Are European Cars Cheaper in Europe?

Intuitively, I’d have thought the answer would be yes. If they are made in Europe, wouldn’t just the transport costs etc. render them more expensive elsewhere, such as in Canada? Obviously, that’s far too simplistic a rationale!

I had a couple of minutes to kill the other day at the Volkswagen dealer after bringing in our vehicle for yet another Adblue adventure (a phantom non-problem that cost €1,500 to “fix”), so I did a little window shopping and checked out the latest model Touareg.

Source: Left Lane 2014 VW Touareg

 Source: Left Lane
                        2014 VW Touareg

The 2014 Touareg Highline with the luxury pack all in, costs €98,351 (including taxes). They don’t sell many Touaregs in this dealership in The Hague – sometimes you don’t even see it in the showroom. With diesel costing around €1.45 per litre and petrol €1.65 per litre (the highest on the continent), it makes more sense to zip around in practical hatchbacks with better fuel economy. I have yet to conduct an empirical study, but hatchbacks/station wagons form about 80% of cars on the road in The Hague. (SUVs are much less common, except at my fitness centre where Range Rovers gobble up all the parking spaces). In general, Holland is a province where tall, tall, tall people like to cram themselves into small, small, small cars.

Anyway, I decided to build my own Touareg from the Canadian website. Turns out, pretty much the same model with similar specs costs CAD$79,108 (taxes included). At today’s exchange rate, this would mean the Canadian model costs €54,977. That’s 44% cheaper than in the Netherlands! Even given some margin of error in comparison, it’s still a hefty gap.

Some general thoughts: VAT is 21% here (not to mention a new vehicle purchase tax called “BPM”) while it hovers around 13% in Canada (it ranges); Cars keep their resale value a lot longer here than in Canada; and, I haven’t really done much analysis with other cars that may have juicier rebates in Europe.

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