Our posts on our Subaru Outback selection and subsequent Import DIY posts have garnered a lot of attention in these early days of this site.  I thought it best to start up a Question and Answer post where I will post some of the intriguing questions I have received from one reader regarding our Subaru Outback import.  After the post we encourage other readers to post questions in the Comments to this post and I will answer all of them!

Update: Dec 8, 2010

I decided to follow up with the dealer regarding what J had told me about the $750 Canadian surcharge.  The last thing I want to do is mis-lead the readers of this series.  So I emailed K to get to the bottom of the surcharge details.

SPF asked: Hi K,  I got word from a reader today that you dealership is now charging a $750 Canadian Export Surcharge.  Can you confirm this?  I want to educate my readers, not mis-lead them!

Karl responded: SPF, I’ve attached a document that explains the addition of the surcharge.  One thing that’s not listed in the document is that if there is ANY issue with the export/import process post delivery that is created by myself or our dealership we will refund the $750 in full.   (interesting to note the refund portion)

SPF asked: Thanks K – the reader I had been talking to also sent me the PDF.

I am curious K, how the figure of $750 was determined.  Of course you don’t have to share, but from my research/knowledge on the subject these are the services I can see that you provide to CDN buyers:

1) a lot of hand holding / knowledge transfer (which may or may not be true for all buyers)
2) faxing paperwork to the border
3) in house service including that really handy map of the US Customs area.

Now, I think these services are important, and perhaps there are more included I am unaware of? (aside from the guarantee – it may be wise to include that bit …).  But for $750, that is quite a chunk of change even given the justification on your pricing, ability to customize.  If a buyer wanted an out-of-the-box on the lot model, and knew the process, they seem to be paying for some faxing work and the “guarantee” (which from my experience, everything @ the border is a breeze regardless of the manufacturer).  If there is more to it, please let me know.  We have been getting a TON of hits on my 5 article piece (linked below) and I want to ensure i’m not misleading anyone or negatively influencing people – just the facts.  Our experience was great and i’m happy to give props where they are due, but if the $750 is for faxing I do need to put that out there to people.

Anyhow K – I don’t mean to come off in the wrong light – but I do want to present the straight up facts, including my experience to the readers.  I still think importing from your dealership is a great deal.  We saved 23% ($9300+) vs buying in Canada (had to make adjustments for the nav/moonroof but I got the numbers figured out).  Even with $750 tacked on we would have saved $8614.47 or 20.8%!

Karl’s response: The figure was arrived at by the owner.  Somewhat off the record (SPF note: I did clarify a few times that K was ok with me quoting him here), here’s how it came about.  You can paraphrase this however you’d like or publish in it’s entirety.  Up to you.

It basically came to the point where there weren’t anywhere near enough cars to go around for customers, regardless of nationality.  Because of our pricing structure we’re as much as $700 UNDER our factory invoice on a new Subaru.  Subaru’s holdback is anywhere between $800 and $1,300.  We rely heavily on “back end profit” to make up for our deeply discounted prices.  This would be profit generated by financing and leasing, which obviously we cannot extend to export buyers, as well as extended warranties, rust proofing, interior and exterior protection packages, maintenance programs, and wheel and tire protection just to name a few.

By and large, these are items and plans that the majority of Canadians don’t purchase.  I don’t know why.  I think fear has a lot to do with it, but I digress.  Essentially the dealership was netting about $250 per Canadian sale.  We simply could not afford to do business like that in the short term or the long term.  We don’t ever see (the vast majority) of Canadian customers again for service or maintenance so there’s residual profit that’s up in smoke.  The choices that were on the table were to either stop selling to Canadians all together or to charge a surcharge.

Various numbers were kicked around the table… everything from $0 to $1,000 or more.  The final figure was chosen by the owner and has been in effect since.  It is completely non negotiable and, in my honest opinion, was a sound business decision.  We are providing a complicated service to Canadian buyers and, unlike any other dealership that I know of, will stand behind that even after the sale.  If there is ANY issue with the export/import process that was created by me or anyone else at our dealership, we will refund the surcharge.

I’ve looked at this from both sides of the table and have to say that I agree completely with the owners decision.  And, to be completely honest, a 20% savings on a new car is nothing to turn ones nose up at :)  I hope this has shed some light on the subject and please let me know if you have any other questions.

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Update: Dec 6, 2010

J has returned with a number of new questions for me and some information I found disappointing.

J stated: Just contacted a dealership, looks like they are charging additional fee’s now when selling to Canadians.

$12.50 NYS Tire Tax
$12.50 NYS In Transit Permit (30 day temporary license plate)
$10.00 NYS Inspection
$75.00 NYS Title
————-
$110 NYS Fees

Answer: I forgot to add this in, thanks J.

J also adds: and an additional $750 dealership fee, so total of $860.  I’ve attached the PDF for your reference.  Did you get hit with this by any chance?

Answer: We did pay the $110, but the $750 is news to me!  Wow – can’t say I like that $750 charge AT ALL.  For $750 they are basically only faxing some papers to the border 72 hrs in advance.   Check with another state dealership – they also sell to Canadians out of the same state.  The issue then becomes some more driving to get there, and, the export office issue.

J asks: Also did you ask your cdn insurance to insure the car when you drove it to back to Ontario?  Since I’m assuming the state in Transit permit is only for the US.

Answer: We got our insurance before picking up the car.

J asks:  One more quick question, K from the dealership mentioned that there is no additional modification needed for the forester 2011, however RIV says something about Electronic Immobilization system need configuration or not meeting CMVSS114 requirements.  When you brought over your outback, what modifications did you do?

Answer: The Outback required NO modifications whatsoever.  Not too sure about the Forester. (upon further research I can’t find anything that confirms or denies J’s concern)

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J asked: Hi, love the blogs. Was reading up on your experience in purchasing the Subaru Outback. My wife and I are in a similar boat and are looking to purchase a 2011 Tribeca with the dealership team in the US.
I have some questions though with your purchasing experience with them.. 1. Was there any negotiating room on the price with them or is it what you see on the website, 2. how much did it cost you to change the odometer and where did you get that done?

Answer: Hi J,
Our situation was a bit odd.  Initially we were slated to get a 2010 Outback but it was getting very hard to get the customization for the model (Limited) we wanted around June when the news of the 2011 model release was announced. K @ the dealership pushed us toward the ’11 citing retail value, availability etc.  The ’11s were $300 more than the ’10s. so he sold us the ’11 for the same 2010 quote – so just over 1% less than invoice.  We didn’t try to negotiate further, though I suppose we could have tried.  Buying at invoice was such a treat (compared to the haggling required in Canada) and Kwas so great (read: patient with me) we didn’t feel a need to hassle as we were saving $9500+ already.

So J, why the Tribeca?  As far as I know it’s fuel economy is worse than the OB (Outback), and less storage capacity – but for a higher cost?

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J asked: Thanks for the quick response. The obvious choice is the OB. However not a fan of the wagon. The gas consumption is worrisome. Was thinking of getting the forester but there is the additional 6.1% duty, however its a lot better on gas.

My thought pattern is to get the tribeca since the cost saving is huge and sell it in 5-6 years, with the initial savings I’ve made + the low subaru depreciation value, I figure this will save me more money in the long run as opposed to the forester.  I would love to get your thoughts on this?

Answer: The Outback is barely a “wagon” now – more of a CUV (Compact Utility Vehicle) with tons of cargo space.  It rides as high as a Tribeca or Forester I think and has the best fuel consumption of the bunch.

The issue w/ selling in 5-6 yrs is that while you save on the purchase, there is still a stigma about imports.  However, the warranty on any Subaru – Canadian or American, the warranty is gone after 5 yrs.   But for some reason US cars just don’t sell for as much as Canadian counterparts, as silly as that is.  As imports become more common this may change some … may not as well.  I think the savings you get up front you will likely lose on resale.  Check out autotrader.ca and check out 2010/11 models of the Subarus – you’ll see the pictures and notice the odometer reads MPH – and they’re used (barely) but are going for about $8-$10k less than the sticker value at sale.  Hard to say really.

We bought our Outback expecting to keep it for 12-15 yrs (we don’t drive much more than 10k KM per year).  We needed the cargo space for family and VERY big dog.

In the following example I compared the OB 3.6L engine as the Tribeca does not offer a 2.5L engine (which is what we bought).  Our 2.5L rates as 22 mpg city and 29 mpg highway.  For the record, I was correct on the fuel consumption – you will save gas using the OB, and the cost but not the total cargo capacity:

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J asked: Looking at the outback and saw that the automatic transmission is CVT. From what I understand cvt transmission is one piece and cannot be repaired or fluid changed. What’s the outlook on that in the future when the OB warranty is gone? I hear the cost to replace down the road is near 8k and your only option is buy new cvt tran or find a used at a junkyard. Thoughts?

Answer: Haven’t looked that far into it.  I do know I had a recall on it (re-programming) that went off without a hitch.

Follow up:  From my research I found that the fluid can be changed, but your dealer will have to do the work and this will cost some money as you can’t DIY.  I was unable to find any recent reports where CVTs could not be fixed.  I would be very surprised that an automobile manufacturer would build an engine that could not be fixed.  The only cost quotes I could see on CVT replacements were for early-mid 2000s Nissans.