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Canadian versus US car price difference prompts government investigation

By Shawn Molnar RSS feed

Posted Feb 20th 2013 11:30AM

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You've likely heard the parable of the fly who landed in the vinegar, and thought it was the sweetest taste in the world. He hadn't tasted honey yet - that was the next jar on the shelf. There's a bit of a parallel here: Canadian consumers tend to think the local shopping is sweet - unless they've made a trip south of the border especially when it comes to cars!

The US versus Canada price gap is a hefty one - in some cases Canadian prices more than double those of our American neighbours. Don't believe us? Go check out book pricing at your local Chapters book store - you're sure to see significant price discrepancies and it's easy to spot: both US and Canadian pricing will be listed together on the sticker.

Move on to the topic of buying automobiles and the cost differential gets broader and far more serious. Getting stiffed over $3.75 at a bookstore is wrong but somewhat inconsequential - getting stiffed $20,000 on a new car is a very big deal, indeed.

So severe and so long in the tooth is this economic quagmire that many border-crossing Canadians are demanding answers. Back in October of 2011 the Standing Senate Committee on National Finance began an investigation into the cross border pricing differences, and their report was just released in early February of this year.

What were the findings? Click here to check out our price comparison gallery and be sure to hit the jump to get the facts and full explanation of the pricing discrepancy. Then have your say and voice your opinion by voting in our poll.
Related GalleryCanadian vs US Pricing Comparison and
McLaren MP4-C12Ferrari 458 ItaliaPorsche 911 Turbo S CabrioletPorsche 911 Carrera (991)Lexus LS 600h LBMW 760LiMercedes-Benz GL550BMW 535i xDrive

At the heart of the matter is the fact that 2.4 million Canadians travel to the US every year for same-day trips - the majority of which include shopping. This ruffles feathers in Ottawa, because the government is losing millions of dollars from the coffers of the Canadian economy.

Many variables play into the cost discrepancy. The Canadian population spans great distances which increases shipping costs. Speaking of shipping, fuel costs are much higher in Canada, also increasing shipping costs (another issue in and of itself). Corporate expenses must be funded by a market much smaller than that of the US. The dollar exchange rate long played a part in the US/Canadian price gap - but the dollar has been at par since December 2010. Finally, taxes are much higher - namely our trade tariffs. When it comes to airplanes and automobiles we pay a 6.7 per cent tariff on foreign products while the US only pays 1.9 per cent.

But something still tastes awfully sour. Never mind a 4.8 per cent tax discrepancy - car buyers are sometimes paying 30 per cent higher purchase prices north of the border!

Which cars are the worst price-gap offenders? Flip through our gallery to find out. But we've also rounded up the cheapest cars in Canada if you want to support local dealers.

Once you've finished perusing through the gallery you'll likely have increased blood pressure and a head-ache - but don't turn to low-dose Aspirin for aid... it costs as much as 114 per cent more in Canada than it does in the US.

Is the current Canadian vs US price gap on cars acceptable?
Yes, considering the higher trade tariff and smaller market the price difference seems about right25 (1.1%)
Not sure29 (1.3%)
No, on many vehicles the price gap is unfair and Canadians are being price-gouged2204 (97.6%)


Easy Way to Find Your Car After Shopping

News Source: Government of Canada, newswire.ca via CBC News

Image Credit: Copyright 2013 AOL

Category: By the Numbers, Car Buying, Canada, USA, Government/Legal

Tags: canada, canada trade, canada trade tariff, canadian prices, canadian trade, car buying, car importation, car prices, car shopping, exchange rate, government of canada, price gap, tariff, tariffs, tariffs on cars, trade, trade tariff, us car buying, us car shopping, us trade, x rate

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djandthepk2

I've got a bit of a different perspective on this topic because I'm an American living in Canada since 1990. Shortly after moving here I went to CT for a quart/litre or Quaker State engine oil (which by the way is head quartered in my home state) I couldn't believe my eyes when I saw the same quart of oil I've purchased a hundred time growing up for .99 to 1.49 selling at CT for 3.49 I vowed to never return to CT again and Im proud to say never have. About 3 months after Walmart moved in to Canada I ventured in to CT and was quit surprised to see that very same quart/litre of QS oil selling for 1.99. Didn't buy it buy it and never returned to CT again. The only good thing about Canadians getting robbed at the check out counter in almost every retailer in the country is that the Canadian retailers are so buffered by their 300% plus profit margin, the Canadian economy will never tank like the US economy did a couple years ago. For those of you that think you're living the high life with this free medical need to give your heads a shake. Every time you buy gas you pay for your medical,every time you buy beer/spirits you pay for your free medical,every time you buy groceries guess what you pay for your free medical. The average American pays 200.00 a month for private medical coverage,the average Canadian pays over 600.00 a month for the same coverage by way of taxes and all the higher prices mentioned above. To all those that are going to say if you don't like it here go back to where you came from, I do every week to do my grocery shopping and every other major purchase, to buy my gas, to buy the 7 new and used automobiles I've purchased since moving here. I save 50.00 a week on gas,50.00 a week on groceries and I'm currently averaging saving almost 100.00 a week on other major purchases and the vehicles. Keep your heads in the sand and keep fattening up your local retailers and asking why am I broke at the end of the month or throw the wife, kids and the dog in the mini van run across and save yourself some money and send these dirtbag retailers a message. Have a nice day

April 06 2013 at 10:41 PM Report abuse rate up rate down Reply
Kozy Mel

How do you think we are paying for our \"free\" health care??

C\'mon you guys!

April 06 2013 at 2:37 PM Report abuse -1 rate up rate down Reply
hitmeup

wow navigating this website was productive... i don't see jump to mentioned but any way.. it sucks we have to pay more for our vehicles and sometimes the U.S, gets different styles than we do.. this pricing difference has gone on for years and it will continue to be a wider gap.. and we wonder why Canadians go shopping in the STates

April 06 2013 at 12:45 PM Report abuse +1 rate up rate down Reply
Luke R

*border, not boarder

March 05 2013 at 3:32 PM Report abuse rate up rate down Reply
Canadianflyfishing

Good point on the tires too. There are duties on tires to protect the Michelin plant in Canada. That is about the only thing CBSA has ever charged me duty on (winter tires and rims for the Audi which I picked up at the same time). I make frequent trips to the US and bring the tires back under the $800 exemption. In fact I bring the Jayco over for a 2 day camping trip and load it up with $3200. I do all my camping in the US now.

February 24 2013 at 12:24 AM Report abuse rate up rate down Reply
1 reply to Canadianflyfishing's comment
Bill

The winter tires and alloy rims (17") and tire pressure sensors and lug nuts I purchased were for an Audi too. $1300 all in. My neighbour also has an Audi and bought the same stuff (different brands) in the USA for the same price I paid. Price differences are insane.

February 24 2013 at 7:38 PM Report abuse -1 rate up rate down Reply
aquos6

Very poorly written article. Boarder? Really? Duty on foreign (non-North American) is 6.1 not 6.7%.

That aside, what this comes down to is market-based pricing. As long as they all play the same game, everyone of them) wins, and consumers lose. An Ontario built Lexus costs more in Ontario than in Hawaii, plus has double the destination charge. The outrageous destination fees takes care (many times over) cannot account for much higher MSRPs. And when prices in Canada are cheaper, it is always on the lowest model that nobody buys, and is decontented to boot. I no longer buy new - I buy luxury vehicles in the USA with very low mileage from a certified dealer. And tires are even worse. Just bought Hankook winter tires in USA for $109 when Canadian MSRP is 221 for the exact tire. Insane.

Government must eliminate importation/postage/broker fees and allow widespread importation by consumers to address this.

February 23 2013 at 11:56 PM Report abuse rate up rate down Reply
1 reply to aquos6's comment
Bob

Really? One typo and it's a very poorly written article? I guess you don't read the Globe and Mail, Tor Star, or BBC News, I catch their typos all the time. These writers turn out a ton of fast paced articles, give them a break.

Official gov of Canada report states 6.7% tariff, where did you get your 6.1% number from?

By the way, you forgot to open your parentheses in your second paragraph.

February 28 2013 at 5:25 PM Report abuse rate up rate down Reply
jimegglet

Harley Davidson motorcycles are $10,000.00 cheaper in the states, so when i told a dealership this in Ontario, they told me bikes to Canada are built better, that,s why the price differance,,what a load of B.S.,so if you buy used you can save big bucks, sold my 2oo4 harley last year , for $15,000. bought a new demo same bike, for $18,000. U.S. up here bike was $31,500.00 plus H.S.T...hey go figure..are we being shafted...these stories go on and on, the people in Canada have not brains,,just the Government,,Who-ruh!!!
LOL....!

February 23 2013 at 9:15 PM Report abuse rate up rate down Reply
wyatt.davidwyatt

It's a rip off plain and simple. My truck was 39,000.00 from the states where i bought it and that was including the broker adding in his 3,000.00 as the dealer wouldn't sell direct to me a Canadian or his dealer licence would be revoked. Do not know if this was true but that is why he said he would not sell to me. The closest I could get any Canadian dealer to quote me was 55,000.00 with no firm price. Trying to get a final price was like trying to nail a jellyfish down as well and when I phoned the states within 2 minutes I had a firm price no trying to be dishonest or misleading.

February 23 2013 at 8:59 PM Report abuse rate up rate down Reply
Canadianflyfishing

BTW the Lexus RX350 made in Canada used be be a great deal in the US. The shipping and "PDI" to Toronto costs about 2X more than in Florida. Go figure.

February 23 2013 at 12:12 PM Report abuse rate up rate down Reply
Canadianflyfishing

I bought a slightly used Volvo V70 and Audi A4 and a Jayco camper in the US from the dealer. It might take 3 days work to learn the process, but the savings are way greater than any normal Canadian could make in a month of income. Dealer sales are the safest. Be really careful if you are buying privately.

February 23 2013 at 12:07 PM Report abuse rate up rate down Reply