By on February 8, 2013

Every Canadian consumer knows that when it comes to new car prices, we get screwed. Yes, Canada is a small market with higher taxes. It costs more to do business here in part because the high distribution costs can’t be amortized over 300-odd million people. In addition, things like metric instruments further complicate things.

But then there’s the question of why a Toyota RAV4, built two hours outside of Toronto, costs $2,890 less in Hawaii than it does in Canada. Why does an Oshawa-built Camaro demand a $4,685 premium in Canada? Where does BMW get off charging a $19,300 premium in the Great White North for a 535i xDrive, a 38.9 percent increase over the U.S. sticker?

The price discrepancy issue was the subject of a report by Canada’s Senate. Other consumer items like books and sporting goods were also investigated, but cars were a central focus. Interestingly enough, certain vehicles are actually cheaper to buy in Canada; these tend to be compact cars like the Honda Civic and Toyota Corolla, which are popular with Canadians and built in Ontario.

Not so for other segments, like sports cars and luxury vehicles. The report mentions that consumers in Canada looking for these vehicles will pay the price that “the market will bear”. Translation: f**k you, we know we can gouge you, so we’ll do it. Of course, it’s the right of every business to set their own prices and earn a profit, which is precisely what makes it so difficult for the government to do anything about this matter. On the other hand, the compact segment is ultra-competitive in Canada, so it’s in the OEM’s interest to make sure the vehicles are priced competitively. But even mainstream cars like the Dodge Charger, built in a suburb of Toronto, can be as much as 20 percent higher in Canada than in the United States.

Some of the suggestions laid out for lowering vehicle prices, like lowering certain tariffs  may help lower the prices, but some experts interviewed in the report suggested that it was doubtful that the savings would be passed onto consumers by the OEMs. For domestic vehicles, it’s hard to imagine the government being able to do anything. Price controls for Camaros would be a farce, especially for a government as committed to free-market principles as the current Conservative government. Ultimately, it’s unlikely that the government will be able to do anything about it, though there’s one “left-field” savior that is just crazy enough to possibly make a difference.

One aspect that got a brief mention was the harmonization of safety standards between Canada and the U.S. Currently, Canada uses the FMVSS standards with a couple minor variations, and the OEMs have long used this compliance as an excuse for high MSRPs. What will really be interesting is if the proposed Canada-EU free trade deal leads to a harmonization between Canada and the UN/ECE standards. One complaint among Canadian car enthusiasts and OEMs has been that Canada’s market tastes have long been aligned with Europe, but the FMVSS-based standards mean that homologating European compact cars has been far too expensive. Meanwhile, Australia, which uses the UN standards and has a comparable market size to Canada, gets all manner of cars that North American enthusiasts can only fantasize about.

Imagine if the EU Free Trade deal opened the floodgates to a whole new swath of product for Canadian consumers? It may not make the Camaro any cheaper, but the amount of available models would increase exponentially, and auto makers would no doubt try and take advantage of the altered regulations to bring better-suited product to Canada. It’s hard to imagine greater overall choice not having any positive effect on vehicle prices. But then again, with things currently as nonsensical as they are, it’s tough to make that call definitively.

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86 Comments on “Canadian Government Investigating Price Discrepancies For New Cars...”


  • avatar
    Robstar

    For the cars that are cheaper in Canada, can a US’ian buy one and bring it back? Is this legal? Will our E10-E15 fuel kill the car?

    If it’s actually cheaper to buy certain cars there (and especially if we have more stick choices) it might be a fun “buy & drive home” vacation option one year.

    Think of it like the “buy a bmw with delivery in germany” option for the middle class.

    • 0 avatar
      CoastieLenn

      The amount of money it’d take to convert the car from the imperial measurement system would make the purchase a wash… or even unfavorable.

      I’m not sure what the exact laws are, but I know when I worked for Volvo, there were always a few cars each year that we had to convert from the Canadian market due to employment relocations. This happened to the tune of roughly $5000+ (USD). That was back in 2002-2008 time frame.

      • 0 avatar
        Easton

        Most GM cars since the early 2000′s have had a button on the dash that simply reprograms all measurements between metric and imperial instantly. I assumed most other manufacturers had this.

      • 0 avatar
        CJinSD

        My Canadian made Civic has the same button Easton mentioned. With the digital speedometer, it is fun to call up kph and drive 130 on the freeway. Since the Civic is one of the cars mentioned that is cheaper in Canada, it would seem that a Canadian market Civic would be fine for US roads.

      • 0 avatar
        Pch101

        “Most GM cars since the early 2000′s have had a button on the dash that simply reprograms all measurements between metric and imperial instantly”

        Aside from GM, not many automakers do that with their analog speedometers. (Off the top of my head, I can’t think of anyone else who does.)

        The Canadian analog speedometers are like the US gauges, but in reverse, with metric on the outer ring and Imperial on the inner ring. But that in and of itself is a bit unusual, as other metric countries typically have speedometers that are only in metric.

      • 0 avatar
        APaGttH

        @Easton

        Heck, my 1989 Ford Probe had a button that converted from English to metric measurements on the dash and other displays.

        It seems to be quite common on GM products, my G8 GT has the feature. I’ve actually used it living close to the Great White North – switch over to metric at the border (although I have to do the math in my head for Celsius on the climate control).

        I too assumed that this ability is pretty common place on most vehicles today.

    • 0 avatar
      bumpy ii

      IF the car is one of the few that meets both US and Canadian regulations as-is, you could buy across the border and bring it back. Obtaining all the documentation to do this would wipe out any cost savings, though.

    • 0 avatar
      danio3834

      Yes, it’s quite easy to import used North American manufactured vehicles from Canada to the US. As mentioned already, depending on the vehicle, you may want to pay to have an imperial measurement instrument cluster installed, however this is not enforced. If having miles per hour in small script and an odometer you have to divide by 1.6 doesn’t bother you, you can live with that. For vehicles with switchable instruments, this is a non issue.

      If the vehicle was never US certified (grey market vehicles like the Nissan X-trail, Chevy Orlando, R34 Nissan Skylines etc.) pretty much forget about it. If you somehow manage to get it through customs, the Feds will eventually come knocking and seize it, even if you never register it for road use.

      Cross border new vehicle purchases often have barriers placed by the manufacturers to discourage the practice. Warranty restrictions or cancellations are common.

      • 0 avatar
        CoastieLenn

        Enforcement isn’t the issue with converting the cars to standard measurement. In order to register a car in the US, you need a specific state’s license plate. To get that, you need to have a title for the vehicle in that state. In order to title a vehicle, you need to have the current MILEAGE. There’s not a way to put a metric measurement on a Certificate of Title in any state.

        So basically, for 30 days (or however long you have in that state to become a resident after moving there), you can legally drive your car with Canadian registration and metric instruments. After that though… its off to spend some (potentially large sums of) money.

      • 0 avatar
        danio3834

        @coastie, right, I understand, I’ve done this a few times. To get the MILEAGE, you simply divide the reading of the odometer by 1.6. Put this number down when you register the title. If the metric cluster doesn’t bother you, you can drive it like that as long as you like.

        The only time you might encounter problems is if you sell the vehicle. If the next prospective owner doesn’t care either, they could continue driving it like that as well.

      • 0 avatar
        CoastieLenn

        I know. We (at the dealership) ran into potential legal issues with titling though. Title applications don’t ask for “Current mileage”. They specifically ask for “current odometer reading”. So, sure you can put the current reading- in KMs, on the title or you can convert it. But… what if you sell the vehicle? Carfax (the almighty used car shopping tool) will show a discrepancy in what mileage car was last titled with (current odometer reading/ mileage) and what you’ll have reported with service history or any subsequent inputs on the Carfax history seeing as no one is going to care to convert the number but you.

        You’re right that it all comes down to “when you sell the vehicle”… but this day and age, that’s a much more common occurance than keeping them ’till they die.

        You’ll run into financial setbacks with bringing an imperial measured car into the states no matter what. Its just a question of “Do you plan on fixing the issue immediately or down the road?”. Its going to have to be addressed.

      • 0 avatar
        28-Cars-Later

        Although I’m this may run afoul of some regulation, why not just switch out the dash with a US spec equivalent? The reason I suggest this is here in PA older Audis and I believe Volvos had issues with the odometer circuity failing very early in the car’s life. The dealer would service the odometer in the dash units, put some kind of sticker on them logging the occurrence, and I thought there was something they had to do with the title as well to indicate this operation took place. Look into it in your state and see if you can do the same.

      • 0 avatar
        CoastieLenn

        28- That would be pretty much ALL Volvo’s pre-1998 but was the most common on the 850 series. Basically the owner would reset the trip meter while driving, a tooth would break off the counter gear, and as soon as the next time around came for that digit… the odometer stops counting. VERY common occurence. Its easily noticed by any older Volvo that has a trip meter that reads 000.0 as the owners would try to reset the trip meter in an effort to see if they’re not seeing their mileage increase.

        Those were the good old days.

        In the repair process, you didnt have to log the occurence with the title IF and only if you had a 1996-1997 car that would still count the mileage in the ECM and it could be read and a new odometer ordered (from the us at the dealer) with the corrected mileage plus whatever you estimate to be current.

        Easy and reletively inexpensive procedure actually.

        YEAH for tangents!!!!

      • 0 avatar
        28-Cars-Later

        In a 2012ish model would the same tangent apply, the mileage being stored in a computer outside of the dash? I’m no auto engineer but I work in software and I would imagine because of the imperial vs American system, data such as mileage would be stored elsewhere probably in binary and then is interpreted by the dash as metric/American. You may be able to apply the same loopholes as you did with the Volvos.

        On another topic just yesterday I bought a very clean brick, a ’93 240 with around 150 on the clock. My mechanic is a retired Volvo master tech so after I verified it felt good driving/shifting I thought for 2 grand it wasn’t a bad deal and if it breaks I’ll make him fix it.

      • 0 avatar
        danio3834

        “You’ll run into financial setbacks with bringing an imperial measured car into the states no matter what. Its just a question of “Do you plan on fixing the issue immediately or down the road?”. Its going to have to be addressed.”

        I could see how as a dealer, it would cause additional challenges. As a business you’d want to CYA as much as possible.

        The cars I exported I did privately, so it was up to the subsequent owners to decide what they wanted to do with them. None of them bothered with the replacement due to the cost. Some have been sold or traded privately without modification because those owners too didn’t want the expense. There were never truly any barriers preventing them from continuing to drive the vehicles with the metric instruments, in Michigan at least.

      • 0 avatar

        Does anybody realize how much $$$, brainpower, time is wasted in THIS (USA)dumass country by NOT being on the METRIC system???

        “Lets build a smarter planet”… “Lets solve this”…it AINT gonna happen until we STOP trying to teach 4th graders and immigrants the beauty? of FOUR different units of measure…inches, feet, yards, miles and weights…ounces, pounds, tonnes. Multiplying fractions…whats 29/64ths X 3/32nds…REALLY??? NO other country needs to go thru this stupid crap. When even the English are getting off their own system, that leaves just US dumbkopfs.

        Imagine the METER, the GRAM, the LITER and the only fractions you need are 1/1000 or 1000/1.

        I want my scientists and engineers, my manufacturing plants building things for export, all dreaming in METRIC, like the whole rest of the PLANET.

      • 0 avatar
        PrincipalDan

        @Fred Diesel. +1

        I used to defend the english measurement system until I got into teaching. When you’re expected to make elementary kids proficient in measurement (as determined by a state standardized exam) and you have to teach them english and metric, it is a nightmare. At least the logrythemic nature of the metric system give a slight advantage in being able to teach a “system” that is more logical and friendlier to divide and multiply.

      • 0 avatar
        golden2husky

        fred diesel you are right. MKS units rule. The old British system should be reserved for football.

    • 0 avatar
      nikita

      I had a gray market BMW from Canada and the California title just stated that the actual mileage could not be determined. That, of course, decreased its value, but that is one reason I got a good deal on it.

      • 0 avatar
        Gardiner Westbound

        Be careful what you wish for.

        Does anyone really have a feel for what liters/100 km means? Unlike miles/gallon, it’s an inverse, nonlinear scale. The difference between 9L and 10L/100km is only 3-mpg, but the difference between 5L and 6L/100km is 9-mpg. So how will a 6.8 rating affect your fuel costs vs. 5.7? Get out your trusty calculator – it’s 8-mpg. If we must use metric why not the much more sensible km/liter as many European countries?

        Eggheads made metric consistent only with itself. It falls short when an attempt is made to connect it with the thing measured. Try to describe how much is in a metric unit. Mumbo jumbo, like “a meter is the length of the path traveled by a ray of light in a vacuum in a 1/299,792,458 of a second time interval”, means nothing to most of us. Imperial measurements are useful approximations of real people and real life, commonsense things like a foot is about the length of your foot, a yard is about one large step, a foot-long hotdog is exactly that and so is a Quarter Pounder.

      • 0 avatar
        vvk

        > Does anyone really have a feel for what liters/100 km means? Unlike
        > miles/gallon, it’s an inverse, nonlinear scale. The difference between
        > 9L and 10L/100km is only 3-mpg, but the difference between 5L and 6L/100km is 9-mpg.

        It is mpg that is non-linear and counter intuitive! Precisely because of what you are describing!

        If you drive 100 miles per week, you use 10 gallons at 10 mpg and 5 gallons at 20 mpg. The difference is 5 gallons. At 30 mpg, you use 3.33 gallons. So even though the difference in mpg is exactly the same (10 mpg), the actual savings is not linear — 5 gallons (10->20mpg) and 3.33 gallons (20->30mpg.)

        If you drive 100 km per week, you save exactly the same 5 liters when you go from 15 to 10 as when you go from 10 to 5.

        It is vastly easier to compare fuel economy of different vehicles in terms of l/100km.

      • 0 avatar
        corntrollio

        I’m assuming you’re trolling with that foot-long hotdog and quarter pounder non-sense, but, as vvk said, it’s much easier to determine actual gas savings with L/100 km (or gal/100mi) because you’re already talking about gas usage.

        You can approximate the translation of L/100 km to mpg by dividing the number into 240 (really 235 or so, but it’s easier to divide things into 240). 4L/100 km would be roughly 60 mpg (actually 58.8). 8 L/100 km would be roughly 30 mpg (29.4).

        But your fuel cost question is easier with gal/100 mi. If you drive 300 miles with a car that uses 4 gallons per 100 miles (or 25 mpg), then it’s 12 gallons @ $4/gallon (or whatever), or $48. If you drive 300 miles with a car uses 8 gallons per 100 miles (or 12.5 mpg), then it’s 24 gallons @ $4/gallon, or $96. Simple.

      • 0 avatar
        Pch101

        If you want to quickly discern how much distance one can travel on a given amount of fuel, then MPG is a far more useful measure than l/100km.

        MPG is also more intuitive because a higher figure is better. With l/100km, it’s the opposite, with lower being better.

      • 0 avatar
        corntrollio

        “If you want to quickly discern how much distance one can travel on a given amount of fuel, then MPG is a far more useful measure than l/100km.”

        Only if you’re lazy or can’t do math. It’s not hard to say 4 gal/100 mi = I can go 25 miles on this gallon. But I’m not sure why that’s useful.

        I’ve found the opposite to be more useful, e.g. with a rental car. If I can return it empty, I’m far more likely to say, it’s 200 miles to Phoenix, I need 8 gallons. Or if I have to return it full, I drove 100 miles, put 4 gallons in it (instead of filling it up and giving Hertz the extra 2 gallons beyond the Full mark).

        I guess if you’re one of those cheap bastards or poor people who only puts 3 gallons of gas in your car at a time and can’t do simple math, it’s slightly more useful to use the reverse. I love when said cheap bastards are driving a Range Rover with stick-on portholes and spinners and pull up at the pump next to me.

      • 0 avatar
        Pch101

        “It’s not hard to say 4 gal/100 mi”

        It’s easy enough. But it isn’t very helpful if one is trying to figure out the distance that one can travel on the amount of fuel that he has, which is a fairly common reason for using that measure.

        I understand the linear argument, but it is still more intuitive to use a bigger = better measure. It’s difficult enough as is trying to explain bond yields, which are also measured on an inverted basis (although golf somehow manages to create less confusion.)

      • 0 avatar
        golden2husky

        bigger = better

        If I had to come up with a list of what is bad about America, that statement would end up in the top five.

    • 0 avatar
      Maymar

      For what it’s worth, if a car is cheaper in Canada, it’s usually because it’s a Canadian-market specific stripper model.

    • 0 avatar
      tatracitroensaab

      Did you really just say US’ian???

  • avatar
    Type57SC

    OEMs are keeping as much profit as they can from the currency appreciation. None could be accused of having a monopoly, but so far they have been pretty well behaved from a game theory perspective. Nothing wrong with not charging cost-plus. They should stick to investigating real ologopolies like telephone, power, water, education, healthcare and airlines.

    • 0 avatar
      danio3834

      Why would they want to investigate the monopolies they already control or outright own? Of course, it’s not a monopoly when the corporation of Ontario or Canada runs it.

      • 0 avatar
        mikey

        @danio….8.7 percent? or [around there} of GM is owned by the governments of Ontario and Canada.

        The other 91 percent is owned by shareholders, with the U.S treasury holding about 32 pecent. I believe the UAW owns around 17 for VEBA funding.

        Canada and Ontario is hardly in a position to set vehicle prices.

      • 0 avatar
        danio3834

        mikey, I was commenting on the other industries Type mentioned, not GM.

  • avatar
    schmitt trigger

    For as long as I remember, books and magazines have carried a sticker with something sinilar to this price:
    US $10, Canada $13

    I always assumed that it was because the Canadian Dollar was valued at less than 80% of the US Dollar. But nowdays they are at parity or even higher….and the practice remains.

    My pet theory is they do it, because the Canadian public is used to this practice.

    • 0 avatar
      APaGttH

      That’s what I think.

      I loved it when the exchange rate was $1.38 Canadian = $1.00 US in 2000 – 2001 before 9/11 and the weakening of the US dollar as part of our fiscal policy. Would party like a rock star once every 4 to 6 weeks in Vancouver at a near 40% discount.

  • avatar
    Felix Hoenikker

    The US car industry went metric in the early 80s. I remember my 1982 Pointiac service manual proclaiming the car as “all metric”. The only things that are in SAE (US measurements) are the speedometer and temperature indicators. For all practical puroses, the speedometer/odometer is the only thing that might need to be changed. Leaving the temperature indicators in Celsius is no biggie since anyone with more than a 7th grade education would have learned the basics of the metric system. At least that was my experience back in the day. However, given the dismal state of US public education under its union centric teachers combined with an emphasis on self esteem since the 70s maybe I shouldn’t assume that, but for the sake of argument I will.
    So how does converting a speedometer from km to miles cost $5K?

    • 0 avatar
      mikey

      My old Impala and my Camaro will convert from metric to imperial with a push of a button.

      • 0 avatar
        dtremit

        Not sure if it’s the same kind of cluster you’re talking about, but Buick had speedometers for a while that had generic number markings and a light indicating either MPH or KM/h. Hit the metric button and the needle jumped instantly.

        Always wondered why more manufacturers didn’t use those clusters — it seems so obvious.

  • avatar
    PrincipalDan

    I am suprised that in this tough economic climate someone hasn’t attempted lowering the MSRP given the purchasing power of the Canadian Dollar.

    • 0 avatar
      danio3834

      They have. The disparity used to be much more. For example back in 2007, the Nissan 350Z started at about $47,000 in Canada where now the 370Z starts at 40k. Still not as cheap as the US at $33k, but much closer. The difference still likely lies in the costs of Canadianization and amotizing those costs over low volume.

      Because the development and marketing costs of the vehicles are spread over a much longer time period than it takes for the dollar to fluctuate, the final pricing often takes a while to catch up.

  • avatar
    mikey

    I worked in final car assembly Oshawa #1.Where the stickers went on was called the “pay point”. Even back in the early 70s the price spread was 10 to 12 percent. Car for car.

    It always sruck me as odd that even in the late 90s,with a U.S. dollar costing 1.56 CDN,the spread was 10 to 12 percent. Today with the money at par,its still 10-12 percent.

    A couple of years ago I was shocked at what used cars were fetching in the U.S. I was going to import a Mustang from Florida. I wasn’t saving enough money,to make it worth the hassle.

    Wow there is a whole lot of consumer goods,where the price spread is obscene.
    I guess thats just the ins, and outs of the free market.

  • avatar
    tenzin

    As someone who works for one of the top manufacturer, I can assure you that although there is higher cost of doing business in Canada which would naturally drive the price of goods higher, the margin should not be as wide as it currently is. The main issue is that in general, most Canadians don’t protest the establishment and big corp. takes advantage. Simple as that.

  • avatar
    Kevin Jaeger

    The government should stay out of idiotic issues like this. All they have to do is ensure that there are no unreasonable barriers to imports and let the prices take care of themselves.

    A couple of years ago I was appalled at the price of GTIs in Canada, so I imported a low mileage American one. It was neither difficult nor expensive.

  • avatar
    mike978

    This reminds me of what happened in the UK about 10 years ago. the UK market had the nickname of “treasure island” because cars in the European mainland were much cheaper than cars in the UK. Some difference could be justified because of left hand/right hand drive conversion but due to a lot of public pressure (and the newspapers hammering on this) prices did moderate down and the gap was reduced (not eliminated). If more public attention is placed on this then the same outcome may happen in Canada.

    • 0 avatar
      MeaCulpa

      Outcry probably had less to do with it then the fact that any British consumer could buy his car in France and order it with RHD without the manufacturer being able to do anything about it thanks to the EEC. I know that this doesn’t fit the – false – British narrative where England is taken advantage of by the power hungry EU.

      • 0 avatar
        mike978

        It is true that some took advantage of traveling to France and ordering but that was not practical for the majority of people. And I think at the time people thought (I am not saying rightly or wrongly) that if they could get a certain price in one European country then a similar price (allowing for LHD/RHD) should be available in the UK.
        It is true that the UK is a net budget contributor to the EU, that could be painted as taken advantage of. It is also true that the EU bureaucracy and parliament do like to expand their areas of “competency”, again this could be construed as “power hungry”.

      • 0 avatar
        MeaCulpa

        @mike978

        I didn’t say that most people would, but rather that they could. This alone creates a downwards pressure on car prices, without the EU it wouldn’t even be possible to buy a car abroad practically.

        Yes Britain contributes about 50 pounds per person and year more then you receive, not really highway robbery. You wont catch any flak for me regarding EU “mission creep”.

  • avatar
    BunkerMan

    The issue is that our economy, while not totally out of the woods, has taken less of a hit than the US economy in recent years. Even so, our disposable income is on average lower than in the US.

    It’s hard to get car dealers to lower their prices when pretty much everything we buy has a large markup, unless all you buy is lobster and maple syrup.

    I live less than 2 hours from the US border. We go across multiple times per year and come back with groceries, clothes, gas ($1/litre vs $1.32/litre), and beer. Even swill like Bud is about 1/3 the price in Maine that it is here. The only thing holding me back from purchasing large ticket items are warranty concerns.

    I’ve been tempted to purchase a travel trailer or classic car across the border, but the customs paperwork is scaring me off.

    Pricing here is weird. A Mustang V6 Premium package is actually $1500 cheaper here than in the US ($24,500CA). The GT however is significantly more ($35,800CA vs $30,750US). Both are with no options. This is the type of thing people are upset about.

    • 0 avatar
      danio3834

      “I’ve been tempted to purchase a travel trailer or classic car across the border, but the customs paperwork is scaring me off.”

      Don’t let the paperwork scare you regarding classic cars, it’s really very easy and inexpensive to import cars more than 15 years old into Canada. They’re exempt from RIV fees, and if they were manufactured in the US or Canada, the tax is minimal.

      The biggest hassle is arguing with Canadian customs officials who almost always accuse you of devaluing for tax purposes. Even with receipts, even with contact numbers, even with transaction documents.

      Every time I’ve brought a car over I’ve been badgered at length and accused of lying. As long as you have your documentation, just stick to your guns, don’t let them intimidate you into admitting something you didn’t do, and it’ll work out fine.

      • 0 avatar
        Gardiner Westbound

        I’ve had the Canada border tax collectors do that with snow tires though I produced my receipt, even called the Tire Rack installer to confirm it. Held me up for 90 minutes!

        Toronto gangbangers would be out of business if they gave gun runners that hard a time.

    • 0 avatar
      bufguy

      As a Buffalonian I see first hand how much more expensive Canada is. In the 90′s when the American dollar was worth so much and Japanese cars had quota limits, Americans were bringing Toyotas and Hondas over the border, changing out the speedometer and saving about $1000.00.
      Today the only cars cheaper in Canada are usually decontented compared to American models.
      Our market is so much bigger…almost 10x…it gives us such an economy of scale and larger choice than Canadians,
      Thousands of Torontians flock to Buffalo every weekend because of our larger selection, lower taxes and lower prices.
      Canadian cars will never be cheaper.

  • avatar
    Landcrusher

    Typical bad politics. If you asked most Canadians with business experience dealing with high cost items about ten years ago, they would all know the answer – currency fluctuations. As great as Canada’s economy and petro dollar have been doing, it could experience trouble again, and it’s a small market. There has to be a cushion. Manufacturers, dealers, and financiers are all living in fear of a swing in the Looney.

    There likely is some extra in there due to Canadian cultural issues (their business practices are based on feudal principles, owners think they are kings and their managers play the roles dukes and earls). Still, having the US next door to your much smaller population creates issues.

    • 0 avatar
      danio3834

      “There likely is some extra in there due to Canadian cultural issues (their business practices are based on feudal principles, owners think they are kings and their managers play the roles dukes and earls).”

      Can you elaborate on this?

      • 0 avatar
        Landcrusher

        It’s likely overstated, but a year spent living and working there I found they still seem to have some archaic sense of position. Better companies and managers in the US don’t play the power card very often, but it seemed standard in Canada. The company has power because its a company and you are just a customer or employee. It’s like every business is a frigging cable company. Strangely, their government bureaucrats had much better customer service on average and would often skip the process so long as the right things were getting done.

        I would say this was anecdotal except we found Canadians in Calgary highly preferred US employers and were begging my wife’s employer not to sell their Canadian division to a Canadian company. When they did, a huge number simply quit.

  • avatar
    nikita

    “Currently, Canada uses the FMVSS standards with a couple minor variations, and the OEMs have long used this compliance as an excuse for high MSRPs.”

    California is about the same size market as Canada. The extra cost for different emissions equipment and certification testing was never more than $100.

  • avatar
    DC Bruce

    Wait . . . let me get this straight. The government of a relatively small automobile market (Canada) which is right next door to a very big one (the United States) is complaining that the “same” car cost more in Canada than in the U.S.

    And, implicit in this discussion is that Canada should turn its car sellers into something like public utilities: (regulated prices and required to sell to all buyers)

    With NAFTA, the U.S. and Canadian car markets should be as one . . . except that the Canadian government doesn’t want to follow U.S. standards, so the companies make “U.S. cars” and “Canadian cars.”

    Isn’t the logical answer that if Canadian car buyers want the benefit of the U.S. car market, that their government should eliminate the non-tariff barriers between those markets (i.e. differing standards), instead of scapegoating the folks who make and sell cars in Canada?

    Then, a Canadian who lives in Windsor, Ontario, can shop for a car by driving across the Detroit River to Detroit, Michigan and get the best deal he can find (and vice-versa, for that matter).

    This is not so different from what the government of Sweden decided many decades ago. Sweden, like the U.K. and Ireland, used to be a right-hand drive country. Eventually, the Swedish government realized that being an island is a sea of left-hand drive countries was costing its consumers money. Vehicle importers had to create a right hand drive model of their car to sell in Sweden. Except for U.K. manufacturers, this cost a lot of money for a small volume market. So, many of them just didn’t bother.

    I’m sure the U.S. DoT would work with its Canadian equivalent to create a set of uniformly-applicable standards which would meet any unique needs of Canada (the only one of which I can think of is daytime running lights).

    • 0 avatar
      Pch101

      “Vehicle importers had to create a right hand drive model of their car to sell in Sweden.”

      The Swedes were commonly driving LHD cars even when the country was RHD. That made it easier for them to make the switch.

      Much of the world is RHD. Anyone who wants to sell cars in the UK and Ireland has to offer a RHD variant. If designed with that intent, it isn’t difficult for OEM’s to make vehicles that can be built in either configuration.

      • 0 avatar
        MeaCulpa

        You sir are correct. Most Swedish cars have been LHD since the introduction of the car in the country. The decision to switch was despite a referendum, but only a consultative one, where the vox popia was against a switch to the right side of the road.

      • 0 avatar
        Pch101

        This link from Volvo talks about “Dagen H” (the day that the Swedes switched in 1967): http://www.volvocars.com/intl/top/corporate/Pages/default.aspx?itemid=74

        As far as I can tell, the Wikipedia link is accurate for this topic.

        (I find this to be one of the more interesting bits of quirky automotive history.)

    • 0 avatar

      “Wait . . . let me get this straight. The government of a relatively small automobile market (Canada) which is right next door to a very big one (the United States) is complaining that the “same” car cost more in Canada than in the U.S.

      And, implicit in this discussion is that Canada should turn its car sellers into something like public utilities: (regulated prices and required to sell to all buyers)”

      Nobody said anything like that. One of the main suggestions in the report was to eliminate the non-tariff barriers by fully harmonizing standards with the US, as well as decreasing certain tariffs that needlessly add to the cost of vehicles.

    • 0 avatar
      200k-min

      +100 to DC Bruce.

      This is 100% about Canadian gov’t not wanting to cede control. With NAFTA there should be “free trade” across the border for vehicles just like there is between states here in the US. A Canadian should be able to buy any car in the US for sticker price, drive it to Canada and pay their local taxes on the US price (GST, HST, etc.) Same goes for an American buying in Canada.

      Instead Canada wants to be “different” so they refuse to harmonize safety standards to the US and in doing so cost their citizens plenty. The metric vs. imperial gauge cluster should be a non-issue with most modern cars but even if you can’t convert with a flip of a switch who cares? It’s always been the drivers responsibility to know what speed he’s driving. Ignorance of conversion should not get you out of a ticket, but Canada insists that the gauge cluster be switched. Again, forcing a cost on their citizens that the US does not (I have reverse imported a Canadian car to the USA).

      If anyone should be getting investigated it’s the manufacturers that want to void warranties, etc. That stuff should be transferrable anywhere in a free trade region.

      As for stuff being more expensive in Canada, which is mostly everything, that should only be based on regulation and taxes, which is a bigger burden in Canada than the US. The small market and vast country really shouldn’t matter with an open border as 90% of Canadians live within 100 miles of the border. Seriously, Montana is far more remote than Ontario. Sure, a goods in Yellowknife should be more expensive, similar to how they are in Alaska, but Toronto, Vancouver, Montreal? No.

      • 0 avatar
        Pch101

        Again, the pre-tax pricing differential is largely the result of exchange rate management. Regulations don’t have much to do with it (although the Canadians do have their own automotive import tariff that the US doesn’t have.)

        Canada could remedy these price differences by sharing a common currency with the United States. But that ain’t gonna happen for a variety of reasons.

  • avatar
    jimboy

    One word summation “GREED”.
    I have been having this same discussion on Allpar forums recently. Having been a loyal customer of ‘domestic’ brands for many years, I have decided that I will never again purchase a new vehicle.
    Someone else can take the hit, not me anymore. These pigs have seen the last dollar they’ll ever see out of my wallet. I’m perfectly happy to buy a 1 year old vehicle and save myself $10,000.00.
    If more people boycotted new car sales, the prices would drop, just like people boycotted the domestics back in the ’80′s when they were producing garbage.

  • avatar
    Pch101

    A lot of these pricing differentials are attributable to exchange rate risk. The price points are implicitly driven by businesses trying to earn net profits with consideration for their profits in US dollars.

    If products were priced at parity, then the flip side to that is that Canadian prices would become inherently volatile as producers corrected for exchange rate changes in real time. If/when the loonie falls against the US dollar, prices in Canada would leap overnight, which would upset the customer, hurt the manufacturers and retailers, and harm the Canadian economy. It’s a safer bet for the OEM to price products based upon an implied weaker CAD:USD exchange rate, and then let the annual price changes in Canada to be driven more by inflation and supply and demand than by changes in the exchange rate.

    “Meanwhile, Australia, which uses the UN standards and has a comparable market size to Canada, gets all manner of cars that North American enthusiasts can only fantasize about.”

    By American standards, new car prices in Australia are pretty horrifying. It’s those high prices that make it possible for smaller companies to find a market niche there that they can’t afford to maintain here. We should count our blessings that we get the resulting pricing benefit, even if it costs us by driving out some of the marginal players.

  • avatar
    doctor olds

    Canadian vehicles do not use the imperial system, but the metric system for “mileage” measurement! Most GM cars have both measures printed on the speedometer, or more typically, just a button to switch from “english” (miles) to metric (km).

    Canadian cars show up on the used lots all the time in Michigan, though I have no idea what steps, if any, had to be taken to make them saleable here. Seems it must be pretty easy.

  • avatar
    Kendahl

    In the 1960s, when I was still living in Canada, the Canadian dollar was worth a few cents more than the American one. Nevertheless, American prices in American dollars for a given item were lower than Canadian prices in Canadian dollars for the same item. Far more than automobiles were affected. At the time, I assumed that the difference was due to higher taxes to support Canada’s welfare state.

  • avatar
    genuineleather

    “Our BMWs and Camaros cost too much!”

    Seriously? What next, a commission on why Hermes is such a big meanie for charging more in Canada than it does in France?

    Grow up. Cars are priced to what the market will bear. If Canadians stopped buying BMWs, they’d either A) lower their prices or B) exit the market if they are unable to profitably sell cars.

    • 0 avatar
      vvk

      > Grow up. Cars are priced to what the market will bear. If Canadians stopped
      > buying BMWs, they’d either A) lower their prices or B) exit the market if
      > they are unable to profitably sell cars.

      Precisely. Prices should be and are determined by supply and demand, not by the bill of materials.Products in great demand enjoy great profit margins. Otherwise, you have socialism and planned economy.

      Canadians pay more because they are willing to pay more.

      • 0 avatar
        Pch101

        “Prices should be and are determined by supply and demand, not by the bill of materials”

        You don’t really understand how these things work in the real world.

        The manufacturer sets a price based upon its margin and volume targets. The resulting price is higher largely because of exchange rate risk.

        As a result, Canadians end up with higher prices. The average Canadian consumer will most likely will respond by shifting toward his consumption toward the lower end in an effort to offset the higher prices. They don’t just buy the same things that they otherwise would have and pay higher prices for those goods; instead, they modify their consumption behavior and buy something that is relatively inferior.

        If Canadians want to consistently pay prices that are similar to American prices, then the answer is to use the same currency, so that vehicle producers sell into what has effectively become a single market. But there is no impetus to peg the CAD to the USD or to scrap CAD entirely in favor of a new combined currency, so this won’t happen.

        • 0 avatar

          “You don’t really understand how these things work in the real world.”

          Enough with the condescension and snarkiness. Feel free to correct people where they’re wrong, but refrain from reminding people how stupid they are.

      • 0 avatar
        Pch101

        “Supply and demand” this and “socialism” that, combined in the same paragraph, is a red flag that the answer is simplistic and inaccurate, and it deserves to be treated as such.

        The textbook answer of “supply and demand” is fun and everything, but in its basic form, it applies only to commodity goods such as wheat and pork bellies, not to branded consumer goods. The real world pricing of goods isn’t just about supply and demand.

      • 0 avatar
        CJinSD

        Pch101,

        Do you never consider value when you make a purchase? Is your world one of simply buying things because you want them without considering whether or not your money could be better spent? That’s the only way I can interpret your denial of the relationship between supply and demand. I might think the BMW 550i is nicer than a Honda Accord Touring. Is it twice as nice? Is it three times as nice? Based on the price and my opinion of its desirability, I may or may not contribute to the demand for BMW 550i’s. If BMW needs to sell one to me to cover their fixed costs, then it matters if the price puts me in the market or not.

      • 0 avatar
        Pch101

        “Is your world one of simply buying things because you want them without considering whether or not your money could be better spent? That’s the only way I can interpret your denial of the relationship between supply and demand.”

        Your interpretations are often completely out of left field, and this is no exception.

        The automaker sets prices based upon a number of factors, including its need to manage volume and margins, and the consumer adjusts consumption to match those prices. The automaker selling in Canada typically overshoots on the price in order to offset the downside exchange rate risk, given the producer’s operations being driven by US dollars, and the consumer responds to those higher prices by adjusting their consumption habits. Hence, Canadians pay higher prices and buy a different mix of vehicles than they would if they were offered US-level prices.

    • 0 avatar

      BMWs are one thing, but a Camaro is made in Oshawa.

      • 0 avatar
        Dimwit

        Just add fuel to the fire for PCH, there’s costs that are not obvious but have to be considered.

        Canada is small beer. We have a very spread out population on vast tracts of land. We are bilingual and it is government mandated. We have our own laws and regulations. We are independent and most definitely notAmericans.

        What that means that there are separate distribution systems set up for each manufacturer. Each has to keep country specific materials in warehouses available to each network. There has to be human resources dedicated to service this. It also means that the wise manufacturer might have special models made to appeal to Canadians that aren’t available anywhere else. There’s tax and regulatory issues that have to be complied with.

        All this has costs that have to amortized over a smaller production base. Will this mean thousands to tens of thousands of dollars difference in MSRP? Of course not, but there IS a difference. One of the big problems is that the biggest noisemakers are coming from the major urban centres like Toronto. Sure, the costs don’t seem fair. But Toronto isn’t Canada as much as it likes to think so. The was an article in the Star recently where Saskatechwan was chuffed because they feel they’ve “made it” as the new registrations of MB’s has quadrupled in 10 years. They’re over 4,000! Toronto is 66,000. Yet MB Canada has to pay the same to service both markets.

        Derek noted that Montana is farther away than Ontario but the costs of doing business in Montana is lost as a rounding error when taking account the west coast costs. It would be nice if the barrier of the border would disappear since shipping N/S is so much easier than E/W but the US gov’t post 9/11 isn’t going to cooperate.

  • avatar
    Dimwit

    The thing that the domestics are good about is never giving Canadians the same vehicle to get one to one comparisons with the US model. There’s always some difference, an added feature as “standard” or the prepackaged options have different equipment. Even just different colours available. They’re not stupid and it’s a bitch. It’s why the output from our factories are mostly labelled FOR EXPORT ONLY.

    • 0 avatar
      Kevin Jaeger

      There are sometimes differences in the warranties as well.

      We had quite a few years while the Canadian dollar was so low that we were paying less than the Americans. The companies didn’t think they’d be able to raise the prices as quickly as our dollar was falling. Now we’re seeing the reverse.

      As long as the border is reasonably open to imports the price difference can’t stay too large for too long.

  • avatar
    Big Al from Oz

    Australia has the same problem but worse than the Canadian’s.

    Our currency is slightly over par with the US dollar and has been now for quite some time, since the GFC, with on hiccup. 6 years ago our AUD would only buy 70c US.

    It’s more complex than you would think. Costs of goods and services are affected by many things. Wages, taxation, interest rates, insurance, compulsory pension fund commitments, etc it goes on and on.

    Australia, Canada and the US have an overall rate of tax which is similar as a product of GDP. Canadian’s are slightly higher than Australia.

    But what has happened in Australia rather than reducing the price of vehicles the manufacturers maintain the prices to see what a person is prepared to pay for a vehicle

    But lately a couple of vehicles are becoming cheaper than the previous models, I think the competition still is going to see further reductionns in cost.

    I bought a brand new Mazda with a retail price of $51k and I walked out with the vehicle only paying $46k. In the US an equivalent vehicle (if you could get it) would have cost $36k.

    Our minimum wage in Australia is about $33k per annum, much higher than most other countries, we also have a compulsory superannuation contribution of 10% of our pay (all privately funded). Our average income is at least 50% higher than the US, and like I pointed out total taxation as a part of GDP is similar.

    Our retailers are finding ways to reduce costs. Major perfume companies have found ways to reduce their costs by 50% at the retail level.

    Price gouging does occur, but how often and to what extent is quite grey. And who would admit to it, the media can sometimes get creative responses from companies on price gouging as its on the new here quite often.

    Not one company ever admits to price gouging.

    Apple is a big abuser of price gouging in Australia. I will not buy an Apple. Most American products except for motor vehicles are price gouged here. But American motor vehicles are of good quality and are market cheaply to compete with Korean vehicles.

    A can of Coke is $3 plus! It’s much cheaper in France. And it isn’t all tax and overheads.

    To the Canadian’s, I feel for you, as we are in a worse boat. Someone has to pay for the excesses of Americans. Maybe one day they will learn that if you earn one dollar you can’t spend more than that for too long.

  • avatar
    olddavid

    Well, there goes another half-hour I’ll never get back.Drivel.

  • avatar
    Bimmer

    There was a story on CBC Marketplace last night regarding price difference. It’s not just cars, it’s everything else also. Bayer aspirin is $6 in the US, same one almost $14 in Canada, Playpen for kids from Thieves’Я’Us is $120 and $230, transmission switch (from same website) is 92% more expensive in Canada. They blame it on manufacturers giving higher (10-50%) price to Canada, because market will bear it.

    • 0 avatar
      IHateCars

      Not everything….there are a number of items that are at par or that are cheaper in Canada. But I agree that we do pay more for a lot. While I’m a firm believer in buying locally and supporting the Canadian economy whenever possible, however I will not pay a ridiculous premium to do so. I will cross border shop regularly and I’malways amazed to see the price difference of groceries….milk and meat are particularly much less expensive in the US.

      Apart from cars, tires can be up to 40% cheaper in the US. American border towns are inundated with Canadian tire orders especially right before Winter. You would think that the Canadian tire industry would take notice of all the lost revenue and adjust their prices…they would more than make up the cost in volume.

  • avatar
    prndlol

    At 35 million people, there are about 50% more Canadians than Australians. Therefore the Canadian market is about 50% larger.

  • avatar
    nrd515

    I used to spend a lot of time at a local Toledo store that sold tires and electronics. They were the only local place that had high end police scanners in stock that wasn’t a Radio Shack. They didn’t have the greatest prices available in the US, to put it mildly, but there were a lot of Canadians buying tires there and when they would see a receiver or scanner for like half what it was back home, they would start thinking about buying something and trying to “smuggle” it back home. The prices back home were just insane, so it made perfect sense. One guy actually bought a scanner, had it modified to pick up cell phones (The greatest source of entertainment, ever)right out of the box, then hid it inside the door panel to get it home. I had to laugh, it was like he was smuggling drugs. I wonder what happened if they caught you, a fine, confiscation, or what?


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