How come cars are so much more expensive in Canada than the USA?

[logmans]

I'm sure you are all sick of people registering accounts just to ask a quesiton, but this has been driving me insane for about a year now. I always assumed it was because car manufacturers lag when it comes to currency exchange rates, but the 2006 models coming out now are the exact same story.

I know why used cars are so much more expensive, a lack of regional supply and the fact that new cars are more expensive. But why are new cars so much more expensive? (note I am talking pre-tax figures here)

The base MSRP for the 2006 WRX STI in the US is $32,995 USD, which works out to about $38.5k Canadian. The base MSRP for the same car in Canada is $48,995, a full 27% more. I can't see the few small differences in Canadian and US street laws making up for over $10000 worth of mods, in fact I would bet the Canadian and American STIs are identical within $1000 of manufacturing cost.

This story is the same across almost all similarly priced "imports". I have no idea if it's true of "domestic" makes because I have never shopped for one.

Can anyone explain to me why cars here are so much more expensive?

[95EagleAWD]

Damn good question.

Carbuilders off their websites... no options, just base price + PDI.

US Acura RSX = $21,225
CDN Acura RSX = $28,480

US Acura TSX = $27,890
CDN Acura TSX= $37,330

US Acura RL = $49,300
CDN Acura RL = $70,930

US Acura NSX-T = $89,785
CDN Acura NSX-T = $143,720

Differences:

RSX = 26%
TSX = 26%
RL = 31%
NSX-T = 38%

Differences obtained using US$ divided by CDN$.

Crazy... with exchange rates and duty fees it might be cheaper to buy one down there, especially in the case of the RL and NSX-T.

Probably the same with BMW, Porsche, etc...

[AcuraTl]

ya most cars are expensive here..not just hondas lol...i recall the Conservative MP trying to smuggle a benz into Canada...haha rottern bastard!

[max_boost]

Simple. Because of the exchange rate. A few years back it was $1USD=$1.60CDN

$32,995=$52,792

Not so cheap was it?

Over on s2ki.com, a Prarie Redliner went down to Montana (I think) and came back with a brand new STi for under $44k (all taxes, duty etc.etc.)

Something to think about, most CDN manufacturers will not honour a US warranty except under a few circumstances such as an American moving to Canada. Why? To prevent curbing. However Subaru is the exception. So why buy a Subaru here? Save the hassle. Why buy in the US? To save $10k :D

With that said, if I lived in Vancouver or Toronto, you can bet I'll go buy an American car :D

[ecstasy_civic]

thats retarded....... I thought that the costs werent too much different.



2002civic, time to get yourself that special car;) :clap:

[Weapon_R]

It's simple - supply and demand. Manufacturers in the U.S. have to price their cars accordingly. There is far more competition and far more car makes and models to chose from.

Ask a Ford dealership how difficult it is to sell a Ford Explorer SUV in Beverly Hills, where 99% of the people there are buying much nicer vehicles.

[max_boost]

Oh Fock, now this thread got me thinking again. Pay down house or buy new car........I was trying so hard not to think about it. :nut: :rofl:

[logmans]

Originally posted by max_boost
Simple. Because of the exchange rate. A few years back it was $1USD=$1.60CDN

$32,995=$52,792

Not so cheap was it?

Right, and like I said in my first post I assumed the discrepancy in prices was because of a lag in xrate responsiveness in the car market. However, with rates as low as they are now and the 2006 models just coming out, this isn't the case. The automotive industry is HUGE, there is no way it would lag that far behind when it comes to exchange rates unless dealerships paid for cars 5 or more years in advance, which they do not. This leaves the following possible explanations for the difference in price:

1) It costs a lot more to manufacture cars for Canada than for the US
2) There is some type of trade barrier that I am not aware of that applies to these cars coming into Canada
3) Somebody somewhere is making a huge monopolistic premium by exploiting Canadian consumers.

Does anyone know which of these is true?

[rage2]

Manufactures rarely change their exchange rates for pricing CDN vs USD. A few years ago, it was way cheaper to buy cars in Canada because of the strong USD. Everyone buying new cars had to sign a contract to ensure the car's not getting exported to the US.

[max_boost]

It's just a cost of doing business. Currency fluctuations affect all businesses, not just the automotive industry.

It is worth it to go buy an American car, what's stopping you? Treat it like a road trip, a little vacation :D

Jaymez and legendboy got their Supra from the US. Kenny came back with a S2K.

[asuth077]

It's the block heaters, at least $10,000 right there...

[logmans]

I'm actually an economist (not a monetary economist but I have a little bit of training in the area) and I'm also a partner in a small international consulting firm. Trust me I understand how exchange rates affect businesses. That's why this is so puzzling to me, if what rage2 says is true the car industry ignores exchange rate signals. And they wonder why their economic policies kill them in the long run :p

Anyway I think I am probably going to buy a car from the US. The problem is the warranty thing mentioned above.

[rage2]

It's not just car industry. Shop for some TV's. Sony ignores currency flucuations too.

[max_boost]

I'm not an economist so I'll just say what I think I know is correct.

Would you like the Americans to raise prices or the Canadians to lower their prices? And would you be pissed if the prices changed from year to year?

[logmans]

With the relative sizes of the markets the American one should be more efficient at determining price points, so the Canadian prices should drop. My guess would be the situation with high car prices combined with the high taxes on vehicle purchases(especially in Provinces with a provincial sales tax) is creating some seriously harmful distortion effects in the Canadian economy.

In terms of electronics it's a little harder to compare because the US is almost always a generation ahead of Canadian technology (see the BestBuy canada vs US websites). However, I know from experience digital cameras have become cheaper in Canada relative to the US since the exchange rate has slid up.

[max_boost]

If you were in business, would you reduce your prices knowing if you didn't, it wouldn't affect business anyway? :D

Prices increase yearly all across the board, what you are propsing I don't think will ever happen. Don't get me wrong, if they were selling new S2000's for $40k+taxes right now, I will be driving one tomorrow.

[logmans]

The thing is I bet it is affecting business. It's also illegal for an industry to collude and fix prices above market levels.

Anyway if rage is right and it's just because Canada isn't large enough for these large companies to bother adjusting prices... well, sucks for us :(

[C4S]

Why not?

everything is more expensive in Canada .. almost ..

just like 5 yr ago .. everyone asked " why Cars in Canada are much cheaper? why houses in Calgary is much cheaper ? "

and .. doesn't matter .. if you want to save .. go buy in US ..

but .. we are talking only few thousand dollar diff .. so .. no big deal!

Same as buying a car from Qubec .. way cheaper!

Just like Asican cars here ... way over priced!

why spend $65K on a RX300 .. but they cost only $35K in Japan?

But a Boxster .. also $65K here .. but they cost $200K in Singapore!

:dunno:

[max_boost]

haha you are going to have find proof to persuade me on this one. Business is good in the auto industry, unless you are GM and Ford. :D

[Godfuader]

Originally posted by logmans
...In terms of electronics it's a little harder to compare because the US is almost always a generation ahead of Canadian technology (see the BestBuy canada vs US websites). However, I know from experience digital cameras have become cheaper in Canada relative to the US since the exchange rate has slid up.
I find the contrary. A Palm T|X is USD$299 (CDN$348.26) and in Canada it retails for CDN$399 (USD$342.46). Must be specific products. :dunno:

http://www.palm.com/us/products/handhelds/tx/
http://www.palm.com/ca/products/handhelds/tx/

[tsi_neal]

I cant remember the specifics of it, but a large part of the price gap is because of taxes. when we import raw materials from certain countries there are major taxes and other countries minimal... which countries and what goods is a big chunk of what i cant remember for the life of me.

What it comes down to is if the north america marker is 90% USA and 10% canada, which is roughly accurate, then manufactures are going to try to make the USA cars (and all other goods for that matter) as cheap as possible by buying from USA friendly trade partners and then canada gets the shaft as a result.

[C4S]

Wow .. Economic class here ..

anyway .. what can we do? can't control the price or exchange rate!

just like houses price .. ~ 50% jump just last few yr .. and with another 50% jump in exchange rate with US ...

a house for $200K 5-6 yr ago ( 120K US back then ) and now $300K .. ( $255K US ) :dunno:

If price different is small I buy here ..

my flash --> $280 US .. and $380 Can .. small diff ..

but my lens .. $1700 US .. and $2800 can ... I fly to US to buy it.:D

[rtsen]

If you buy a car from the states and drive it back, do you have to pay any additional tax/duties at the border?

[max_boost]

Originally posted by rtsen
If you buy a car from the states and drive it back, do you have to pay any additional tax/duties at the border?

6% duty
7% GST
Plus a bunch of paperwork

Refer to this thread.
http://forums.beyond.ca/showthread.php?s=&threadid=107279&highlight=importing+thread

[logmans]

The duty only applies to cars built outside north america I believe (which I guess is most of the cars we are talking about here).

And only 6% GST after Monday ;) (ok actually after the budget but whatever)

[barbarian]

People in Canada are used to paying more, so the market sustains itself.

[rage2]

Originally posted by logmans
In terms of electronics it's a little harder to compare because the US is almost always a generation ahead of Canadian technology (see the BestBuy canada vs US websites).
Huh???

Everything I buy it seems to be available US and Canada. Of course there are some models that arent available here (less choice), but the top end stuff is available on both sides of the border.

[googe]

Originally posted by max_boost


6% duty
7% GST
Plus a bunch of paperwork

Refer to this thread.
http://forums.beyond.ca/showthread.php?s=&threadid=107279&highlight=importing+thread

6% duty only if it wasnt made in the usa

[Goblin]

and motorbikes too, wow, dont get me started on that...

my dad works in the states, all my pc stuff is from the states, he can bring back about a 1k duty free each time he comes and goes... yess.....

if you want something and have the cash, pm me :D

[logmans]

Originally posted by rage2

Huh???

Everything I buy it seems to be available US and Canada. Of course there are some models that arent available here (less choice), but the top end stuff is available on both sides of the border.

Maybe you can find the stuff at the HIFI stores but not at the big chains. For example last year both future shop and best buy(yes I know they are the same company) carried only DLP TVs a generation behind the ones sold in the US.

I will concede that electronics are generally somewhat cheaper, but autos are the largest mobile purchase most people will ever make. You would think prices would keep up with exchange rates.

[Newk]

Just one more reason the US and Canada should adopt common currency.

[sputnik]

My uncle just had an American friend of his buy a 2006 Trailblazer SS for him. Once the title cleared he bought it "used" from his friend and took it over the border. Saved himself $10,000 in the process.

He told me that his new SS cost less than the Envoy he bought 3 years ago.

[CSVT]

When i Get my Cobra next year ill probably buy it down in the states, they sell for like 20 grand cheaper down there.

[C4S]

Buying a Z06 is a good idea too ..

$60K US vs $95K Can .. :D

but for some cars ( usually European ) their bumper standard are diff ... and the speedometer on some of them, are either Km or miles ... some cars may cost few thousand to converta to Canadian spec ..

well .. we talked about that before .. :D

[(hemi(al hem1]

Same thing in Europe, whole pilgrimages swarming Germany- cheapass cars.

[importer]

Duties are 6.1% and are dependant on the percentage of North American content in the vehicle. Some vehicles are not allowed from the U.S. to Canada under any circumstances, some need to be modified before you will be allowed to register it. There are document to submit to customs, it's not as easy as just driving across the border.

[googe]

Originally posted by C4S
Buying a Z06 is a good idea too ..

$60K US vs $95K Can .. :D

but for some cars ( usually European ) their bumper standard are diff ... and the speedometer on some of them, are either Km or miles ... some cars may cost few thousand to converta to Canadian spec ..

well .. we talked about that before .. :D

cant bring the new vettes in. bumpers need a conversion, and it requires new bumper covers. i checked :(

GM probably did that on purpose...

[heavyD]

I can't speak for every car manufacturer but I purchased my ACR SRT-4 for $27.5K CDN. Quite a few guys on the SRTforums in the US paid $22-24K US for theirs so you could argue that I got a great deal. Unfortunately cars are all so overpriced these days there are no good deals. You overpay for every new car no matter who made it or what price you got it for.:(

[Hakkola]

Originally posted by C4S


But a Boxster .. also $65K here .. but they cost $200K in Singapore!

:dunno:

Bad example, the difference is taxes.

[ACX]

Originally posted by max_boost
haha you are going to have find proof to persuade me on this one. Business is good in the auto industry, unless you are GM and Ford. :D

or mazda.


It seems some manufacturers are way worse than others for fucking up prices from here to there.

I stopped trying to figure out the pricing scheme about a decade ago.

There is no question though that with our comparatively strong dollar, it seems like we are getting hosed.

:eek:

[project240]

This does definitely get a person thinking. For the past few months I have been contemplating purchasing a newer SUV... probably a pathfinder or 4runner. Probably about a 10K CDN price difference on the pathfinder and more on the 4runner.

Keep in mind I'm in Sask and you don't see nearly as many used as in Alberta.

More than likely when I do buy, we will fly down, pick it up, drive back and make a little holiday out of it.

[kane584]

Originally posted by max_boost
Oh Fock, now this thread got me thinking again. Pay down house or buy new car........I was trying so hard not to think about it. :nut: :rofl:

lol :dunno:

[C4S]

Almost everything in US are way cheaper then Canada .. even cheaper then the rest of the world !

Say a $40k US car ... probaby $55KCad here .. and $40K Pound in UK...

Mainly because of the exchange rate .. few yr ago .. everyone was asking " how come everything in USA is so expensive? "

Exchange rate between US -- Canada .. has changed from .. ~ 1.68 : 1 to 1.18 : 1 almost 50% changed .... :dunno:

But if we compare price between Canada and UK for example ... not much different in last 2 yrs .. :dunno:

Something such as Camera .. a $1200 US Camaera .. selling for $1800 Can here, and $1000 UK pound ... :dunno:

So .. what can we do ? almost every big items I bought lately .. ( besides car and house ) I bought from HK .. Taiwan .. and USA .. :rofl: