Why are Trucks so Much Cheaper in Canada than in the USA?

"Luc - The Acadian Oppo" (luc5) 08/28/2014 at 16:30 • Filed to: None

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I just drove by my local Ford Dealer in Edmonton AB and a 2014 Ford F-150 XL Reg 2WD has a sticker price of $19,999.00 CAD before delivery and taxes. I thought to myself "man that's really cheap, if it's this cheap here how much is it in the states?"(cars are generally $3K-$10K cheaper in the USA).

Ford Canada:

So I get home and go on the Ford USA site to see the MSRP of a 2014 Ford F-150 XL Reg 2WD and loan behold it has an MSRP of $25,025.00 USD. WHAT??? this makes absolutely no sense whatsoever !!!

Ford USA:

Two exactly identical trucks in a market where vehicles are normally more expensive than in the USA. My mind is such confused.

To rattle your brain even more $19,995CAD is only $18,440 in US Dollars. Which makes the 2014 Ford F-150 XL Reg Cab 2WD $6585.00 cheaper in Canada than it is in the US.

I can only come to one reasonable conclusion:

1. Buy trucks in Canada.

2. Sell these newly purchased trucks to americans

3.???????????

4. PROFIT!

Disclaimer all these numbers are strictly based off of MSRP without factoring in any rebates at all.

CB > Luc - The Acadian Oppo 08/28/2014 at 00:56

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I did some digging last year. And you know what I found out? That this shit doesn't make any sense.

norskracer98-ExploringTheOutback > Luc - The Acadian Oppo 08/28/2014 at 00:57

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I've heard though that after tax and everything it's actually more. At least in Ontario.

Luc - The Acadian Oppo > CB 08/28/2014 at 00:59

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I can only come to one conclusion:

1. Buy trucks in Canada.

2. Sell these newly purchased trucks to americans

3.???????????

4. PROFIT!

GhostZ > Luc - The Acadian Oppo 08/28/2014 at 01:00

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1. Demand. I believe that despite the fact that we make millions of them, most trucks are still backordered for fleet usage and things like that.

2. Options. Domestically produced non-fleet trucks in the US are generally chock full of options and luxuries to try and beat out the competition. We don't really have 'stripper' trucks or bare/base models anymore. Canada may be getting cheaper versions than us for that reason.

3. Fleet sale subsidy. US manufacturers are able to offer bulk discounts for fleet sales by creeping the MSRP of normal trucks up since it's a seller's market. In Canada, it's probably the other way around.

4. Chicken Tax Monopoly. Small trucks in the US can inflate their prices because competition gets taxed considerably coming in, so there really isn't any competition between the major US brands. One might argue they are colluding to keep prices high. One might be right.

No idea if any of this is true, but these are the major reasons that spring to my mind.

CB > Luc - The Acadian Oppo 08/28/2014 at 01:02

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The opposite is true for BMWs. $30k difference for some models, last time I checked.

For Sweden > Luc - The Acadian Oppo 08/28/2014 at 01:05

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It's all part of Harper's secret agenda.

Luc - The Acadian Oppo > norskracer98-ExploringTheOutback 08/28/2014 at 01:08

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There is only a $605 difference between destination charges in Canada and the states.

even at a ridiculously high tax rate of 15% the total price out the door is still less than USA MSRP.

I'll break it down so you see what I mean.

$20,000 MSRP + 15% tax = $23,000

$23,000(tax incl) + $1,800 destination = $24,800

USA Equivalent is $25,025 MSRP + taxes and fees

anyway you slice it we Canadians get the better end of the deal.

Conan > Luc - The Acadian Oppo 08/28/2014 at 01:08

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Likely focused around http://en.wikipedia.org/wiki/Chicken_t… somehow.

Luc - The Acadian Oppo > CB 08/28/2014 at 01:10

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I know, that's why I was so flabbergasted. I'm so used to us getting gouged BIG time.

Luc - The Acadian Oppo > Conan 08/28/2014 at 01:12

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Last time I checked the F150 wasn't classified as a light truck?

Jordan and the Slowrunner, Boomer Intensifies > Luc - The Acadian Oppo 08/28/2014 at 01:14

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Anything 1 ton and below is a light truck.

Conan > Luc - The Acadian Oppo 08/28/2014 at 01:15

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Well, I'm sure they use it to justify part of it even though it isn't. I do remember that there were much greater margins on trucks/SUVs then passenger cars from my dealership experience. You could have as little as 750 front end gross on some small cars and as much as 15,000 on some SUVs/trucks. I guess people just pay it.

Luc - The Acadian Oppo > GhostZ 08/28/2014 at 01:15

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All of these could be true I suppose. #1 & 3 probably makes the most sense IMO.

PS9 > Luc - The Acadian Oppo 08/28/2014 at 01:17

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The difference in value exists not between the two trucks, but between the two currencies. In all scenarios, you must convert one currency to the other when conducting business in either country, and when you do, that relative difference in value will be accounted for and eliminated. $18K US is $19K CAD. Because of this, there is no way to retain the difference in value between currencies as a profit, because from the perspective of a currency exchange, there is none.

Let me explain a little further with a simpler example; you live in a world where US import regulations don't exist, and where $2 US is worth $1 CAD. Couldn't you sell A '$10k' Truck from canada in the US for '$20k' and make a 100% profit? No, because no one in Canada will take your US dollars, and no one in the US will take your CAD dollars. Only do business in the US? Your extra $10k in profit never materializes, because everything uses 100% more money relative to your native currency. Take your money back to Canada? A legit currency exchange will turn your '$20k' back into '$10k' before letting you use it in the Canadian economy. $20k US is $10k CAD. Because there is no difference, there can be no profit.

Luc - The Acadian Oppo > Conan 08/28/2014 at 01:21

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I'm sure there are huge margins on trucks and that the F150 XL is as cheap as it can get.

Ex: 2014 F150 XL Reg Cab 2WD currently only has $735 in rebates.

2014 F150 limited 4x4 on the other hand currently has over $14000 in rebates and about 9K off on mid level XLT's

in that case I know for sure that there is at least 14K in margin on a high end truck.

Luc - The Acadian Oppo > PS9 08/28/2014 at 01:24

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Why must you ruin all my ambitions?

Conan > Luc - The Acadian Oppo 08/28/2014 at 01:24

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My cousin said it might have something to do with less annoying regulations. No idea.

Luc - The Acadian Oppo > Conan 08/28/2014 at 01:27

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beats me? but now I wouldn't feel so bad about buying one since I know I'm getting a killer deal even at full MSRP.

Conan > Luc - The Acadian Oppo 08/28/2014 at 01:28

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I always liked the stripped down models when I sold for Ford back in the day. Seemed more like a real working truck to me. I'd still try to look for invoice price/rebate cash and so on.

norskracer98-ExploringTheOutback > Luc - The Acadian Oppo 08/28/2014 at 01:29

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Except you lose out because you live in Canada.

Kidding of course, I think it's because of the stupid gas guzzler tax because it doesn't get 1,000,000 mpg like a Prius.

Jordaneer, The Mountaineer Man > Luc - The Acadian Oppo 08/28/2014 at 01:34

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The only thing I can think of is the chicken tax. http://en.m.wikipedia.org/wiki/Chicken_t…

cuts_off_prius > norskracer98-ExploringTheOutback 08/28/2014 at 01:40

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Gas guzzler tax only applies to cars, since they didn't (probably intentionally) update the law since it was written in '78. Light trucks back then were overwhelmingly used for commercial purposes, unlike today where they make up at least half the market (this includes crossovers/SUVs and minivans as well).

JalopJeep > Luc - The Acadian Oppo 08/28/2014 at 02:13

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I feel like no one in Canada wants a 2WD truck.

JalopJeep > Luc - The Acadian Oppo 08/28/2014 at 02:13

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I feel like no one in Canada wants a 2WD truck.

shpuker > Luc - The Acadian Oppo 08/28/2014 at 02:21

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Found the difference! The US truck gets tow/haul mode dude! Totally worth the extra few grand....

Our maybe it's because they know they can get away with it here? Hmmm

Saf1 > Luc - The Acadian Oppo 08/28/2014 at 07:20

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What are rebates in car buying and how do they apply?

Hindered23 > Luc - The Acadian Oppo 08/28/2014 at 08:08

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because country music didn't take over canada yet. Clearly all the bro's that listen to country music so they can pretend to be cowboys for dumb city girls have followed luke bryan's footsteps and bought trucks.

Yowen - not necessarily not spaghetti and meatballs > Luc - The Acadian Oppo 08/28/2014 at 08:34

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Maybe your disclaimer says it all? Rebates are possibly much more widespread in the USA? That way they get huge margins on early adopters until rebates kick in.

On the Canadian website you are also getting $735 in employee pricing.

Also, after finance charges of 1.9% USA vs 5.9% CA the American truck might actually be cheaper.

SidewaysOnDirt still misses Bowie > Luc - The Acadian Oppo 08/28/2014 at 09:16

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Are they really identical? Don't alot of companies offer Canada only models without things that they think we all demand like AC and power windows?

Tohru > Luc - The Acadian Oppo 08/28/2014 at 09:53

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They sell more in the US, so the price is higher due to demand.

Canada buys less trucks (and less vehicles overall, with only 10% of the population of the US), so the price is cheaper due to less demand.

Luc - The Acadian Oppo > Yowen - not necessarily not spaghetti and meatballs 08/28/2014 at 10:33

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That $735 is off of the $19,999 so right now the price with rebate is $19,264.

also Who in their right mind would finance a truck for 5.9%? I can go thru a 3rd party financing and get a much better rate. so that makes your last sentence is irrelevant to the price.

Luc - The Acadian Oppo > Saf1 08/28/2014 at 10:34

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truck is $50000 msrp, manufacturer offers a $10000 rebate for year end clearout. now the msrp is $40000. the rebates are directly applied to the price.

Luc - The Acadian Oppo > norskracer98-ExploringTheOutback 08/28/2014 at 10:36

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I know right Canada is so bad that they have to give you free health care for you to live there.

Yowen - not necessarily not spaghetti and meatballs > Luc - The Acadian Oppo 08/28/2014 at 10:36

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Ah ok. I'm no expert on Canadian vs. US interest rates, I thought maybe that was an indication they are much higher in CA.

Luc - The Acadian Oppo > Tohru 08/28/2014 at 10:40

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although your statement is technically correct. In Alberta at least they sell 5 trucks for every car so the demand is huge in Alberta. but Canada wide you may be right.

Luc - The Acadian Oppo > JalopJeep 08/28/2014 at 10:43

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Luc - The Acadian Oppo > SidewaysOnDirt still misses Bowie 08/28/2014 at 10:46

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The canadian truck gets A/C put I think that's about it. but is power windows and locks worth and extra $5K to you? it sure as hell is not to me.

SidewaysOnDirt still misses Bowie > Luc - The Acadian Oppo 08/28/2014 at 10:50

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Hell no, those are just parts that are going to break. I wish that this whole "must out-upscale the competition" thing would stop. The MkIV Golf stripped-for-Canada version doesn't have the problems that the USDM ones do since it doesn't include all of the things that break.

norskracer98-ExploringTheOutback > Luc - The Acadian Oppo 08/28/2014 at 11:00

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Yep, god damn them wanting its people to be healthy.

Luc - The Acadian Oppo > SidewaysOnDirt still misses Bowie 08/28/2014 at 11:39

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I'm with you on that one. what I consider a "loaded vehicle" is something with A/C,Tilt & cruise. everything else is just overkill.

SidewaysOnDirt still misses Bowie > Luc - The Acadian Oppo 08/28/2014 at 12:09

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I didn't even have the option of buying my BRZ without the stupid sat-nav center console touchscreen that you can't easily turn off. Why does any car even have GPS in it in 2014, let alone as standard equipment? Everyone has a phone that does that already., and the maps on those update automatically instead of leaving you with a useless device in five years when parts of the grid change.

Saf1 > Luc - The Acadian Oppo 08/28/2014 at 14:43

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Gotcha thanks!

Mirwin > CB 08/28/2014 at 16:38

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The opposite is true for every single other make and model. CDN dollar's worth less than the US greenback and has 1/10 of the market. Makes no sense at all for prices to be cheaper.

Wacko > Luc - The Acadian Oppo 08/28/2014 at 16:53

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hehe, health care ain't free, we pay for it with our taxes. that is why our income taxes are higher, way higher than the states. on average 35-40% of your salary.

Wacko > Luc - The Acadian Oppo 08/28/2014 at 16:58

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I would not finance a truck at 5.9%, but I do know alot of people who did. Miners/drillers/construction workers.... Many of them just look at how much it costs per month, they do the same for their boats, bikes, side-by-sides, and snowmobiles. I'm just waiting for the price of gold to drop, then buy some toys off of them cheap before they file for bankruptcy

FJ80WaitinForaLSV8 > Conan 08/28/2014 at 17:00

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Chicken tax doesn't apply to countries which we have free trade agreements with. Such as Canada, Mexico, or Australia.

As Du Volant > Luc - The Acadian Oppo 08/28/2014 at 17:10

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Gas in Canada is funky expensive, so many fewer people buy trucks to use as grocery getters unlike in the US. I'd imagine they're cheaper to try and get more people to overlook the gas issue and buy them anyway.

This is the same reason why Chevy Tahoes/Suburbans aren't nearly as popular there, yet the Dodge Journey (!) has been their #1 selling vehicle for several years.

Conan > FJ80WaitinForaLSV8 08/28/2014 at 17:39

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Why does Canada get them cheaper then? I like trucks. I'm nowhere near as familiar with their pricing reasons.

Luc - The Acadian Oppo > As Du Volant 08/28/2014 at 17:41

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I guessing you have never been to Alberta? There is easily 5 trucks for every car.

but I guess if you average it out across canada you are probably right.

I'd imagine they're cheaper to try and get more people to overlook the gas issue and buy them anyway.

this is true on so many levels @ $21K all in for a brand new truck how can you go wrong? I'm even considering one for myself at that price. you get much more for your money than anything else.

Luc - The Acadian Oppo > Wacko 08/28/2014 at 17:44

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you got that right! I paid 15K in taxes last year. I almost passed out when I saw that.

Luc - The Acadian Oppo > Wacko 08/28/2014 at 17:47

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I know so many people like that. I'm not sure that's very smart. Edmonton is especially bad for that.

Me on the other hand I want the least amount of debt possible. All I have is a mortgage and a car payment. I'f I want a quad,sled,ect. I save up my money and buy it cash.

FJ80WaitinForaLSV8 > Conan 08/28/2014 at 18:18

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My guess is that it's an incentive thing. The two trucks probably retail at similar prices but just have different MSRPs.

Wacko > Luc - The Acadian Oppo 08/28/2014 at 21:55

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my quad, and sled both bought used, and cash.

My in-laws (father in law and the 3 brother in laws) all work at the same mine. 2 of them just financed 2 new pick ups, F-150 FX4 and A RAM hemi, both financed, and I think they both took the extended warranties. I think they both are about 50,000$ financed.

For some, money comes in, money comes out.

Wacko > As Du Volant 08/28/2014 at 22:09

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You never been to Quebec either, sure the big cities have more cars, but the second you are out the the big cities ( Montreal, Quebec City...) you see way more trucks used as grocery getters. There is a Mall parking lot in front of my office building, and I would say that at least 1 in 4 are pick-ups and half of those pick-ups are F150.

suburb and are not as popular as pick-ups, but I would blame that on crew cabs not on price of gas.

CB > Mirwin 08/28/2014 at 22:12

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Not every other make and model. I found a few exceptions.

Wacko > GhostZ 08/28/2014 at 22:15

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on your stripper trucks point, we don't have much of those in canada either, only stripper versions I see are company trucks, and not much. Stripper versions exist, to be able say they start at a low price of..... But we all know that 95% of truck sold won't be stripper versions.

As Du Volant > Wacko 08/29/2014 at 07:55

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1 in 4?

Try anywhere in rural America, it's 3 out of 4 in many places.

Luc - The Acadian Oppo > Wacko 08/29/2014 at 09:42

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I'm ok with 1 reasonable car payment. A new car is hard to buy cash. but I don't go crazy when shopping. for instance I drive a 2013 Ford Fusion and it was $26K all in.

To me it's worth buying new for the piece of mind of warranty and new car reliability. and when you get a 0% loan you would be crazy to pay cash it's better to let someone else pay for it up front.

every other toy tho is cash only! A reliable car is a necessity, a new toy is not.