Courtesy: AP Photo
There is a class-action lawsuit before the courts in Canada that argues that Canadians pay much higher prices for new cars than Americans do.
The timing of this suit is interesting, coming as it does on the heels of a plummeting U.S. dollar and sky-rocketing Canadian dollar (one Canadian dollar was worth $1.04 American at the time of writing).
In 2006, more than 100 thousand Canadians went south of the border to buy a new car – they saved thousands of dollars on each purchase, despite the many headaches to complete the purchases. The lawyers behind the lawsuit allege that there is a conspiracy among car makers to keep prices higher in Canada.
I interviewed the lead lawyer in the case on Sunday, as part of my role hosting a news show on CBC radio. I asked him why car makers would want to keep prices higher in Canada than the United States.
Henry Juroviesky, managing partner of Juroviesky and Ricci in Toronto, replied that if car makers know that Canadian dealers can sell a Dodge minivan, for example, at a higher price in Canada, then they – the manufacturers – can sell that minivan to the Canadian dealer for a higher price. And make more money. Doesn't matter if the Canadian market is a tenth the size of the U.S. market.
I then asked Buzz Hargrove, president of the Canadian Auto Workers Union (formerly linked to the UAW), if his union believed Canadians should be allowed to buy cars at the same price as Americans. He said, "Certainly, as long as they buy those cars here in Canada". Fair enough. The point is everyone wants to pay what they consider a fair price.
What does any of this have to do with golf? Plenty, actually. Substitute golf equipment for automobiles and ask yourself – if you're a Canadian – why you would want to buy golf equipment in Canada when you can buy it in the United States?
In fact, ask this question, as well: why do American manufacturers sell to Canadian retailers at higher prices than to American retailers?
Check a couple of golf websites from Canada and the U.S. and compare the price of a set of Taylormade r7 Draw Hybrid irons. The difference is nudging $300 (or $315 U.S.!).
90% of Canadians live within 300 miles of the border with the United States. The Canadian dollar is now worth more than the greenback.
I think it's pretty obvious what will happen: Canadian retailers will feel a loss of business; they will start to push the American manufacturers for lower prices; Canadian golfers will slowly come back to retailers north of the border when those prices begin appearing in stores.
This can become a complex economic equation if you listen to the manufacturers. They'll talk about transportation costs (not an issue. The cost to ship from California to New York is the same as from California to the Ontario/New York border and it's cheaper to the border with British Columbia), currency differentials (not an issue now), the inequality in market dimensions (U.S. is bigger than Canada but there are more golfers in Canada, per capita), etc.
But it's a simple equation when you boil it down to its basics: many markets are being charged simply what those markets will bear.