April 2008
Should you buy your new car in the U.S.?
You may save loonies, but the process might drive you loony
Despite the alignment of the Canadian and U.S. dollars, there's a big difference in car prices across the border, especially
when it comes to luxury models. The average sticker prices for new cars and light trucks is about $8,000, or 26 percent, less
in the U.S. than in Canada, according to a recent Consumer Reports analysis. The difference on some luxury models runs to tens of thousands of dollars. With such gaps, it's hardly surprising
that the number of new and used cars Canadians imported from the U.S. in 2007 has more than doubled in recent years, to 189,738
vehicles.
In response, some automakers are dropping prices and adding extra incentives on vehicles purchased in Canada. Many cars remain cheaper to buy in the U.S., however. Should you buy there? Here's what to consider:
Q Can I export the model I want?
Some manufacturers, including Acura, BMW, Chrysler, General Motors, Honda, Lexus, and Toyota, prohibit their U.S. dealers from selling vehicles for export. Such prohibitions, along with generally higher Canadian car prices, have spurred Canadian consumers to file a $2 billion class-action lawsuit and a discrimination complaint against automakers and dealers. While Subaru permits cross-border sales, it's making them less appealing by eliminating incentives to its U.S. dealers for cars sold for export, and Canadians who export U.S. Subarus no longer qualify for rebates or other incentives, says Joe Spitz, Internet sales manager for a Seattle Subaru dealer. As a result, he says, the savings for Canadians buying an Outback 2.5i from his dealership rather than in British Columbia dropped from $12,000 to $7,000. Moreover, we couldn't find a single carmaker willing to finance the purchase or lease of a U.S. vehicle headed north, which means you may not be able to take advantage of some promotions.
Q Will the car meet Canadian standards?
Canada prohibits outright the import of some 2008 and earlier U.S. vehicles because they can't be modified to meet Canadian vehicle standards. Other vehicles can be imported only after they've been modified to address Canada's safety requirements.
Q Can I get warranty coverage in Canada?
The U.S. warranty might be invalid in Canada or, as with Chryslers, invalid on both sides of the border once the car is exported. Even if the U.S. warranty is valid in Canada, some benefits might differ or be unavailable.
Q Are U.S. models and trim lines the same in Canada, and can I easily compare them?
Canadian and U.S. models might have different options, even when their options packages bear the same names. Some examples: Canadian-bound Toyotas come standard with heavy-duty alternators, batteries, and weather stripping, as well as extra paint protection. The base Volvo XC70 costs $9,720 more in Canada than in the U.S., but any potential savings are offset by features that cost $1,700 extra in the U.S., including heated front seats and heated windshield-washer nozzles.
Q Am I ready for the paperwork?
Importing a car involves red tape on both sides of the border, including advance notifications and inspections, that can take a week or longer. Erring along the way can delay or even undo the importation process.
Q Have I factored in taxes and fees?
Those could offset potential savings by thousands of dollars; see the checklist on the next page for details. For example, importing a gas-guzzler makes you subject to Canada's "green levy" of up to $4,000, and yet an imported fuel-efficient vehicle is ineligible for the federal ecoAUTO rebate of up to $2,000. Depending on the state, you might have to pay sales tax in the U.S., in addition to the GST and PST in Canada.
WHAT TO DO
If you're still considering buying your new car in the U.S., here are some steps to follow:
Estimate potential savings. For each vehicle you're considering, check the Canadian prices and incentives against those in the U.S. Keep in mind that you probably won't be able to take advantage of U.S. financing and leasing deals, or rebates either, depending on the manufacturer. You can often find prices and incentives on the manufacturers' Canadian and U.S. Web sites.
Check for government restrictions. Examine the list of vehicles that can be imported into Canada (see below), noting any required modifications. Some manufacturers require an authorized dealer to make the modifications.
Look for manufacturer restrictions. Contact the manufacturer (a Canadian manufacturers contact list is available free of charge) for information about whether U.S. dealers can sell to Canadians and whether there is any effect on incentives and benefits.
Contact dealers. Send e-mail to the dealership for a price quote. Make it clear that you're buying the vehicle for export, and ask if it can help with the paperwork and process. Some will even complete much of the work at no charge.
Compare prices. If you've decided to buy, it's time to seek more exact price information. Canadian dealer and invoice pricing is available at www.carcostcanada.com ($39.95 for up to five reports), and www.roadcompanion.ca ($24.95 per report; $5 more for non-members). The Consumer Reports New Car Price Service (www.CRcanadacars.org) offers dealer invoice pricing, incentives, and the CR Bottom Line Price, plus lists of standard and recommended equipment; U.S. crash data (if available); CR's Ratings of reliability, owner satisfaction, and depreciation; and alternative vehicle recommendations ($29.95 U.S. for one report; $49.95 for four).
As for the comparative U.S. information you'll need, several Web sites provide U.S. invoice prices and incentives free of charge, including edmunds.com, kbb.com, and nada.com. You can get free U.S.-dealer holdback information at www.edmunds.com. Or you can purchase CR's price reports on cars for the U.S., which offer everything that's in the Canadian reports, plus holdback information, from ConsumerReports.org ($14 for one report; $12 for extra reports; $39 for a New Car Buying Kit, including unlimited reports for three months).
It also pays to visit the "Your best deal" forum at ConsumerReports.org and the prices-paid forums at www.carspace.com to get an idea of how much others actually are paying.
NEW-CAR IMPORT CHECKLIST
Here are many of the procedures you should follow when buying a new car in the U.S. and importing it to Canada. Check the sources listed on this page for additional information.
In response, some automakers are dropping prices and adding extra incentives on vehicles purchased in Canada. Many cars remain cheaper to buy in the U.S., however. Should you buy there? Here's what to consider:
Q Can I export the model I want?
Some manufacturers, including Acura, BMW, Chrysler, General Motors, Honda, Lexus, and Toyota, prohibit their U.S. dealers from selling vehicles for export. Such prohibitions, along with generally higher Canadian car prices, have spurred Canadian consumers to file a $2 billion class-action lawsuit and a discrimination complaint against automakers and dealers. While Subaru permits cross-border sales, it's making them less appealing by eliminating incentives to its U.S. dealers for cars sold for export, and Canadians who export U.S. Subarus no longer qualify for rebates or other incentives, says Joe Spitz, Internet sales manager for a Seattle Subaru dealer. As a result, he says, the savings for Canadians buying an Outback 2.5i from his dealership rather than in British Columbia dropped from $12,000 to $7,000. Moreover, we couldn't find a single carmaker willing to finance the purchase or lease of a U.S. vehicle headed north, which means you may not be able to take advantage of some promotions.
Q Will the car meet Canadian standards?
Canada prohibits outright the import of some 2008 and earlier U.S. vehicles because they can't be modified to meet Canadian vehicle standards. Other vehicles can be imported only after they've been modified to address Canada's safety requirements.
Q Can I get warranty coverage in Canada?
The U.S. warranty might be invalid in Canada or, as with Chryslers, invalid on both sides of the border once the car is exported. Even if the U.S. warranty is valid in Canada, some benefits might differ or be unavailable.
Q Are U.S. models and trim lines the same in Canada, and can I easily compare them?
Canadian and U.S. models might have different options, even when their options packages bear the same names. Some examples: Canadian-bound Toyotas come standard with heavy-duty alternators, batteries, and weather stripping, as well as extra paint protection. The base Volvo XC70 costs $9,720 more in Canada than in the U.S., but any potential savings are offset by features that cost $1,700 extra in the U.S., including heated front seats and heated windshield-washer nozzles.
Q Am I ready for the paperwork?
Importing a car involves red tape on both sides of the border, including advance notifications and inspections, that can take a week or longer. Erring along the way can delay or even undo the importation process.
Q Have I factored in taxes and fees?
Those could offset potential savings by thousands of dollars; see the checklist on the next page for details. For example, importing a gas-guzzler makes you subject to Canada's "green levy" of up to $4,000, and yet an imported fuel-efficient vehicle is ineligible for the federal ecoAUTO rebate of up to $2,000. Depending on the state, you might have to pay sales tax in the U.S., in addition to the GST and PST in Canada.
WHAT TO DO
If you're still considering buying your new car in the U.S., here are some steps to follow:
Estimate potential savings. For each vehicle you're considering, check the Canadian prices and incentives against those in the U.S. Keep in mind that you probably won't be able to take advantage of U.S. financing and leasing deals, or rebates either, depending on the manufacturer. You can often find prices and incentives on the manufacturers' Canadian and U.S. Web sites.
Check for government restrictions. Examine the list of vehicles that can be imported into Canada (see below), noting any required modifications. Some manufacturers require an authorized dealer to make the modifications.
Look for manufacturer restrictions. Contact the manufacturer (a Canadian manufacturers contact list is available free of charge) for information about whether U.S. dealers can sell to Canadians and whether there is any effect on incentives and benefits.
Contact dealers. Send e-mail to the dealership for a price quote. Make it clear that you're buying the vehicle for export, and ask if it can help with the paperwork and process. Some will even complete much of the work at no charge.
Compare prices. If you've decided to buy, it's time to seek more exact price information. Canadian dealer and invoice pricing is available at www.carcostcanada.com ($39.95 for up to five reports), and www.roadcompanion.ca ($24.95 per report; $5 more for non-members). The Consumer Reports New Car Price Service (www.CRcanadacars.org) offers dealer invoice pricing, incentives, and the CR Bottom Line Price, plus lists of standard and recommended equipment; U.S. crash data (if available); CR's Ratings of reliability, owner satisfaction, and depreciation; and alternative vehicle recommendations ($29.95 U.S. for one report; $49.95 for four).
As for the comparative U.S. information you'll need, several Web sites provide U.S. invoice prices and incentives free of charge, including edmunds.com, kbb.com, and nada.com. You can get free U.S.-dealer holdback information at www.edmunds.com. Or you can purchase CR's price reports on cars for the U.S., which offer everything that's in the Canadian reports, plus holdback information, from ConsumerReports.org ($14 for one report; $12 for extra reports; $39 for a New Car Buying Kit, including unlimited reports for three months).
It also pays to visit the "Your best deal" forum at ConsumerReports.org and the prices-paid forums at www.carspace.com to get an idea of how much others actually are paying.
NEW-CAR IMPORT CHECKLIST
Here are many of the procedures you should follow when buying a new car in the U.S. and importing it to Canada. Check the sources listed on this page for additional information.
| Action | Where | Notes |
|---|---|---|
|
RESEARCH |
||
| Determine whether you can import the car. Consult the list of admissible U.S. vehicles. | www.tc.gc.ca/roadsafety/ importation/impusae.htm |
Note any required modifications, including to bumpers, daytime running lights, and speedometer. Get an estimate before importing. |
| Check transferability of U.S. factory warranties and services/benefits. | Manufacturer, dealer | Manufacturers might charge a fee or impose special procedures. If void in Canada, the U.S. warranty also might be void in the U.S. |
| Check for additional requirements. | Provincial authorities | The province may impose inspections, taxes, or other obstacles. |
| Check eligibility for U.S. incentives. | Manufacturer | Low-interest financing and special lease offers probably won’t apply. |
| Secure financing if you need it. | An independent bank | Most, if not all, automakers and some banks, including Royal Bank of Canada, generally will not finance cross-border sales due to uncertainty about vehicle resale value, etc. |
|
BEFORE YOU BUY |
||
| Obtain the necessary documents or labels, including recall clearance letter and statement of U.S. compliance with Canadian standards. | Manufacturer, dealer, car’s door panel (compliance statement) | For some vehicles, a vehicle admissibility letter is required, for which the manufacturer might impose a fee. |
| Provide ownership documents to the U.S. | Read “Importing or Exporting a Car” at www.cbp.gov | Must be received by U.S. Customs and Border Protection at least three days before the car crosses the border. |
| Arrange insurance. | Canadian insurer | Start early; some people have reported delays arranging insurance. |
| Obtain proper registration to transport the vehicle. | U.S. dealer, state and provincial motor vehicle officials | Temporary state registration might not allow you to drive the vehicle in Canada. |
| Determine applicable taxes, fees, and duty. | Consult provincial authorities. Read “Importing or Exporting a Car” at www.cbp.gov | Includes: U.S. state sales tax; Canadian GST and PST; green levy (up to $4,000); duty if car is made outside North America (6.1 percent); Registry of Imported Vehicles fee ($195); air conditioner excise tax ($100). |
|
AFTER YOU IMPORT |
||
| Have the vehicle inspected, modified as needed, and registered within 45 days of purchase. | Canadian Tire outlets, www.riv.ca/english/independent- inspection-centres.pdf, Registry of Imported Vehicles |
Determine if your province allows the vehicle to be driven before the car is inspected and registered. |
| Register for recall notifications and warranty coverage. | Manufacturer, dealer | Registration might be required for Canadian warranty coverage. |
