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

  1. #1
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    Default How come cars are so much more expensive in Canada than the USA?

    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?

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    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...

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    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!

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    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

    With that said, if I lived in Vancouver or Toronto, you can bet I'll go buy an American car
    max_boost is a name known to all

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



    2002civic, time to get yourself that special car

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    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.
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    Originally posted by r3cc0s
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    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.
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    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?

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    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.
    Originally posted by SEANBANERJEE
    I have gone above and beyond what I should rightfully have to do to protect my good name

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    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

    Jaymez and legendboy got their Supra from the US. Kenny came back with a S2K.
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    It's the block heaters, at least $10,000 right there...

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    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.

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    It's not just car industry. Shop for some TV's. Sony ignores currency flucuations too.
    Originally posted by SEANBANERJEE
    I have gone above and beyond what I should rightfully have to do to protect my good name

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    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?
    max_boost is a name known to all

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    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.

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

    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.
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    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

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    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!

    The Original !

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    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.
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    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.

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


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