Why Cars Are Expensive in Canada: The 5 Biggest Reasons

Why cars are expensive in Canada – It’s no secret that cars are expensive in Canada – in fact, the highest car prices are usually found here in British Columbia and Ontario, compared to other provinces and territories.

But why? What makes cars so much more expensive here than elsewhere?

The answer lies in a combination of factors, but these five reasons have the biggest influence on what we pay when we walk into our local dealership.

Why Are Cars So Expensive Right Now

There are a number of reasons why cars are so expensive right now. For one, a lot of people aren’t buying new cars.

why are cars so expensive in canada

Instead, they’re simply keeping their old ones longer—and not replacing them. A lack of new car sales has kept automakers from investing heavily in factory expansions and employee training.

Car Price Markups

So why are cars so expensive in Canada? Prices differ across provinces. Alberta has higher taxes on cars, so if you live there you’ll pay more than most Canadians do for their new wheels.

But even within provinces, prices vary widely between brands and models. Your Honda Civic will cost a lot less than your neighbor’s Mercedes E-Class.

Buyers are often willing to pay extra for a certain brand name or when they simply want to stand out from the crowd with something flashier or more luxurious than usual.

After all, making a statement is an investment of sorts, especially because people generally keep their cars longer these days and they drive them almost every day—they aren’t just luxury vehicles that are rarely used.

Taxes and Duties

Automobiles are one of several products that are heavily taxed and/or duties in Canada.

In fact, vehicles costing more than $5,000 CAD must pay duties on their value under Canada’s Customs Tariff.

A $25,000 car would be subject to duties that range from 2.5 percent to 6.1 percent (and sometimes even more), depending on what part of a vehicle is made where. So why are used cars so expensive in Canada?

Transport Costs

Transport costs make up a huge chunk of any vehicle’s price. For cars that can cost upwards of $35,000 USD, that’s a lot of cash to pay for shipping.

Cars manufactured in Europe or Asia often have to be shipped to North America—which means those additional costs are passed on directly to Canadian and American consumers.

As if that weren’t enough, tariffs and duties also get slapped onto imported cars, further bumping up their price.

If you want to avoid paying more than necessary for your next car, try looking at vehicles manufactured closer to home—though it may mean compromising on luxury options like heated seats or GPS navigation.

Add-ons (Extras, Maintenance, Repairs, Etc.)

When you take into account all of these additional costs, it’s easy to see why cars are expensive in Canada.

For example, even a basic four-door sedan with no frills will cost you about $25,000. But if you want one with leather seats and a sunroof, add an extra $8,000 to that price tag.

And since maintenance and repairs are inevitable (unless you’re very lucky), be prepared to spend an additional $1,500 annually—at least—on those items alone.

So that same basic vehicle will actually cost closer to $35,000 over three years! Just think how far your money can go elsewhere in the world…or how far it has already gone if you live elsewhere!

Fees, Taxes, and Levies

In addition to a car’s base MSRP, there are a whole slew of taxes and levies tacked on.

These include goods and services tax (GST), tire levy, air tax, registration fees, annual motor vehicle fees—which pay for highways and roads—and more.

Depending on where you live, these could add another $1-2k onto your price tag right off the bat.

Of course, these additional costs can vary between provinces; Saskatchewan has much lower provincial taxes than Alberta or Ontario.

When all is said and done, a car bought in Quebec will generally cost you around $3k more than one purchased in British Columbia. Why?

Is it Expensive to Buy a Car in Canada?

As any Canadian knows, a car is an expensive purchase.

When you compare auto costs to other countries around the world, including those of our own neighbors, it’s no wonder why so many people want to know if they’re getting ripped off when buying a vehicle up north.

There are several reasons that cars cost more in Canada than elsewhere.

Perhaps one of these might answer your question and help you determine if you’re getting what you paid for.

Are Car Prices Cheaper in Canada?

While there is no definitive answer, a cursory search online reveals two common theories.

First, as of 2017, manufacturing cars in Canada is cheaper than manufacturing them in most parts of the United States.

Second, Canadian regulations require that automobiles be built with higher safety and emissions standards than those sold across state lines.

As a result, some manufacturers set their prices higher to account for these higher costs.

Either way, you can rest assured that car prices will only go up—not down—in your lifetime.

So if you’re looking to save money on your next vehicle purchase check out our list of affordable options here.

Are Vehicles More Expensive in Canada?

There are a number of reasons why vehicles cost more in Canada than they do across the border.

When you adjust for currency exchange rates, gas and insurance prices are often lower here than in America. In fact, Canada’s $0.12 cents per kilowatt hour is 40% less than what Americans pay on average.

As it turns out, however, vehicles cost significantly more here when looking at American dollars instead of Canadian ones because of other expenses like taxes, fees, and parts that must be imported from places like Germany or Japan (see below).

Why Are Prices More Expensive in Canada?

In general, everything is more expensive in Canada. This is especially true for cars and why are rental cars so expensive in Canada?

A recent study found that Canadians pay an average of $1,500 more for a new car than Americans do, and costs are even higher when you’re looking at buying a used car.

Of course, many of us would like to know why cars are more expensive in Canada than in the us. So here’s a look at five big reasons why Canadian drivers pay so much more.


When you look at cars from a distance, all you see is cool style and speed. But when you look closely, there’s more than meets the eye.

Canadian cars are expensive, but they’re not as expensive as they seem. In fact, most of what you pay for are taxes and fees—and to find out why we pay more than Americans for our cars, we need to take a closer look at what goes into pricing them. Here’s a closer look at why vehicles cost more up north than down south…