Car Pricing: Additional Fees on the Price Quote

As many veteran car buyers may know, a car’s listed price is not the same amount that ends up being displayed at the bottom of a bill of sale. For instance, if a consumer decides to purchase a car with a sticker price of $21,000, they may actually pay $22,000.

This happens due to additional (pre-tax) fees that dealers charge their customers. Some fees are mandatory, while others are optional – but that is not always made clear.

Research and vigilance play a key role in making sure that a consumer does not overpay. The following list provides some guidance in this respect.

Mandatory

Mandatory additional fees apply to all vehicles in every single province. These fees are usually unavoidable. Anything else that is added on top of these fees (aside from the HST) is optional.

Freight and PDI

Freight is essentially the price of shipping a vehicle from the location of production to wherever it will be sold. To determine the freight fee, a manufacturer has to calculate the average cost of transporting a particular make and model to a Canadian dealership and apply the amount to all of them – regardless of where in the country they are being sold. The reason for this is to make sure the freight charge for each make and model is the same nationwide.

PDI, or Pre-Delivery Inspection, is the price of doing a maintenance check of a vehicle when it first arrives at a dealership. Every dealer is obligated to check their cars to make sure they are ready for the road. Unlike the freight fee, this amount is determined by the dealer, not the manufacturer.

Most dealers tend to combine both fees into a single number on a bill of sale.

Air Tax

Air tax, or Federal Air Conditioner Excise Tax, is a $100 fee that the government of Canada applies to all vehicles with onboard air conditioning.

Tire Tax

Tire tax is a provincial fee applied to any vehicle purchased from a dealership to fund a nationwide tire recycling program. Though the charge varies from province to province, it usually falls between $20 and $30.

Regulatory Charges (OMVIC/AMVIC)

Car dealers in Ontario and Alberta charge government-imposed regulatory fees, administered by OMVIC (Ontario Motor Vehicle Industry Council) and AMVIC (Alberta Motor Vehicle Industry Council). The OMVIC fee is $10, while the AMVIC charge is $6.25.

Block Heater Installation Fee

Dealers sometimes charge a fee for installing a block heater, the purpose of which is to keep a car’s engine warm in cold temperatures to ensure it starts. Installing block heaters is a requirement in parts of Canada with colder winters, where temperatures are continuously below 0°C, but not in any of the southern provinces, such as Ontario.

Optional

While mandatory fees are unavoidable, optional fees can be excluded completely, if they are not desired.

Administration Fee

Administration is a fee dealers charge to cover expenses such as licensing, arranging insurance documentation, processing a loan or lease with a financial institution as well as activation of satellite radio, Bluetooth and other similar in-car devices.

While this charge is usually negotiable on the sale of most cars, dealerships that sell luxury vehicles tend to make it mandatory.

Etching Fee

Etching is a fee dealers charge for the service of imprinting a vehicle’s VIN onto its windows. The purpose of this exercise is to reduce the vehicle’s value and in turn prevent thieves from stealing and reselling it. This service is NOT required for any vehicle in any of the provinces.

Nitrogen Fee

Some dealers charge a fee for filling up a vehicle’s tires with nitrogen to obtain more predictable pressure fluctuation, prevent oxidation and improve safety and fuel economy. This service is required for exotic and sports cars only, but many dealers charge it for other types of vehicles too.

If you have any additional questions, feel free to contact us at any time or obtain the Unhaggle free dealer cost report.

Updated on March 26, 2013

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