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The average new vehicle is more expensive in Canada than it is in the US

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Alex Law
Largely because of the desire of the Japanese, German and Korean auto companies to increase the amount of profits they take from Canadian consumers, the average new vehicle is $5,842 (17 percent) more expensive in Canada than it is in the US.

Price differentials of the models covered by the study vary across the study by DesRosiers Automotive Consultants Inc. of Richmond Hill, Ontario, of course, but they found only five models that cost less in Canada than the US -- Pontiac Montana SV6, Toyota Corolla, Hyundai Elantra, Chrysler PT Cruiser Convertible, and Hyundai Accent.

At the other end of the scale on the study is the Nissan Murano, which is 26 percent more expensive in Canada than it is in the US.

When it comes to keeping costs even between the two countries, a study on pricing differentials reveals, General Motors of Canada "has the distinction of offering the greatest parity between Canadian and American vehicle prices."

The study shows that, in general, the Asian and European firms are charging Canadians a lot more than Americans for new vehicles than the US-based firms are.

GM, Ford and DaimlerChrysler (DCX) passenger cars in Canada average $4,332 over American MSRPs, DesRosiers says, while the other firms cars average $7,939 over US pricing. On the light truck side (i.e. SUVs, minivans and pickups), the premium charged by GM, Ford and DCX is $3,639, while the other firms are charging $6,432 more on average.

While there has indeed been a "restoration of profitability at all levels of the Canadian vehicle distribution and retail sectors," DesRosiers also points out that "a greater amount of negotiation headroom exists on any given vehicle."

This "headroom" is starting to take a higher profile in the Canadian market, as Ford of Canada is once again offering huge employee-level discounts to anyone in the market and Toyota, Honda, Nissan, Mazda, Mitsubishi, Lexus, Acura and pretty much everyone else have cut-rate financing offers and various deals on the table.

DesRosiers didn't give extensive model-by-model comparisons or any brand-by-brand comparisons at all (he's looking for a car company to fund a broader study), but he did allow that "high-volume vehicles have the most competitive cost structures, while lower-volume models are the most likely to receive premium pricing, even if they are in fact volume products in the US."

Those vehicles that DesRosiers describes as being purchased on a "needs basis" (entry-level or midsize family vehicles) generally have price differentials under 10 percent.

"Aspirational" vehicles, on the other hand, "regularly carry Canadian price premiums between 15 to 25 percent," reports DesRosiers. That would include the models in the ever-expanding entry-level luxury segment, which includes numerous models from about $40,000 to $55,000.

While all vehicle segments in the Canadian market came with higher profit margins (or, in DesRosiers's words, "marked affordability downswings"), the three segments that do the largest business in this country had less disparity with the US market.

The subcompact, compact and intermediate passenger car segments in Canada showed average premiums of $1,420, $1,245 and $1,991, respectively, over prices south of the border.

As for GM's low-premium leadership in the Canadian market, the study found that, "outside the luxury segments, it was uncommon for any GM vehicle to carry a price premium greater than five percent. Even within the luxury segments, GM vehicles often populated the bottom of the price differential matrix."
Alex Law
Alex Law
Automotive expert