The majority of Canadians who own a vehicle plan to purchase a new one every five years, spending an average of $26,044, according to an Auto Report survey of 1,004 Canadians conducted on behalf of the Bank of Montreal (BMO).
Overall, vehicle expenses account for the third-largest household monthly expense for Canadians.
According to the BMO Auto Report, car ownership is high in Canada. More than 83 per cent of those surveyed own a vehicle; for the vast majority, buying is far more popular than leasing, with 82 per cent of those who intend to acquire a new vehicle saying they will buy.
The Auto Report poll also revealed:
- On average, Canadians spend $437.48 per month ($5,250 annually) on vehicle costs, including payments, insurance, gas and maintenance.
- Vehicle costs account for 15 per cent of the average household budget, trailing only housing costs (33 per cent) and food expenses (19 per cent).
- Percentage of funds set aside for vehicle costs is 7 points higher than that allocated to savings and investments (8 per cent); and 9 points higher than debt repayment costs (6 per cent).
- Half of Canadians (49 per cent) paid for their current vehicle with a loan, while 11 per cent paid using a line of credit.
Car vs. Other Household Monthly Expenses
|
Category |
Percentage |
| Housing Costs (rent/mortgage/utilities, etc.) |
32.7 |
| Food |
18.82 |
| Vehicle Expenses (loan payments, gas, insurance, etc.) |
15.19 |
| Savings and investments |
8.4 |
| Entertainment |
7.3 |
| Debt re-payment |
6.42 |
| Clothing |
5.76 |
Average Price Spent on New Car Across Regions
|
Overall |
ATL |
QC |
ON |
Prairies |
AB |
B.C. |
|
$26,044 |
$24,080 |
$22,694 |
$25,981 |
$26,149 |
$29,963 |
$28,562 |
Ray O’Kane, Managing Director and Head, National Retail Dealership Finance, BMO Bank of Montreal, cautioned Canadians who plan to purchase a vehicle in the near future to ensure they can afford it.
“It’s easy to become overwhelmed when shopping for a new vehicle,” said O’Kane. “One of the most important decisions is how to finance the vehicle, as automotive expenses can consume a significant portion of overall household expenses. A sound strategy is for consumers to maintain a shorter financing amortization period to reduce interest expenses and create more flexibility for future purchasing decisions.”
Alex Koustas, Economist, BMO Capital Markets, said the poll results reflect the red-hot pace of sales over the past few months.
“Low financing rates, dealer incentives and attractive vehicle offerings have been bringing consumers into showrooms across the country,” said Koustas. “While there still is some push from cyclical economic factors, it appears there has been a fundamental change in car buying habits, with Canadians comfortable owning more vehicles per household. Sales should come close to matching last year’s record year of $60.8-billion, and remain strong in 2015.”