Ambitious But Rubbish

Living in Canada has its advantages. For one thing I don’t have to worry about having to declare bankruptcy if I get hit by a bus while crossing the street or fall ill; I have decent health insurance which is paid by my (fairly high) taxes. That being said, can anyone explain why buying a car here means, ceteris paribus, so much more expensive here than it is in the United States?

Seriously, I’d love for someone to give me a straight answer on this one. My mother has recently decided to buy a car, a convertible, specifically a Volvo C70. She’s worked hard all her life (and her kids sure didn’t make it any easier…) and now she has the money, that’s what she wants. Good on her to enjoy her earnings, I say.

But the experience is leading me to the realization that she’s not getting her money’s worth on this purchase. Not nearly. Sure, it’s a great car, I test-drove it last week and it’s a fantastic piece of engineering, to be sure. However the cost of owning this splendid Pininfarina-designed vehicle is staggering, when one compares it to the cost Mother would have to pay if she were an American (or at least living in the USA).

This is not just me talking bullshit here by the way, you can actually go to the Canadian and American web sites and configure the car in an equivalent way to check up on my work here.

There’s only one C70 trim, to make it easy. It’s a T5, with an automatic transmission and the following options:

• the DynAudio package (same in Canada and the US)
• the Sport package, which is a little trickier because it’s not offered in the US. To make an equivalent configuration on the US site you must first choose the 18″ rims on the Styling page, then select the Premium package and the Climate package.

The color in both cases is “Magic Blue” with the black leather interior.

Now for the shocker. The finished price. In neither the Canadian nor the US prices does this include sales tax in any way, remember that…

• US price: $46,562
• Canadian price: $66,860

No, you didn’t misread that. The car sold in Canada — the very same exact car, but sold in Canada — costs over $20,000 more.

That is absolutely staggering. That’s almost as much as I made in salary my first year out of University, before taxes. That sort of premium is an awful lot, especially considering that because the average Canadian pays (in total) a lot more in taxes than the average American he has even less of that “extra money” to spend on cars.

I really see no reason why cars destined for the Canadian market should be put at such an incredible premium (around 40% in this case). I don’t think this is the case for all cars, but Volvo in particular seems to love hosing Canadians for extra money for what seems to be no reason at all. A “stock” S40 T5 all-wheel-drive, for example, sells in the US for $28,990 (before options & dealer fees which, incidentally, are also stupendously higher here), the same car in Canada will cost you $39,995. A 35% premium before we even start talking options.

Let’s look at another one. BMW 328xi, green with tan leather and burl trim, with the Premium package (you have to add the premium sound system separately on the US site for some reason). US price: an even $40,000. Canadian price: $51,685. That’s not Volvo-outrageous, but it’s still well over 25%. Almost 12 grand for nothing.

In the past we used to be able to point to the exchange rate for the reason why we as Canadians were getting shafted by importers. To do so now would be a complete and utter lie. Today’s official exchange rate is $1CAD = $0.958US (thanks, W!). And that’s the “bid”, the “ask” is even higher. Therefore the prices that we’re being offered now are nothing short of highway robbery and pure profit on the part of the company that sells stuff to us.

It would be one thing if Canadian corporations were highly taxed. However, they’re not. They’re taxed at a rate considerably lower than US corporations are by their government, so that can’t be what it is.

The sad truth is that we’re being robbed blind. And we’re not being robbed blind by Wall Street. We’re being robbed blind by our own.

What are we, stupid? Well, no. We as consumers just don’t have any real choice in the matter. And that’s really what’s saddest about this whole phenomenon.