Low to Middle Income Hardest Hit in CDN Vehicle Prices

The globeandmail reported today that there is a class action lawsuit being launched against automakers and dealers for allegedly charging Canadians 25-35% higher for vehicles sold in Canada when compared to the US. Consumer groups are welcoming the lawsuit.

It is only now through the parity of the dollar that Canadians realize the glaring differences in vehicle prices between Canadian and US dealerships. The article doesn't mention any specific automaker other then Porsche within the article but its suffice to say that not everyone is driving a Porsche nor can they afford one. What about the average joe on a regular salary? I would argue that we are definitely a larger portion of vehicle sales per annum. I set out to find out how much of a difference there actually exists between vehicles here and across the border.

Assumptions:

• Growth since 2002 has averaged -1% in Canada. I assumed no growth in the current fiscal 2007 using 2006 stats from Statistics Canada.


• I used a 2004 study to understand the most popular vehicles purchased in Canada. I assumed this hasn't changed with the exception of Chevrolet that has discontinued the Cavalier and Pontiac Sunfire, and Toyota that has discontinued the Echo. I substituted the Chevrolet Malibu and didn't place another Toyota vehicle as I already had a comparison.


• I also assumed that that the % of vehicles purchased by consumers in Canada by make will remain the same (a large assumption i know but they made the analysis easier given information I was able to obtain). I believe once you see the vehicles individuals were buying in 2004, you will see that those models are still quite popular today.

Findings: If Canadians was to continue to purchase vehicles based on the assumptions above, we would have have paid an extra $888 Million dollars between the vehicles in the table presented here. It is also important to note here that this represents only 11% of all vehicles sold in Canada.

The vehicles depicted here are priced an average of $20,586 in Canada while only $15,772 in the US. Honda and Mazda seem to be the worst offenders (Ford owns Mazda). With vehicles that are priced to attract the low to middle income, it is concerning to think that these automakers are pricing vehicles they way they have.

While many Canadians have realized this some time ago, others are only now starting to realize that the automakers have "pulled the hood over our eyes" (pun intended of course). This isn't small change either and both a public inquiry and a class action lawsuit are definitely warranted under the circumstances. Especially with "ethically" responsible manufacturers like Toyota is promote their One-Price policy. Consumers are now the wiser so beware.

My 2 thoughts......

(Again if you interested, let me know if you want me to share my figures via email)