Thanks to the parity between the Canadian loonie and U.S. greenback– and carmakers' failure to lower their Canadian prices to compensate– our neighbors to the north are flocking south to buy new and used vehicles from American car dealers. The Toronto Star finally puts numbers to the trend: Canadian cross-border shoppers imported 24,873 cars in October. That's double the previous month's total (12,289). It seems the trade is having a ripple effect on the entire industry, as savvy buyers wait for automotive prices to drop. To wit: Canadian new car sales declined from August's 158,394 to October's 121k. The toll on "domestic" used cars could be even heavier. However, as we've reported, the entire trade has just fallen afoul of federal regulations requiring Canadian-spec, manufacturer-approved, anti-theft immobilizers. With over a thousand imported cars in limbo, the resulting confusion and outrage is certain to create some major political blowback– especially with as Transport Canada admits some of those cars may have been purchased between Sept. 1, when the new regulation came into effect, and the time when the agency posted the list of prohibited vehicles on its website. Oops.
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It was earlier estimated that Canadians would import over 130,000 vehicles from the US this year, close to double the previous year.
There were 120,976 new vehicles sold in Oct, the vehicles imported in Oct are 20% of the new vehicles sold.
Vehicles built after Sept 1, 2007 require the manufacturers approved immobiliser, vehicles built prior to Sept do not require the immobiliser. Its the manufacturers that provide RIV the list of admissable vehicles. The list of admissable vehicles has been updated and changed several times since Sept 1.
Informative article from the Globe and Mail on some of the deals being offered http://www.globeauto.com/servlet/story/RTGAM.20071121.wh-dealweek-1121/GAStory/specialGlobeAuto/home
The used car market here in ontario has been tuned upside down.5 and 6 yr olds are a bargain.
Its a very buyer beware market.Lots of deals and lots of crap. IE flooded cars from the US south.
Cheap used cars = lousy trade in money=slow new car sales.
Just curious but how are car sales taxed in Canada? Do they use some kind of VAT or is it a straight sales tax like most US states? If a Canadian buys a new car in the US, does he/she pay the tax when the vehicle is registered in the province, and is tax paid only to the province or is there also a national tax?
Just wondering if maybe part of the price discrepancies are related to taxation…
Martin, the way it works, from what I have read, is that you pay the GST at the border (6%) and then you pay the PST (7% in Ontario) when you register the vehicle. The tax is based on the bluebook value of the car, not what you paid for it. And of course there are other fees, I think ~$100 tax for AC and penalties if you buy a car that gets absolutely terrible mileage.
My wife is hours away from pulling the trigger on a ’08 Jeep Patriot.
No, its not the best mini-SUV out there. But for $23K, she is getting something darn close to what would cost $10K more in a RAV4 or CRV. In the U.S. those vehicle cost about the same.
Chrysler seems desperate savvy enough to understand that Canadians don’t like paying a “north of the border tax”.
Martin,
Here’s the scoop on taxes..
On new cars bought in Canada, we pay Federal sales tax (aka the Goods and Services Tax, or “GST”) of 6%. Most provinces then charge an additional provincial sales tax (in Ontario the PST is 8%).
If you’re importing a car from the US, you pay the GST at the time of importation. If the car was manufactured outside the NAFTA zone, there’s an additional 6.1% import duty assessed at the same time. The provincial tax is assessed and paid when the car is registered.
Even with all the above, US cars are still significantly cheaper. For example, BMW USA base price of 335i Coupe is $41,575. Add PST, GST, and the 6.1% duty and that car is in my Ontario driveway for about $50K. To buy the same car from a Canadian BMW dealer is nearly $59,000 (base price of $51,600 plus 6% GST plus 8% PST). Because the currencies are more or less at par, there is no foreign exchange discount or premium to factor in.
When I was living in Canada, the Loonie was 80 cents. Even at that time, many of the makes were pricing cars as if the Loonie were still at 60 cents.
I had a dealer call me up about a new plane and start threatening to import it from the states before he even compared prices. I told him we would offer a discount, and that we were competitive with the US dealers. He was so sure I was just full of it. I suppose since his business worked that way, he thought ours did as well.
The GST (sales tax) goes from 6% to 5% on January 1.
On my last look, I priced out a new Honda Accord EX-L V6 at $39,000CDN (excl Taxes) in Canada and $30,000 US.
Sooner or later, the pricing will be adjusted or the car companies in Canada will just have to close up shop. Not a good time to be buying new cars in Canada right now.
I’m glad to see new car sales falling in Canada. The only power we have in a (semi) free market is by exercising our discretion in how we spend our money.
If I was a manufacturer and consumers were still buying my product at a 20%-35% premium over the same product in the US I wouldn’t drop my price either.
Yes we have to get the word out and tell your brother/mother/friends to not buy a new car in Canada until we get fair pricing, because while we keep paying the over-inflated prices that is all we will get.
The companies like Porsche should be doubly boycotted for insulting our intelligence, they issued PR about dropping prices, but it was merely a token amount. We are still looking at $15 000 difference on the cheapest Porsche Boxster.
When I replace my car I won’t pay unfair pricing. Unless we have fair pricing, I will go far enough south to find a dealer who will sell to me, I will do without warranty. Whatever it takes, the number one way we straighten this out is to hang tough and take our dollars elsewhere.
Only when the balance sheets bleed deep crimson will they finally start to offer fair pricing.
Do your patriotic Canadian duty, buy in America!