Are Cars Cheaper in Canada or USA?

Consumers often wonder if cars are cheaper in Canada or the United States when considering a vehicle purchase across the border. This article examines the elements contributing to car price disparities between Canada and the U.S., offering insights into direct cost comparisons and the practicalities of importing a vehicle.

Factors Influencing Car Prices

Economic and market elements contribute to varying vehicle costs between Canada and the United States. Exchange rates play a significant role, as fluctuations in the Canadian Dollar (CAD) against the U.S. Dollar (USD) directly impact prices. A weaker Canadian dollar makes U.S.-priced vehicles more expensive for Canadian buyers, and vice versa.

Automakers often implement distinct Manufacturer’s Suggested Retail Prices (MSRPs) for the Canadian and U.S. markets. Pricing strategies are influenced by market size, competitive landscapes, and regional demand. The larger U.S. market often benefits from higher sales volumes, enabling manufacturers to offer lower pricing per unit. This difference can persist even after exchange rate conversions.

Taxes represent a substantial component of a vehicle’s final price. In Canada, federal Goods and Services Tax (GST) or Harmonized Sales Tax (HST) apply, ranging from 5% to 15% depending on the province. Some provinces also levy a Provincial Sales Tax (PST). In the U.S., vehicle purchases are subject to state and local sales taxes, which vary widely, typically from 0% to over 8%.

Vehicle standard features and trim levels can differ between the two countries for the same model. A vehicle marketed under the same name might include different standard equipment or package options, influencing its base price. These variations mean a direct MSRP comparison may not always reflect an accurate value assessment. Market dynamics, including inventory levels and manufacturer incentives like rebates or special financing offers, contribute to temporary price variations tailored to specific market conditions.

Direct Price Comparisons

When evaluating car prices between Canada and the U.S., a universal “cheaper” designation does not apply to all makes and models. Generally, new car prices in Canada have historically been higher than in the U.S. when directly converted to U.S. dollars, with some reports indicating an average difference of around 20%.

For instance, a new car costing $30,000 in Canada might be $24,000 in the U.S. This disparity is often attributed to the larger sales volume in the U.S. market, allowing for more competitive pricing. However, specific models can defy this trend; some vehicles may have a lower MSRP in Canada even after accounting for exchange rates due to manufacturer pricing strategies.

Used car prices also show variations, with some data suggesting they might be more economical in Canada when considering the exchange rate. For example, a used 2018 Toyota Corolla might sell for $14,000-$16,000 USD in the U.S., but $16,000-$19,000 CAD in Canada (approx. $12,000-$14,250 USD). A 2018 Honda Civic could range from $15,000-$18,000 USD in the U.S. and $18,000-$22,000 CAD in Canada (approx. $13,500-$16,500 USD). A 2018 Ford F-150 might be $25,000-$30,000 USD in the U.S., compared to $30,000-$35,000 CAD (approx. $22,500-$26,250 USD) in Canada. These examples highlight that while general trends exist, the most advantageous deal depends on the specific vehicle and current market conditions.

Importing a Vehicle Across the Border

Importing a vehicle between Canada and the U.S. involves specific procedural steps and regulatory requirements. Vehicles must be admissible. For U.S. imports, vehicles must comply with U.S. Environmental Protection Agency (EPA) emissions and Department of Transportation (DOT) safety standards; vehicles 25 years or older are generally exempt. For Canadian imports, the vehicle must meet Transport Canada’s safety and emissions standards, often verified through the Registrar of Imported Vehicles (RIV) program for vehicles under 15 years old. A recall clearance letter from the manufacturer is often required for Canadian imports.

Required documentation for importing a vehicle typically includes the original title or proof of ownership, a bill of sale, and the vehicle identification number (VIN).

Required Forms

For U.S. imports, specific forms are necessary: CBP Form 7501 (Entry Summary), DOT Form HS-7 (Declaration of Conformance), and EPA Form 3520-1 (Declaration of Imports of Vehicles and Engines).
For Canadian imports, the Vehicle Import Form (Form 1) is completed at the border.
An Internal Transaction Number (ITN) may also be required for exporting a vehicle from the U.S., obtained by filing export information with U.S. Customs and Border Protection (CBP) at least 72 hours before export.

Vehicles may require modifications to meet the importing country’s safety and emissions standards. If a vehicle does not conform to U.S. standards, a Registered Importer (RI) may need to modify it for compliance. Upon arrival at the border, the vehicle and all documentation must be presented to customs officials for declaration, often involving primary and secondary inspections.

Import duties and taxes are assessed at the border. For vehicles imported into the U.S., a duty rate of 2.5% generally applies to foreign-made automobiles, though North American-manufactured vehicles are often exempt under trade agreements like USMCA. A Harbor Maintenance Fee of about 0.125% of the vehicle’s value may also be levied.

Canadian Import Fees

A 6.1% duty may apply to vehicles not manufactured in North America.
The federal Goods and Services Tax (GST) of 5% is collected on the vehicle’s value.
A $100 excise tax applies for vehicles with air conditioning.
Provincial sales tax (PST) will be due when the vehicle is registered.
An RIV inspection fee, typically $195 to $325 CAD plus tax, is charged for vehicles under 15 years old.

Post-Importation Considerations

Once a vehicle clears customs, several steps ensure it is legal and operational. The primary step involves registering the vehicle with the relevant provincial or state motor vehicle department. This process typically requires submitting customs clearance documentation, proof of ownership, and payment of any remaining taxes or fees, such as provincial or state sales tax. Many jurisdictions also require a safety inspection and, in some cases, an emissions test to ensure the vehicle meets local standards before registration and licensing.

Obtaining appropriate insurance coverage for the imported vehicle is important. Insurance requirements and premium calculations can vary significantly between the U.S. and Canada, and even between different states or provinces. Secure a new insurance policy from a provider licensed in the country where the vehicle will be registered, as previous coverage may not be valid.

Review the manufacturer’s warranty validity for an imported vehicle, as warranties are often region-specific and may not transfer or be honored in the importing country. Contact the manufacturer directly to understand any limitations. Additionally, consider ongoing maintenance and future recall management. While recall clearance is often a pre-importation requirement for Canada, ensuring continued access to authorized service and recall information in the new country is important. Keep all import-related documentation, including customs forms, proof of taxes paid, and compliance certifications, for future reference or inquiries.