Buying a car can be a major investment. From your first car as a teenager, experiencing the freedom of a new license and car, to upgrading your car to fit your lifestyle as a new parent, career-person, or for a taste of luxury. On average, Canadians spend at least $13,000 on their car every year. This begs the question, are cars cheaper in Canada? The quick answer is—it depends.
Cars in Canada are typically more expensive than they are in the United States, with Canadians paying nearly 20% more than Americans for new cars. However, cars in Canada are cheaper than in a lot of European countries. There are a number of factors that determine how expensive a car is, so it is hard to give a straight answer.
Let’s look a bit at some car statistics in Canada and then the price of cars in Canada compared to other countries and regions of the world.
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Car ownership statistics in Canada
Because Canada is such a large country, most Canadians need to own a car. Even though the main urban centers of Toronto, Montreal, and Vancouver have a dense population and good public transit systems, the majority of Canadians populate suburbs and smaller areas. This requires a car to get around and live in Canada.
Here are some statistics about car ownership in Canada:
- There were over 35 million vehicle registrations in Canada in 2019, nearly a one-to-one ratio of population to cars.
- In 2016, the average car commute for Canadians was 24.1 minutes.
- The average yearly cost of owning a car (not buying) is $8,600 for a compact car, $12,000 for an SUV, and $13,000 for a pickup truck.
- A lot of Canadians do not thoroughly research buying a car—35% of consumers don’t do any research into car financing options and end up paying very high rates.
Are cars cheaper in Canada than in the USA?
Cars in Canada are more expensive than cars in the United States, especially when talking about new cars. Japanese, German, and Korean auto companies actually charge more for their vehicles to Canadians than in the US. On average, a new vehicle in Canada is $5,842 or 17% more expensive than in the US.
There are also a number of American auto companies, such as Ford or General Motors. Canada does not have any car manufacturers, so all cars are imported into the country. This means that Americans will pay less for their own country’s cars, whereas Canadians will face a higher ticket price.
One study shows how much of an annual salary it costs to own and run a new car in different countries. They factored in the purchase price, insurance, repairs, and fuel prices. They found that in the US, it costs 54.87% of an average annual salary to own a car, and in Canada, it was 64.4% to own that same car.
Cars in Canada versus the world
We’ve seen that cars in Canada are more expensive than in the US, but how about the rest of the world? The same study just mentioned showed that Canada ranked 4th cheapest country in the world to own a car, so it’s not too bad. Many of the European countries came in after Canada.
For example, Sweden at #5 costs 75.84% of an average annual salary to own a car and Finland at #10 costs 91.58%. Even more expensive are countries in South America, like Colombia, where it costs 508.93% of an average annual salary.
When looking at luxury cars, or “supercars,” Canada is actually the cheapest country in the world to buy one. While most people aren’t looking for a supercar, it’s pretty interesting that different cars can be priced so varyingly.
Average prices of cars in Canada
The price of cars will depend significantly on what kind of car you purchase, if it is new or used, and possible financing expenses. Here are some insights about the price of buying a car in Canada:
- The average price of a new car in Canada is over $40,000.
- Prices of cars in Canada were affected by the COVID-19 pandemic and slowdown of the global supply chain. New cars are in short supply, which has increased the prices of used cars. Generally, used cars are a depreciating asset, but the car shortage has led to extended periods of increased rates.
- Used car prices were up 12.8% in Canada because of the COVID-19 pandemic shortages.
- The three most affordable new cars in Canada in 2021 are the Chevrolet Spark ($10,198), Mitsubishi Mirage Hatchback ($13,858), and the Nissan Versa ($16,498).
- The prices of used cars in Canada vary wildly, from just a few thousand dollars to near the price of a new car.
- Used cars are purchased in Canada through private sales on platforms like Facebook Marketplace or Craigslist, as well as used car dealerships.
- Car insurance is a large car-related expense. Each province has different insurance rates, with British Columbians and Ontarians paying the most—$1,832 and $1,528 per year, respectively. This is in comparison to just $816 in Prince Edward Island and $717 in Quebec.
- The average monthly car payment is $456 in Canada.
- The average interest rate on cars in Canada in 2020 was 4.38%, although it can vary significantly based on the type of car and overall price.
Conclusion
Cars are an important, and expensive, purchase that most people will do a few times in their lives. Because it is a necessity for most people, most Canadians own a car and Canadian culture is very car-focused.
Car prices in Canada are more expensive than in the US but cheaper than in other countries around the world. The type of car, whether it is used or new, and its financing options will determine how much you will pay for a car. Overall, it’s important to do your research, carefully consider all of the options, and find the best option for you!