Why do USA cars depreciate so much faster than Canadian cars?

[Peakster]

Okay. I admit it. I'm kinda looking to get another vehicle in the not so distant future and this time I want something festive, sporty and fun that won't break the bank both in initial purchase and fuel cost.

I've also taken interest in buying a convertible because they seem to hold their value much better than hard-top coupes. Mustangs (6 cylinder versions of course), Miatas, and that sort of thing. The problem is that they're still expensive in Saskatchewan. A lowly optioned 2001 mustang is around the $12,000 range and a good condition 1991 miata is looking at about $8000+ .

Then I looked at www.autotrader.ca and holy smokes! Cheap, cheap cars! I found a beautiful yellow Porsche Boxter for only $11,700! That same car would easily fetch over $30,000 in most parts of Canada!

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With the Canadian dollar now around 94 cents per US dollar, it makes almost total sense to buy a car in the 'States and bring it up here.

The question is: why are (used) car prices so much cheaper South of the border than here? Is it just because there's way more people and used cars to choose from in the USA?

[Spule 4]

Dunno, but friends have commented on the same thing.

[Matt Timion]

Originally Posted by Peakster

The question is: why are (used) car prices so much cheaper South of the border than here? Is it just because there's way more people and used cars to choose from in the USA?

I think that's it. Supply and demand.

[88HF]

Its cause so many people here buy new cars. Basically we call cars "totaled" when there are plenty of good parts left on them. Insurance is such a racket. Then Katrina hits and noone wants to pay. Like they can just write policies, take payments and say **** you when **** hits the fan. Its not bad enough I pay 3 times my cars value every year for the state mandated insurance. In Japan they are even worse. Thats why we get low mileage engines so cheap . YAY, I want one. (or two).

[Peakster]

Originally Posted by Matt Timion

I think that's it. Supply and demand.

Are you saying that the USA just has more supply of vehicles, or less demand for them? Or both?

Originally Posted by 88HF

Its cause so many people here buy new cars. Basically we call cars "totaled" when there are plenty of good parts left on them.

That's an interesting theory: maybe Americans like to buy cars new more than Canadian buyers? Either way, I should be looking down there for my next vehicle purchase. So what if I have to pay 11% tax: I'd have to pay the same if I bought at a used car lot at home.

[VetteOwner]

well herers the idea: first off its canada, has hot summers but longer colder winters. most people dont want convertibles beacuse lets face it, its essentially sitting in a driveable tent in -20* weather...so theres prolly alot less convertibles up there. southern US florida cali etc, winter is like 50*F.. and not that long so a convertible is very ideal down there.

alot of the yuppie americans would never consider buying a used car because they have to keep up with the jonses as the saying goes. and they must have the newest and greatest things every 3 years so in turn alot of used cars are about. canadians and much like the midwest where i live, tend to keep cars till they rust apart or blow up.

[Erdrick]

This is off topic, but in response to 88HF's comment. While you are right that Japanese cars have very short usable lifetimes, leading to their being parted out and sold to various parts of the world, your reason as to WHY this happens is incorrect.

Japan has a very complex system that controls their car market. Simply put, the average populace knows nothing about cars. I mean NOTHING. They couldn't put in wiper washer fluid to save their life. This is thanks to overbearing government regulations. They have a system called shaken. It is a bi-yearly (you get three years if you buy a new car) car-check that makes sure that your car is in running order and that it meets all safety specifications. It is complicated by things like vehicle weight, fuel used, displacement, and a plethora of other things. When you hit a snag (for example, your ceiling liner starts to sag) you can be in for HUGE amounts of money to fix it up. Something as small as a tear or cigarette hole in your seat can make you fail shaken. You must fix it to continue driving your car. When you get enough of these problems, people say screw it and just buy another car. For an average size vehicle, with low miles (in Japan terms, this means 40,000 or less), and NO PROBLEMS WHATSOEVER, you can expect to pay about $800 to pass shaken, which is due every two years.

Now you also have something called jidousha zei, or automobile tax. This is due every year. Expect to pay around $300-$400 for this baby. There is also mandatory insurance, though I am not sure what it is for, as it is worthless if you get in an accident (your fault OR the other's fault). This is less than $200 a year. Many people buy optional insurance to supplement this worthless "mandatory insurance." Prices on this varie wildly depending on who you go through. My fiance pays about $400 per year for hers, as it is through the government, being that her dad is a police officer. If you go private, expect to shell out around $800 a year for run of the mill optional insurance.

Add all of these things up (and some other costs that I am sure that I forgot to mention) and you end up paying A LOT of money to drive a car in Japan. All of these factors influence Japanese consumers and lead them to go hook line and sinker to 1800 mile interval oil changes, and 50,000 mile average car life expectencies.

Perhaps that is why my fiance's father told me that the 90,000 mile eight year old Prius that I was looking at was garbage and ready to be scrapped. Haha...

Another reason why U.S. cars sell so much less as used cars is because they also are much less expensive when new. New cars cost considerably more in Canada than in the U.S. so when you add (or subtract) depreciation you get a much less expensieve used car. I have a 2006 Acura TL which lists at 45,000 here in Canada but only about 33,000 in the U.S.

[BainDreanor]

I noticed this a couple years ago, but between prices in Saskatchewan and Alberta. I thought it was due to the fact most kms put on an Alberta car are from stop and go traffic causing more wear, whereas we have much less traffic (Average rush "hour" in Saskatoon being 30 minutes long). When I lived in Calgary for a few years I couldn't believe the number of people I met that had transmission problems on cars with under 200,000kms

[ELF]

Originally Posted by Peakster

Are you saying that the USA just has more supply of vehicles, or less demand for them?

USA has a excessive supply of new and used cars, there is literally millions of new and used cars/trucks/suv's sitting on lots just waiting to be sold. I bet there is at least 10,000 cars for sale within a 25 mile radius around my home. With all these vehicles for sale the prices are bound to be cheap.