Thursday, May 22, 2008

Hybrids and the Canada US price discrepancy

Someday soon I hope to be in the market to buy a brand new car. To ease my carbon footprint conscience, I've decided I'm buying a hybrid vehicle. Due to my present state of poverty, I'm doing my research on the best deals before jumping into the market.

My most irksome discovery has come from the difference in price between Canada and the USA.

If you buy a car in Ontario, you have to pay both the GST, at 6% and the PST at 8%.
If you buy the car in the USA, you only have to pay the GST when importing to Canada, plus whatever tax the USA charges. So automatically you've saved yourself a few percent on Provincial Sales Tax.

States with no sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon.
Other State tax rates fluctuate, averaging around 5%. A list of tax rates can be found here.

I've priced out the following Hybrids, according to their respective Canadian and American websites.

Toyota Prius
Canada - $29,500
USA - $21,500
Savings - $8000
Percentage difference - 37.2%

Toyota Camry Hybrid
Canada $30,660
USA - $25,650
Savings - $5010
Percentage difference - 19.5%

Toyota Highlander Hybrid
Canada - $41,075
USA - $34,200
Savings - 6875
Percentage difference - 20.1%

Honda Civic Hybrid
Canada - $26,350
USA - 22,600
Savings - $3750
Percentage difference - 16.5%

Nissan Altima Hybrid
Canada - $33,998
USA - $25,480
Savings - $8518
Percentage savings 33.4%

I can tell a rip off when I see one. The scary part is, the price premium in Canada isn't just on cars, it's on almost everything. If you were to do all your electronics shopping in the states, you'd save a 15-40% on what you pay in Canada. Some things I've bought are child car seats, strollers and jewelery.
I'd recommend to anyone living in Canada, at or near a border, if you need to make a big purchase or a few moderate ones, take a trip over the border and do your shopping there. Even if you have to stop at the border and pay 6% tax, it's well worth it!

I sometimes think of the business opportunity, if one were to somehow tap into the discrepancy by taking care of all the legal details when importing stuff to Canada...

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