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CFS Annual Report - 2024

Reimbursement for Business Use of Personal Vehicles
Model Year 2024

Study prepared for
The Treasury Board of Canada Secretariat

by Corporate Fleet Services

November 2023

1       Executive Summary

Corporate Fleet Services (CFS) has been mandated by the Treasury Board of Canada Secretariat to perform the annual evaluation of per-kilometre reimbursement rates for government employees required to use their personal vehicles while performing government business. This study assesses all vehicle operating expenses and provides recommendations for reimbursement rates for each Canadian Province and Territory.

The present study is based on 2024 model year vehicles and accounts for all of the following:

This report summarizes all assumptions, methodology, values and findings. It presents up-to-date recommended rates of reimbursement for consideration by the Treasury Board of Canada Secretariat.

1.1     Methodology and Evaluation

The recommendations for reimbursement rates are given for the model year 2024 for:

These rates are given on a per-kilometre basis, for each Province and Territory. This is intended to accurately account for differences in vehicle operating costs across Canada.

The recommendations are based on total costs of operating privately owned or leased vehicles. In order to reflect realistic conditions, the study assumes an annual driving distance of 20,000 kilometres and ownership terms of both four and five years. Fixed costs include ownership expenses consisting of depreciation, financing or leasing interest and taxes, as well as vehicle insurance and registration. Variable costs cover fuel, preventative maintenance, repairs, tires and miscellaneous items. All cost variations between the Provinces and Territories are accounted for, as well as the special driving conditions in the three Territories.

Weighted average nationwide costs of operating personally owned or leased vehicles were determined to be $0.580 per kilometre, as compared to $0.570 in the previous Fuel Update (August 2023, for publication on October 1st, 2023) and $0.570 in the previous Annual Report (November 2022, for publication on January 1st, 2023). The slight increase versus the previous Fuel Update (August 2023, for publication on October 1st, 2023) was primarily driven by an overall rise of total ownership and maintenance costs, as well as, to a lesser extent, more elevated insurance costs in certain provinces.

The following table indicates Canadian average expenses by cost component as calculated in the current study, in dollars per kilometre, before rounding up to the nearest half-cent:

Cost component

Cost
(dollars/km)

Cost sub-component

Cost
(dollars/km)

Ownership

$0.238

Depreciation

$0.150

Interest

$0.039

Acquisition Sales Tax

$0.049

Registration

$0.005

Registration

$0.005

Insurance

$0.089

Insurance

$0.089

Fuel

$0.130

Fuel

$0.130
Maintenance $0.117

Preventative Maintenance

$0.060

Repairs

$0.019

Tires

$0.017

Miscellaneous

$0.008

Maintenance Sales Tax

$0.013

TOTAL

$0.579

Rounded up to $0.580

$0.579

 

The largest component of vehicle operating expenses is ownership (encompassing depreciation, interest and acquisition sales tax), which accounts for 41.1% of total costs, followed by fuel expenses at 22.5%.

2       Preamble

Corporate Fleet Services (CFS) has calculated reimbursement rates for business use of personal vehicles by government employees according to the methodology and parameters listed in a Statement of Work issued through a competitive RFP process. CFS is therefore pleased to present this study with its findings and recommendations, based on extensive research performed on behalf of the Treasury Board of Canada Secretariat.

2.1     Note on Methodology

The current study strictly follows the methodology described in the Statement of Work from the RFP response to solicitation No. 24062-22-299 from July 2023. It also reflects the methodology employed in the previous Annual Report (November 2022, for publication on January 1st, 2023) as well as subsequent Fuel Updates, with only one update proposed to and later approved by the project Technical Authority, as described in Section 2.1.1 below. The analysis is deemed to accurately reflect costs in the current Canadian automotive marketplace and is described in detail in Sections 3 through 6.

2.1.1   Update to methodology

The relevancy of the sample of vehicle models (nameplates) included in the study is crucial to the accuracy of the evaluated reimbursement rates. The relevancy is defined as total year-to-date sales of the vehicle models included in the study as compared to the total sales of all models in their respective classes. The higher the relevancy, the more accurate the results of the study. A relevancy factor of approximately 80% has been considered to be optimal since 2013, when the original methodology was established.

Over the past several years, a clear trend has emerged: Canadians are choosing to purchase increasingly larger vehicles. As a result, the market share of Crossovers/SUVs in Canada (currently at more than half the market) has been increasing rapidly, to the detriment of Compact Sedan, Minivan and Mid-size classes (the latter two having an extremely small and declining market share – below 2% in both cases). Therefore, keeping with the previous methodology in choosing the vehicle models for the study would have resulted in the relevancy of the sample models to drop below 70% of representation in their respective classes. In order to bring the relevancy back to over 80%, the updated methodology adds an additional 10 models in the Small Crossover/SUV class and eliminates the Minivan and Mid-size classes due to their small and declining size both in terms of number of models available and sales in Canada.

Therefore, the present study analyzes the following four vehicle classes:

Each class contains 10 of the most sold nameplates (models), with the exception of Small Crossovers/SUVs class that includes 20 of the most sold nameplates, for a total of 50  vehicles considered for the Provinces.

For the Territories, as before, the study uses three vehicle classes (Small Crossovers/SUVs, Medium Crossovers/SUVs and Pick-up Trucks) to reflect the different driving conditions in the Canadian North. Due to the proposed update of the methodology, this results in an increase of the vehicles studied for the Territories from 25 to 35 models.

2.2     Policy Recommendations

It is our opinion that public employees continue to be reimbursed for government business use of personal vehicles on a cents per kilometre basis, reflective of the practice that has been in use since 1999. This is deemed to be consistent with current public and private sector practices as well as it accounts for a fair and simple reimbursement method in line with accepted reimbursement policies across Canada.

However, since there are substantial differences among the ten Canadian Provinces and three Territories, these rates are calculated separately for each Province and Territory in order to account for differences in vehicle operating costs.

3       Methodology And Cost Component Determination

3.1     Assumptions

The present study’s objective is to determine reimbursement rates for business use of personal vehicles by government employees, in order to reflect current Canadian automotive market conditions as accurately as possible. To accomplish this, an in-depth analysis was performed on all components of the total cost of operating a vehicle.

The methodology employed follows all the elements listed in the Statement of Work that were similarly used in the previous Annual Report (November 2022, for publication on January 1st, 2023) with the inclusion of the update to methodology described in Section 2.1.1. The purpose was to calculate the different rates of reimbursement, in cents per kilometre, separately for all ten Canadian Provinces as well as the three Territories. In light of this, we performed research and data analysis to calculate costs for the following components, which represent the total costs of running a personal vehicle:

  1. Fixed expenses
    • Ownership
      • Depreciation
      • Prevalent retail rebates
      • Financing methods
      • Prevalent interest rates
      • Applicable sales taxes
      • Projected resale values
    • Registration and licensing
    • Insurance

  2. Variable expenses
    • Fuel
    • Vehicle maintenance
      • Preventative maintenance
      • Projected costs of repairs beyond manufacturer warranty
      • Tires
      • Miscellaneous expenses

All calculations assumed four- and five-year retention periods as well as considered all vehicles to run an average of 20,000 kilometres per year.

In addition, in order to assess current prevalent insurance premiums by Province and Territory, the study used a certain demographic to reflect the average government employee. The demographics are based on data available from the Treasury Board of Canada Secretariat as well as Statistics Canada. The following characteristics were used:

The following table gives an overview of the cost proportion of the components involved in total expenses of operating a vehicle:

Expense Cost Proportion
Acquisition Sales tax 8.5%
Depreciation 25.8%
Fuel 22.5%
Insurance 15.4%
Interest 6.7%
Maintenance Sales Tax 2.2%
Preventative Maintenance 10.4%
Registration 0.9%
Repairs 3.3%
Tires 2.9%
Miscellaneous 1.4%

3.2     Vehicle Selection

In order to be reflective of the Canadian marketplace we have performed a thorough study throughout all Provinces and Territories, focusing on 55 vehicle models (nameplates) grouped under four vehicle classes for the Provinces, and three classes for the Territories. The models studied account for a significant portion of the Canadian vehicle market, and they were deemed representative for the types of vehicles used by government employees.

The following list describes the parameters used:

Make

Model

Class

Weight for Provinces

2024 Model Year Pricing*

Toyota

Corolla

Compact

3.5%

$25,810

Honda

Civic

Compact

3.4%

$31,480

Hyundai

Elantra

Compact

2.8%

$25,574

Kia

Forte

Compact

1.6%

$24,445

Volkswagen

Jetta

Compact

1.6%

$29,845

Mazda

3

Compact

1.3%

$28,695

Nissan

Sentra

Compact

1.2%

$27,498

Kia

Soul

Compact

0.5%

$26,495

Subaru

Impreza

Compact

0.3%

$31,990

Volkswagen

Golf GTI

Compact

0.1%

$39,495

Toyota

RAV4

Small Crossover/SUV

9.6%

$34,880

Honda

CR-V

Small Crossover/SUV

6.8%

$39,925

Hyundai

Tucson

Small Crossover/SUV

3.5%

$36,124

Mazda

CX-5

Small Crossover/SUV

3.0%

$34,345

Nissan

Rogue

Small Crossover/SUV

2.9%

$35,278

Hyundai

Kona

Small Crossover/SUV

2.8%

$29,924

Ford

Escape

Small Crossover/SUV

2.7%

$37,544

Kia

Seltos

Small Crossover/SUV

2.6%

$29,095

Subaru

CrossTrek

Small Crossover/SUV

2.4%

$31,190

Kia

Sportage

Small Crossover/SUV

2.3%

$33,945

Ford

Bronco Sport

Small Crossover/SUV

2.3%

$41,090

Vokswagen

Tiguan

Small Crossover/SUV

2.0%

$36,545

GMC

Terrain

Small Crossover/SUV

1.9%

$36,945

Ford

Edge

Small Crossover/SUV

1.8%

$42,495

Mitsubishi

Outlander

Small Crossover/SUV

1.8%

$35,898

Subaru

Outback

Small Crossover/SUV

1.8%

$36,190

Nissan

Kicks

Small Crossover/SUV

1.8%

$24,128

Chevrolet

Equinox

Small Crossover/SUV

1.7%

$33,345

Hyundai

Venue

Small Crossover/SUV

1.6%

$22,824

Mazda

CX-30

Small Crossover/SUV

1.5%

$30,245

Tesla

Model 3

Battery Electric/Plug-in Hybrid

2.7%

$57,120*

Tesla

Model Y

Battery Electric/Plug-in Hybrid

2.5%

$62,120*
Chevrolet Bolt EUV Battery Electric/Plug-in Hybrid 1.6% $41,998*
Hyundai Kona EV Battery Electric/Plug-in Hybrid 1.2% $46,524*
Mitsubishi Outlander PHEV Battery Electric/Plug-in Hybrid 0.9%

$49,898

Volkswagen

ID.4

Battery Electric/Plug-in Hybrid

0.7%

 $48,545*
Hyundai IONIQ 5 Battery Electric/Plug-in Hybrid 0.6% $56,924
Ford Mustang Mach E Battery Electric/Plug-in Hybrid 0.6% $59,090*
Toyota bZ4X Battery Electric/Plug-in Hybrid 0.5% $51,920

Kia

EV6

Battery Electric/Plug-in Hybrid

0.4%

 $58,045

Jeep

Wrangler

Medium Crossover/SUV

2.8%

$53,860

Jeep

Grand Cherokee

 Medium Crossover/SUV 2.2% $58,415

Toyota

Highlander

Medium Crossover/SUV

1.9%

$47,580

Hyundai

Santa Fe

Medium Crossover/SUV

1.6%

$39,974*

Volkswagen

Atlas

Medium Crossover/SUV

1.5%

$52,045

Ford

Explorer

Medium Crossover/SUV

1.3%

$50,435

Dodge

Durango

Medium Crossover/SUV

1.1%

$57,065

Ford

Bronco

Medium Crossover/SUV

1.0%

$53,355

Honda

Pilot

Medium Crossover/SUV

0.9%

$53,650

Nissan

Pathfinder

Medium Crossover/SUV

0.9%

$48,928

* Note: The current study used 2023 model-year pricing for vehicles for which prices were not yet available for 2024 model-year. All prices are given before applicable taxes.

Distribution of vehicles studied by class for Provinces

Vehicle Class Distribution
Battery Electric/Plug-in Hybrid 11.7%
Compact 16.3%
Medium Crossover/SUV 15.3%
Small Crossover/SUV 56.7%

 

Distribution of vehicles studied by brand name

Brand Name Distribution
Chevrolet 3.3%
Dodge 1.1%
Ford 9.8%
GMC 1.9%
Honda 11.1%
Hyundai 14.0%
Jeep 5.0%
Kia 7.4%
Mazda 5.8%
Mitsubishi 2.7%
Nissan 6.7%
Subaru 4.5%
Tesla 5.3%
Toyota 15.5%
Volkswagen 5.9%

 

3.3     Data Sources

The present study used information available in the public domain, data from previous studies that we have performed, as well as new research and consultations with specialized professionals and agencies. For each element studied we confirmed the accuracy of the data by consulting additional data sources and cross-referencing the findings. All data sources were assessed for reliability and were thoroughly documented.

3.4     Use of Weighted Averages

In order to accurately reflect current market conditions, consistent with the methodology employed in the previous year’s report, the present study follows a weighted average approach instead of a simple average, by employing weighted arithmetic means where relevant. This was deemed necessary because not all elements calculated contribute the same amount to the total. For example, according to the most recent information available from Statistics Canada, in Ontario there were approximately 82 times as many vehicles registered than in Prince Edward Island, and thus the two regions contribute significantly different amounts to the overall Canadian average. This method was employed throughout the study to better reflect the reality of the Canadian market.

In the same manner, certain vehicle models sell significantly more units on the Canadian market than others and therefore contribute more to the overall weighted average. For example, the Toyota Corolla sells considerably more units in Canada than a Nissan Sentra, approximately three times the amount, and therefore the operating costs for the Toyota Corolla should reflect proportionately in the total calculated weighted average for each component of the cost. See Section 3.2: Vehicle selection for details.

4       Fixed Expenses Analysis

4.1     Ownership Costs

4.1.1     Current model-year vehicle prices

4.1.1.1       Vehicle pricing

For each vehicle under study we have extracted 2024 model year MSRP (Manufacturer Suggested Retail Price) values. The main tool employed was AutoQuote, the industry-leading software that provides up-to-date detailed pricing for all new vehicles available on the Canadian market. At the time of the current study, pricing was not yet available for 7 vehicle models out of a total of 55. For these, 2023 model-year values were used, as in our experience these values vary only slightly from year to year and are generally reflective of 2024 values.

MSRP pricing is established by the manufacturers for the whole model year and is valid across Canada. Values extracted from AutoQuote were also cross-checked against the information published by vehicle manufacturers. On average, MSRP prices for vehicles studied increased by approximately 5.2% as compared to the previous year.

4.1.1.2       Prevalent manufacturer rebates

In the past, vehicle manufacturers used to offer retail rebates for new vehicles in order to promote sales and distinguish themselves from their competition. We have thus performed substantial research to determine prevalent retail rebates for all vehicles studied. A period of one year was used as retail rebates vary from month to month as well as display variation, primarily by vehicle model and type of acquisition (cash, finance or lease).

All the data obtained was integrated into a 2,145 data-points matrix and subsequently reflected in the purchase price of each vehicle, by Province and Territory and by the type of acquisition. Direct price negotiation between vehicle retailers and buying individuals could not be accounted for in this study.

Rebates on new vehicles were very rarely offered by manufacturers during the last 12-month period, mainly due to the strong demand and continued limited supply. Actually, with the exception of two FCA models (Dodge Durango and Ram Pick-up) rebates were almost non-existent for the sample of 55 models used in the study. The average for the period was only $85, a slight decrease from $120 last year, but a significant decrease from four years ago when the average was close to $1,100.

4.1.1.3       Federal and provincial levies

Provincial and federal levies apply to the purchase of new vehicles and are intended in principle to offset environmental costs such as disposal and recycling of air conditioning fluids or tires. For the vehicles under study the following levies apply:

All applicable fees and levies have been factored in the analysis.

4.1.1.4       Provincial and federal rebates for electric vehicles

Six Canadian Provinces (British Columbia, Quebec, Nova Scotia, New Brunswick, Newfoundland and Labrador and Prince Edward Island), as well as the Yukon Territory currently offer government-funded rebates for the acquisition of a Battery Electric (BEV) or Plug-in Hybrid Electric vehicle (PHEV). Rebates offered by Provinces and Territories range between $1,500 and $7,000 per vehicle.

Additionally, the Federal Government offers its own electric vehicle incentive, applicable across Canada. Battery Electric as well as Plug-in Hybrid Electric vehicles with a range equal to or greater than 50 km are eligible for a rebate of $5,000. Plug-in Hybrid Electric vehicles with a shorter range are eligible for a $2,500 rebate.

Where applicable, Federal and Provincial rebates vary by a number of factors, such as battery capacity or driving range, vehicle size and MSRP cost. All these particular variations were integrated in the study accordingly.

For reference, the following table lists all currently applicable Federal and Provincial ‘green vehicle’ rebates, by type:

Area of application Type
Battery Electric Vehicle (BEV) Long-range Plug-in Hybrid Electric (PHEV) Plug-in Hybrid Electric (PHEV)
FEDERAL $5,000 $5,000 $2,500
BC $4,000 $4,000 $2,000
QC $7,000 $5,000 $2,500
NS $3,000 $3,000 $2,000
NB $5,000 $5,000 $2,500
NL $2,500 $1,500 $1,500
PE $5,000 $2,500 $2,500
YT $5,000 $5,000 $3,000

* Definition of a “Long-range PHEV” varies by program, e.g. Federal Government as well as Nova Scotia, New Brunswick and the Yukon has a range requirement of 50 kilometres or more, British Columbia requires 85 kilometres or more, while Quebec has battery capacity requirements instead. Newfoundland and Labrador and Prince Edward Island have no distinctions between Long-range and Regular PHEVs.

4.1.2     Method of vehicle acquisition

We have performed research on the Canadian market to establish which methods of vehicle acquisition are the most prevalent, as well as what market share is held by each. It has been observed that, due to the increasing interest rates, there has been a shift away from leasing and towards cash purchases. Consequently, we have come to the conclusion that in Canada the new vehicle market is currently distributed among the following three forms of acquisition as follows:

Therefore, in order to accurately reflect the reality of the market, we have analyzed all three forms of acquisition and subsequently calculated a weighted average for each vehicle under study according to their proportion of the market.

The net cost of vehicle ownership was calculated according to the method of acquisition (cash, financing or leasing). All three vehicle acquisition methods were addressed with their specific particularities, proportionately with their prevalence in the Canadian automotive landscape, as follows:

4.1.3     Four- and five-year retention periods

We calculated ownership costs for both four- and five-year retention periods, terms that were found to be reflective of average retention periods for the Canadian automotive landscape. All calculations were performed by vehicle and per Province or Territory taking into account both retention periods, and the results were averaged to yield one value per vehicle, by Province or Territory.

4.1.4     Vehicles driven 20,000 kilometres annually

All vehicles under study were considered to be driven 20,000 km per year. This is deemed to be a reasonable benchmark to base all reimbursement calculations on since the average Canadian vehicle is driven between 16,000 and 24,000 km per year. All calculations were made using this benchmark all across Canada.

4.1.5     Financing and leasing interest rates

We have performed in-depth research to determine the prevalent interest rates provided by vehicle manufacturers. The manufacturers offer what are known as subvented rates to promote sales of new vehicles. These rates are typically substantially lower than regular financial institutions’ loans. Since these reduced rates are prevalent on the market, we deemed it reflective of reality to integrate these rates into our calculations.

Interest rates vary considerably by:

All these variations were integrated into a 2,860 data-points matrix and subsequently reflected in the ownership costs of each vehicle, by Province and Territory.

For the current study all vehicle models studied had manufacturer-established interest rates available for four- and five-year financing. However, while all the manufacturers studied offered subvented leasing rates, some did not offer them for certain models on four- and five-year leasing terms. In these instances, average market (financial institutions or third-party leasing companies) rates were used.

All interest rates (financing and leasing) varied from 2.12% to 9.90% for manufacturers’ subvented rates, while the third-party interest rates were approximated at 9.99%. The average interest rate for financing contracts was 5.65% (up from 3.96% the previous year), while the lease rate was 7.74% (up from 5.85% last year). Overall, interest rates are higher as compared to the previous year.

4.1.6     Sales taxes

Federal and provincial sales taxes (GST, PST, QST, HST) apply to the full cost of a new vehicle according to the taxation method of each Province or Territory. Sales taxes also apply to:

Whether a vehicle is cash-purchased, financed or leased, taxes apply differently. For both cash purchases and financing contracts, the full price of a new vehicle is subject to sales tax, whereas for leased vehicles sales tax is only applied to monthly lease payments (including tax on interest).

Sales taxes have been factored into all calculations as to accurately reflect the direct costs to the end user of a vehicle. Following is a table listing the combined GST/PST/QST/HST applicable for each Province and Territory for the period relevant to the current study:

Sales taxes in Canada
by Province and Territory

Combined sales taxes

Alberta

5%

British Columbia

12%

Manitoba

12%

New Brunswick

15%

Newfoundland and Labrador

15%

Northwest Territories

5%

Nova Scotia

15%

Nunavut

5%

Ontario

13%

Prince Edward Island

15%

Quebec

14.975%

Saskatchewan

11%

Yukon

5%

 

4.1.6.1       Taxes on fuel

Fuel prices listed at the pump have all taxes included, as is the standard throughout Canada. Fuel is usually taxed federally, provincially as well as regionally. Approximately a third of the price paid at the pump is made up of the following:

All fuel prices given in the present study have all taxes included.

4.1.6.2       Taxes on insurance premiums

Regular sales tax (GST/PST/QST/HST) as well as additional insurance-specific taxes apply differently to insurance premiums across Canada depending on each Province or Territory. Insurance premiums given in the present study account for all applicable taxes.

4.1.6.3       Recent and upcoming tax rate changes

We have consulted directly with all relevant public sources in order to determine if there are any impending tax rate changes across Canada in the near future. At this time, no changes in sales taxes are foreseen anywhere in Canada.

For each subsequent Fuel Update of the present study, research will be performed again for all Canadian Provinces and Territories to determine if tax amounts have changed or if any changes are foreseen in the future.

4.1.7     Resale values (vehicle remarketing)

In order to accurately assess total costs of vehicle ownership, an analysis was performed for each vehicle under study, to project resale values for retention periods of four and five years, based on historic patterns. Resale values were extracted from resale market data for the same or a similar vehicle model. The research was based on:

The values were extracted from the Canadian Black Book, an industry standard for establishing values for used cars and were supported through consultation with specialized vehicle resellers, as well as employing other relevant tools. Final values were projected for:

Resale values were integrated into the depreciation analysis differently depending on the type of acquisition, as follows:

On average, vehicle resale values increased slightly over the last year, by approximately 2%. The COVID-19 pandemic had a significant impact on the supply and demand balance in both the new and used vehicle markets. As described in the last Annual Report (November 2022, for publication on January 1st, 2023), severe shortages caused mainly by supply chain disruptions in microchip manufacturing during the past three years had led to a reduced availability of new vehicles, which in turn had driven resale prices for vehicles up considerably. Although the situation has started to normalize as the supply chains of new vehicles return to previous levels of functionality, the effects of the disruption in the used vehicle market remain observable and it is unclear when resale values will return to pre-pandemic levels.

4.1.8     Total cost of ownership calculations

For each Province and Territory, total costs of ownership were calculated for:

A weighted average was then calculated for all vehicles under study to yield a final cost-of-ownership figure per Province and Territory. All figures were converted and expressed in dollars per kilometre.

The following three tables give a detailed break-down of vehicle ownership costs in Canada in dollars per kilometre, by vehicle class, four- and five-year retention periods, split by depreciation costs, financing costs (interest) and sales taxes, as well as a weighted average according to vehicle sales figures:

DEPRECIATION

Compact

Small Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrids

Weighted Average

4-yr ownership

$0.087

$0.144

$0.245

$0.137

$0.149

5-yr ownership

$0.094

$0.146

$0.235

$0.153

$0.151
       

$0.150

---

INTEREST

Compact

Small Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrids

Weighted average

4-yr ownership

$0.023

$0.033

$0.056

$0.051

$0.037

5-yr ownership

$0.026

$0.037

$0.061

$0.056

$0.041
       

$0.039

---

ACQUISITION SALES TAX

Compact

Small Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrids

Weighted average*

4-yr ownership

$0.040

$0.050

$0.074

$0.064

$0.054

5-yr ownership

$0.033

$0.041

$0.061

$0.055

$0.045
       

$0.049

* Note: total weighted averages are rounded to 3 decimals.

4.1.9     Costs of ownership changes from the previous year

A general trend of increased MSRP prices and record low manufacturer rebates was counterbalanced by an increase in resale prices and residual values. Additionally, rising interest rates moderately increased ownership costs. The overall result is that, across Canada, total average ownership costs increased slightly over last year (by approximately 4%), with minimal variation between Provinces and Territories.

4.2     Vehicle Registration and Licensing Costs

Vehicle registration, licensing and plating is regulated at the provincial level. Each Canadian Province and Territory has its own regulatory body governing the rules and costs of vehicle licensing. Registration costs are typically charged annually in the form of a registration renewal. In some Provinces there are certain one-time up-front costs that are charged only at the time of the initial vehicle registration.

We have performed a complete study of these costs by contacting all provincial and territorial authorities. Registration costs do not have additional taxes applied to them as payment is made directly to the respective governmental agencies. The terms registration and licensing are used interchangeably in this study.

Registration costs vary by:

All these costs have been integrated in the calculations for each Province and Territory. Annual registration costs vary between $0 in Ontario and $255 in Quebec and contribute a weighted average of $0.005 per kilometre for all of Canada.

The following table lists annual registration costs used in the study for all ten Provinces and three Territories:

Province/Territory

Annual
registration costs

Registration costs
in $/km

Alberta

 $93

$0.005

British Columbia

 $61

$0.003

Manitoba

$126

$0.006

New Brunswick

$165

$0.008

Newfoundland and Labrador

 $90

$0.005

Northwest Territories

 $83

$0.004

Nova Scotia

$125

$0.006

Nunavut

 $42

$0.002

Ontario

   $0

$0.000

Prince Edward Island

$130

$0.007

Quebec

$255

$0.013

Saskatchewan

 $68

$0.003

Yukon

 $54

$0.003

 

4.2.1     Note on the Province of Quebec

It must be noted that in Quebec, provincially regulated bodily injury insurance must be purchased through the annual vehicle registration process. This is the reason why registration costs in Quebec are generally higher than the other Provinces or Territories.

4.3     Vehicle Insurance Costs

4.3.1     Regulation of vehicle insurance

Insurance rates vary greatly across Canada, primarily due to different provincial laws determining vehicle accident fault, subrogation or no-fault policies. Vehicle insurance is offered by private insurers in Alberta, Ontario as well as the four Atlantic Provinces and the three Territories. Quebec, however, has a hybrid system where bodily injury insurance is provided by the Province through its vehicle registration process, while third-party liability is provided by private insurers. On the other hand, the Provinces of British Columbia, Manitoba and Saskatchewan have mandatory public vehicle insurance, offered exclusively by the provincial governmental bodies.

4.3.2     Variability of insurance premiums

Insurance premium rates vary considerably not only from Province to Province, but also according to a substantial number of other parameters related to the insured driver’s personal characteristics as well as to the vehicle being insured. Where insurance is offered privately, insurance premiums also vary considerably from one insurer to another.

4.3.3     Analysis of prevalent insurance premiums

We have performed a thorough analysis on current prevalent insurance premium rates for the average government employee to keep these figures in line with current market conditions as well as recent industry publications. The steps taken to determine the insurance rates used in the present study were as follow:

Following is a table listing average insurance premiums for the ten Provinces and three Territories as well as a comparison with the insurance premiums published in the previous year study, for direct comparison (averaged annual premiums have been rounded up to the nearest $25):

Province/Territory

Current insurance premiums

Insurance costs
in $/km

 January 1st 2023
Annual Report insurance premiums

Alberta

$2,150

$0.108

$2,175

British Columbia

$1,525

$0.076

$1,250

Manitoba

$1,550

$0.078

$1,425

New Brunswick

$1,475

$0.074

$1,475

Newfoundland and Labrador

$1,700

$0.085

$1,700

Northwest Territories

$1,775

$0.089

$1,875

Nova Scotia

$1,525

$0.076

$1,575

Nunavut

$1,775

$0.089

$1,825

Ontario

$2,225

$0.111

$2,175

Prince Edward Island

$1,250

$0.063

$1,150

Quebec

$1,150

$0.058

$1,225

Saskatchewan

$1,575

$0.079

$1,275

Yukon

$1,475

$0.074

$1,425

 

The values obtained through the present study are deemed to be reflective of the current reality for the established demographic. Insurance rates vary between $1,150 and $2,225, with a Canadian weighted average of $0.089 per kilometre.

The largest increase of insurance premiums has been observed in the three Provinces with public vehicle insurance, i.e. British Columbia, Manitoba and Saskatchewan. Due to the fact that these Provinces offered discounts during the COVID-19 pandemic that were not offered by private insurers in other Provinces, they now seem to rebalance their rates to better align with the rest of the country.

5       Variable Expenses Analysis

5.1     Fuel Expenses

Fuel expenses are directly related to three main factors: buying location, fuel consumption of the vehicle and time of the year. The current study focuses on gasoline prices across Canada, which are strongly related to variations in the world energy market.

This report aims to provide an overview of the current market situation and present the latest estimates and forecasts pertinent to the energy market conditions. Nevertheless, similar to the previous reports, caution must be exercised when considering the data available due to the rapidly changing nature of global markets.

5.1.1     Energy market context

Over the past three months, crude oil prices have experienced an upward rally, approaching the $100 USD per barrel mark in September. This marked a 30% increase since June. The upward rally was largely driven by Saudi Arabia and Russia extending their voluntary production cuts in September, at a time when inventory levels were dropping. The rapid decline that followed saw prices falling by as much as 10% in the span of seven days. The subsequent volatility has developed mainly on the account of worsening economic growth and the demand outlook in China. This has been further impacted by the continuously rising interest rates around the world, which are expected to weigh on economic growth and are likely to hinder demand in the future. The recent escalated conflict in Gaza between Israel and Hamas has added another layer of uncertainty to the markets.

As a result, since late June, oil prices were largely on a rise up until late September, reaching the three-month maximum on September 27th, 2023, of $93.68 USD per barrel in the case of West Texas Intermediate (WTI) and $96.55 USD for Brent. This peak was followed by a rapid decline, with prices losing more than 10% of their respective value in the span of a week. Following this, prices continued their downward trend. The period minimum was recorded on November 16th when WTI stood at $72.90 USD per barrel and Brent at $77.42 USD per barrel. As of November 17th, WTI is at $75.89 USD per barrel and Brent is at $80.61 USD per barrel.

Gasoline prices have closely followed crude oil, rising in September, followed by a sudden drop in early October, and fluctuating thereafter. Overall, the average price of gasoline in the three-month period from September to November has remained relatively constant relative to the preceding three-month period, as the increase in September was offset by a subsequent decline. On average, the price of gasoline in Canada was $1.646 per litre, 1.6% lower than during the summer months, and 2.4% lower than a year ago.

5.1.1.1      Global crude oil demand

While the rebound from the COVID-19 pandemic – the largest economic shock of the past 75 years – was swift, the pace of the recovery has significantly moderated. A multitude of factors have contributed to this slowdown, including the long-term consequences of the pandemic, Russia’s war in Ukraine and increasing geoeconomic fragmentation (as opposed to global integration). In addition, more cyclical factors, including the effects of tightening monetary policy necessary to reduce inflation, withdrawal of fiscal support amid high debt, as well as extreme weather events, have all applied a downward pressure on the global economy.

Despite signs of economic resilience observed earlier this year as well as progress in reducing global inflation, economic activity is still generally falling short of pre-pandemic projections, especially in Emerging Markets and Developing Economies, including China. This means that the world still has a way to go to bring the economy back to its pre-pandemic growth trajectory. The strongest recovery among major economies has been in the United States, where the gross domestic product (GDP) for 2023 is estimated to exceed its pre-pandemic path. The Euro Area has also recovered, albeit less strongly, with output remaining at 2.2% below pre-pandemic projections, thus reflecting its greater exposure to the war in Ukraine and a spike in imported energy prices. On the other hand, Emerging Markets and Developing Economies have seen a much larger shortfall of consumption and slower recovery of the labor market, particularly in China, reflecting tight restrictions on mobility during the COVID-19 crisis.

As a result, according to the World Economic Outlook (WEO) published in October 2023 by the International Monetary Fund (IMF), global economic growth is projected to decline from 3.5% in 2022 to 3.0% in 2023, and further reduce in 2024 to average 2.9%. This growth rate is well below the pre-pandemic average of 3.8% between 2000 and 2019. While projected to decline steadily from 8.7% in 2022, global inflation remains high. The estimates for 2023 stand at 6.9% (0.1 percentage point higher than the July WEO Update) and at 5.8% for 2024, an increase of 0.6 percentage points above the previous forecast.

The growth in Advanced Economies is expected to slow down from 2.6% last year to 1.5% this year and 1.4% in 2024. While the overall rates remain unchanged, the U.S. economic momentum has been stronger than expected, at 2.1% last year as well as this year, but is projected to slow down to 1.5% in 2024. However, the growth in the Euro Area has been below the previous projections and is now estimated at 0.7% this year, a significant decline from 3.3% last year, but is forecasted to recover to 1.2% in 2024.

Projections on the Canadian economy, however, vary quite significantly. On one hand, the IMF estimates that the growth of Canada’s gross domestic product (GDP) declined from 3.4% in 2022 to 1.3% this year, but is expected to recover to 1.6% next year. On the other hand, the Bank of Canada in its Monetary Policy Review (MPR) published in October 2023 is much more conservative, indicating a significant downward adjustment to its previous forecasts from July 2023. The Bank estimates that the Canadian economy will grow by 1.2% this year (down from 1.8% in the report from July 2023) and forecasts the growth will further reduce to 0.9% in 2024 (a downward adjustment of 0.3 percentage points from 1.2% in the previous report). As noted by the Bank, higher interest rates have contributed to softening demand for housing and many durable goods, as well as slowing household credit growth. Demand growth has also moderated for many services, such as recreation, restaurants, and accommodation. As noted in previous reports, the Canadian economy was operating at excess demand, with supply being unable to catch up with the sudden increase in demand after the pandemic, that pushed consumer prices up. Now that the demand growth is slowing, the supply is closing the gap, resulting in an easing of the inflation rate to about 2.5% in the second half of 2024.

The growth in Emerging Markets and Developing Economies is projected to decline more modestly from 4.1% in 2022 to 4.0 % in both 2023 and 2024. A downward revision of 0.1 percentage point in 2024 is largely reflecting the economic issues in China. While the rest of the world faces inflationary pressures, China has been contending with looming deflation. Chinese property developers continue to face severe funding constraints, preventing them from completing presold homes, which is undermining home buyer confidence. All of this has resulted in a severely and rapidly declining economic growth rate, from 8.9% in the first quarter of 2023 when the reopening surge after COVID-19 lockdowns took place, to 4.0% in the second quarter of 2023.

The risks to the global economic outlook remain tilted toward the downside. As noted by the IMF, “(…) the near-term inflation expectations have risen and could contribute – along with tight labor markets – to core inflation pressures persisting and requiring higher policy rates than expected” and “amid rising debt-service costs, more than half of low-income developing countries are in or at high risk of debt distress.”

Despite slowing economic growth, global energy demand has increased to near record levels. Global demand projections of crude oil by the Organization of the Petroleum Exporting Countries (OPEC) stand at 102.1 million barrels per day (mb/d) for this year, an increase of 2.5% over last year. Furthermore, OPEC expects the demand to rise another 2.2% to 104.4 mb/d next year. The International Energy Agency’s (IEA) projection is very similar, at 102.0 mb/d for this year. However, the U.S. Energy Information Administration (EIA) in its Short-Term Energy Outlook (STEO) from November 2023 is more cautious, projecting the total global consumption to average 101.0 mb/d in 2023 (about 1.0 mb/d lower than OPEC and IEA estimates) and 102.5 mb/d in 2024, a slight downward adjustment from the STEO three months ago.

5.1.1.2       Global crude oil supply

To meet global demand, supply has been on the rise and is projected to reach a record of 101.8 million barrels per day (mb/d) in 2023, according to the International Energy Agency’s (IEA) estimates. This growth has been driven by the non-OPEC+ producers adding about 1.7 mb/d, particularly the United States and Brazil, which are outperforming forecasts. A similar trend is expected next year, when a further 1.6 mb/d will be added to the market, averaging 103.4 md/d. The U.S. Energy Information Administration’s (EIA) estimates are a little more conservative, standing at 101.5 mb/d for this year and a further increase of 1.1 mb/d next year, averaging 102.6 mb/d.

Global crude oil prices were on the rise since late June all through late September, supported by the ongoing OPEC+ production cuts of 3.7 mb/d, as well as the voluntary production reduction by 1.0 mb/d by Saudi Arabia starting in July 2023. In late summer, Russia agreed to cut its crude exports by an additional 0.3 mb/d. In the first week of September, Saudi Arabia and Russia, two of the largest OPEC+ producers, announced that they would prolong their combined voluntary production cuts of 1.3 mb/d until December 2023, two months longer than the market was anticipating. This provided a strong boost to crude prices, lifting them to the highest levels of the year.

Due to the production cuts and the resulting tightness in the supply and demand balance, the global oil inventories remain near historic lows. The U.S. stockpiles have also been low, particularly in September, when inventories stood at 416.3 million barrels, about 4% below the five-year average, adding to the price pressures.

On the other hand, a number of countries, including the U.S., Canada and Venezuela, have continued to increase their production with even more supply expected to be added to the market in the near future. Venezuela, one of the three OPEC countries that have been exempt from the mandatory production cut agreement due to internal or external challenges on their production, has been steadily increasing its output and is expected to see even further gains. Since 2016, the U.S. had applied strong sanctions on Venezuelan oil. As a result, Venezuelan production had dropped from 2.4 mb/d in 2016 to just over 0.7 mb/d presently. In mid-October, the U.S. announced that most of the sanctions had been eased in exchange for more democratic elections in 2024. The agreement allows Venezuela to produce and export oil to its chosen markets for the next six months without limitation. Despite this, the recovery in production is likely to be gradual, as the country needs numerous infrastructure upgrades to significantly increase production, like drilling new rigs, billions of dollars in infrastructure replacements for refineries, and a reliable power supply.

In addition, North American producers have also been steadily increasing their crude oil production. Despite financial uncertainties for oil investments, the U.S. oil industry has thrived this year. In October, U.S. producers hit a new record-high for weekly oil production, topping 13.2 mb/d in the first week of the month, exceeding the previous record set before the COVID-19 pandemic, which stood at 13.0 mb/d. The U.S. EIA estimates that the U.S. production is going to average 12.9 mb/d, increasing by a further 0.3 mb/d to 13.2 mb/d in 2024.

Canada, on the other hand, is poised to see a significant rise in oil production and shipments over the next 12 months, possibly the largest production increase globally in 2024. Canada has been producing about 4.8 mb/d of crude and is expected to increase its production by as much as 10% or 0.5 mb/d by the end of 2024, according to S&P Global Commodity Insights. Alberta's oilsands are expected to drive much of the growth, although increases are anticipated throughout Western Canada and at offshore facilities near Newfoundland and Labrador. The sudden rise is partially due to lengthy maintenance requirements that were in effect at some oilsands facilities this year, as well as the disruptions caused by wildfires. The expanded Trans Mountain pipeline from Alberta to the West Coast is in the final stages of construction and will boost the pipeline's capacity from 0.3 mb/d to 0.9 mb/d by the end of next year. It must be noted that the increase in production is not because of increased investments, but rather due to finding ways to make the existing facilities more efficient at full capacity. As a result, it remains to be seen how long the production increase will last.

In addition to the continued war in Ukraine, another significant geopolitical conflict broke out in the Middle East between Israel and Hamas in October. While devastating in itself, global fears of the conflict’s impact on the crude oil market did not materialize. In fact, the supply disruptions have been minimal, with inventory levels rising since the beginning of the conflict, mostly due to the weaker demand described in Section 5.1.1.2.

5.1.2     Gasoline prices across Canada

As noted in the previous reports, the Canadian gasoline market is tightly linked with the U.S. due to the fact that both crude oil and refined products like gasoline move across the border in both directions. Therefore, changes in the U.S. market have direct impacts on gasoline prices in Canada.

In recent months, concerns over gasoline prices and their impact on inflation in the U.S. had intensified. Gas prices have been contributing to over half of the recent surge in inflation, as per the U.S. Department of Labor. While the current demand remains quite strong, there are concerns over the demand in the future and whether it will remain strong. In fact, the U.S. Energy Information Administration in its Short-Term Energy Outlook (STEO) from November 2023 forecasts that the demand for gasoline will decline by 1% in 2024 due to a number of factors, including an increase in remote work, improvements in the fuel efficiency of vehicles, high gasoline prices, and continuous high inflation. If this forecast becomes true, this will result in the lowest per capita gasoline consumption in the U.S. in two decades. However, a decline in demand could provide some price stabilization in the market.

While gasoline prices have exhibited closely similar price trends to crude oil – rising until late September and rapidly declining thereafter – on average, they have remained relatively stable as compared to the previous three-month period from June through August. Thus, average gas prices across Canada fluctuated from a 2.9% decline in British Columbia to a 4.5% increase in Nova Scotia, with the national average declining by 1.6%.

The more significant price decline in British Columbia was a result of price fluctuations between late September and November. While typically the demand for gasoline dwindles at the end of summer, this year it remained strong. This coincided with several refineries across North America, including one in Alberta and one in Washington state, going offline at the same time. This resulted in very tight supply for gasoline in Western Canada, pushing gas prices up as high as $2.30 per litre at some stations across the Vancouver metro area in late September. As crude oil prices eased and the refineries came back online, the supply normalized and prices decreased significantly – by as much as 50 cents over the span of six weeks.

With the continued volatility of the energy markets, determined by global factors that are hard to forecast, it is difficult to make any predictions regarding gasoline prices for the next three-month period. However, any future changes will be reflected in the subsequent Fuel Update.

Prices of gasoline, in Canada, include all applicable taxes. Prices vary significantly across the country, mainly due to the difference in the types and amounts of taxes being charged on fuel in different Provinces and Territories. According to Natural Resources Canada, the vast majority of light-duty vehicles on Canadian roads run on gasoline. We have therefore researched the average prices of regular gasoline charged at the pump. The fuel price data was primarily obtained from Natural Resources Canada via Kalibrate (previously Kent Marketing), based on daily published fuel prices for 78 locations across Canada. This data was verified against additional databases that similarly track fuel prices all across Canada.

Consistent with the methodology of the previous study, when determining average gasoline prices per Province or Territory, we have used a weighted average according to population in order to better conform to reality. In this manner, metropolitan population centers account for a greater portion of the total than smaller municipalities. Prices were tracked daily across Canada (except for Saturdays, Sundays and holidays).

Fuel price data was extracted for a period of three months (August 21st to November 10th, 2023) in order to better reflect current prices. Gasoline prices in Canada varied during this period between $1.323 in Calgary, AB to $2.150 in Vancouver, BC, with a national average of $1.646.

The following is a table with three-month average regular gasoline prices for all Canadian Provinces and Territories, in dollars per litre, as well as gasoline prices from previous reports, for comparison:

Province/Territory

Current average fuel price ($/litre)

Current average fuel cost ($/km)

Oct 1 2023 Fuel update ($/litre)

Jul 1 2023 Fuel update ($/litre)

Apr 1 2023 Fuel update ($/litre)

Jan 1 2023 (Annual Report) ($/litre)

Alberta

$1.405

$0.111

$1.417

$1.353

$1.309

$1.515

British Columbia

$1.902

$0.150

$1.958

$1.825

$1.719

$2.001

Manitoba

$1.597

$0.126

$1.587

$1.578

$1.539

$1.753

New Brunswick

$1.754

$0.139

$1.690

$1.613

$1.589

$1.683

Newfoundland and Labrador

$1.817

$0.144

$1.747

$1.682

$1.661

$1.782

Northwest Territories

$1.678

$0.193

$1.667

$1.641

$1.621

$1.765

Nova Scotia

$1.746

$0.138

$1.671

$1.541

$1.529

$1.648

Nunavut

$1.535

$0.176

$1.501

$1.456

$1.410

$1.205

Ontario

$1.590

$0.126

$1.623

$1.502

$1.471

$1.594

Prince Edward Island

$1.750

$0.138

$1.712

$1.631

$1.608

$1.741

Quebec

$1.726

$0.136

$1.732

$1.623

$1.597

$1.715

Saskatchewan

$1.560

$0.123

$1.577

$1.550

$1.473

$1.647

Yukon

$1.924

$0.221

$1.851

$1.760

$1.742

$1.913

 

Gas prices in Nunavut are typically set for a full calendar year and rarely exhibit any changes. However, the Territory is gradually bringing its gasoline prices more in line with the rest of Canada and the latest price update occurred on October 1st, 2023. The territorial average was thus determined to be $1.535 for the current study.

For illustration purposes, the following Graph displays gasoline prices for the main metropolitan areas for a one-year period (November 2022 – November 2023).

 

Also, for illustration purposes, the following Graph displays crude oil prices for three benchmarks – WTI (West Texas Intermediate), Brent and WCS (Western Canadian Select) for a one-year period (November 2022 – November 2023).

 

5.1.3     Fuel consumption

For each vehicle under study, fuel consumption figures were extracted from the industry’s vehicle pricing and specification standard tool, AutoQuote, backed up by Natural Resources Canada’s EnerGuide. For models where 2024 model year figures were not available, 2023 figures with similar engine sizes were used. Fuel consumption figures are determined by vehicle manufacturers, based on standardized tests, and are published for both city driving and highway driving. For Battery-Electric and Plug-in Hybrid Electric vehicles, AutoQuote and the EnerGuide provides figures for fuel consumption by using a litre-equivalent (Le/100 km) system, thus facilitating the comparison with conventional fuel vehicles.

In Provinces where the majority of the population lives in large urban centres (e.g., Ontario) vehicles are driven more under city-driving conditions rather than highway-driving conditions. In light of this fact, the percentage of city versus highway driving has been referenced to a 55/45 city/highway split, consistent with the methodology used by EnerGuide. On the other hand, for the Territories, a reversed 30/70 city/highway split was factored in, due to the predominantly rural character of the Territories and long distances to be covered.

The following table gives average fuel consumption figures by class of vehicle, in litres of gasoline per hundred kilometres, as well as the weighted averages according to year-to-date vehicle sales:

Combined fuel consumption
(l/100 km)

Compact

Small Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrid

Pick-up Truck

Weighted average

Provinces

7.0

8.5

11.0

2.5

-

7.9

Territories

-

8.0

10.3

-

11.4

9.6

 

5.1.4     Calculation of fuel expenses

Based on an average of 20,000 kilometres per year and following the methodology described above, the study calculated average fuel costs, per Province or Territory, for all vehicles under study. These numbers were weight-averaged according to population to yield individual fuel cost figures for each Province or Territory.

Fuel contributes on average $0.130 per kilometre to total operating costs, ranging from $0.111 in Alberta to $0.221 in the Yukon.

5.2     Vehicle Maintenance Expenses

In order to keep a vehicle in proper running condition and respect all driving safety requirements, a vehicle must be adequately maintained. Vehicle maintenance includes the following:

5.2.1     Preventative maintenance

Preventative maintenance includes, but is not limited to, the following:

Costs of preventative maintenance were estimated based on consultation with specialized garages and qualified mechanics in order to determine the frequency and costs for parts and labour. Sales taxes apply to all preventative maintenance costs.

5.2.2     Projected costs of repairs not covered by manufacturer warranty

Since the current study is considering retention periods of four and five years, a certain cost for projected repairs must be taken into account. Repairs due to accidents are covered by insurance and are reflected in insurance premiums costs. Most manufacturers offer warranties of up to 3 years or 60,000 kilometres (with the exception of Kia, Hyundai, Mitsubishi, Volkswagen and Tesla, which offer longer warranties). Beyond this period or mileage, any mechanical system that breaks down will incur a direct cost to the owner. Repairs not covered by manufacturer warranty have been accounted for in the present study accordingly.

5.2.3     Tires

The various vehicles under study have different tire requirements, mostly due to different rim sizes. All new vehicles come with a set of standard all-seasons tires. However, if only one set of tires is used, they wear out and need to be replaced, on average, after 60,000 kilometres. This implies that at least one new set of tires must be purchased for both four- and five-year retention periods.

For the purpose of this study, average quality all-seasons tires were considered. Costs of tires vary between $1,040 and $1,590 for a set of four with installation included, mainly depending on the type and size, plus applicable taxes.

5.2.3.1       Adjustments for Quebec and British Columbia

The Province of Quebec mandates the use of winter tires for all light-duty vehicles, for the period between December 1st and March 15th. In order to reflect this requirement a 50% increase in the cost of tires was factored into the calculations. This accounts for purchasing an additional set of winter tires while offsetting the need to purchase another set of all-season tires for the four-year retention period studied but not necessarily for the five-year period.

Similarly, British Columbia mandates the use of winter tires in mountainous areas between October 1st and April 30th. A 50% increase in the costs of winter tires was factored in the calculations to account for this requirement, in order to reflect the fact that winter tires are consistently used by vehicles registered in this Province.

5.2.4     Miscellaneous maintenance expenses

There are other common expenses related to maintaining a vehicle that do not fall under the previous three categories, but which are necessary for safety as well as aesthetic reasons. The present study allocated a $162 per year allowance for miscellaneous costs such as windshield washer fluid, occasional car wash and polish, light bulbs etc.

5.2.5     Total costs related to vehicle maintenance

Total maintenance costs were calculated for every Province and Territory. Costs are higher for Quebec and British Columbia mainly due to winter tire regulations. Costs for the three Territories are also higher primarily due to the extra equipment needed to support driving conditions in the North, as detailed in Section 6. Costs are lower for the Province of Alberta due to the fact that there is no provincial sales tax applicable.

The following five tables give a full break-down of vehicle maintenance costs in dollars per kilometre, by vehicle class as well as four- and five-year retention periods, split by preventative maintenance, repairs, tires, miscellaneous and maintenance sales tax, as well as weighted averages according to vehicle sales:

PREVENTATIVE
MAINTENANCE

Compact

Small Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrid

Weighted Average*

4–yr ownership

$0.056

$0.058

$0.064

$0.042

$0.057

5–yr ownership

$0.062

$0.064

$0.069

$0.046

$0.063
       

$0.060

 ---

REPAIRS

Compact

Small Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrid

Weighted Average*

4–yr ownership

$0.011

$0.012

$0.012

$0.006

$0.011

5–yr ownership

$0.026

$0.028

$0.031

$0.022

$0.027
       

$0.019

 ---

TIRES

Compact

Small
Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrid

Weighted average*

4-yr ownership

$0.015

$0.019

$0.024

$0.019

$0.019

5-yr ownership

$0.012

$0.015

$0.019

$0.015

$0.015
       

$0.017

 ---

MISCELLANEOUS

Compact

Small
Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrid

Weighted average*

4-yr ownership

$0.008

$0.008

$0.008

$0.008

$0.008

5-yr ownership

$0.008

$0.008

$0.008

$0.008

$0.008
       

$0.008

 ---

MAINTENANCE
SALES TAX

Compact

Small
Crossover/
SUV

Medium Crossover/
SUV

Battery Electric/
Plug-in Hybrid

Weighted average*

4-yr ownership

$0.011

$0.012

$0.013

$0.009

$0.012

5-yr ownership

$0.013

$0.014

$0.016

$0.011

$0.014
       

$0.013

* Note that the total weighted averages are rounded to 3 decimals.

6       Operational Costs in the Territories

In order to accurately reflect the actual costs of operating vehicles in the three Canadian Territories, the analysis required a different approach than for the ten Provinces. The Territories are mostly rural and driving conditions are harsher, especially in the wintertime. This means that prevalently larger vehicles are used with winter-adapted equipment and therefore the costs for maintenance, tires, fuel and specialized equipment are higher.

This section describes the methodology used for the Territories as well as highlights where it differs from the methodology used for the ten Provinces.

6.1     Vehicle Selection for the Territories

The nature of the climate and road conditions in the three Territories is considerably different than for the ten Provinces. Due to this fact, as well as the harsh winter driving conditions that drivers face in the North, the automotive landscape has a different make-up, and as a result Trucks and Crossovers/SUVs are significantly favoured over Compact cars and Battery Electric/Plug-in Hybrid Electric Vehicles. Following this rationale, the present study selected three vehicle classes that were deemed representative of the Territories, the same as in the previous Annual Report (November 2022, for publication on January 1st, 2023):

The study kept the vehicles studied in the Small and Medium Crossover/SUVs categories, added the 5 most sold pick-up trucks in the Truck category and eliminated the Compact Sedan and Battery Electric/Plug-in Hybrid Electric Vehicle classes.

Following is a table listing the vehicles studied for the Territories, as well as the class they belong to, and the weight assigned to each according to recent Canadian sales:

Make

Model

Class

Weight for Territories

2024 Model Year Pricing*

Toyota

RAV4

Small Crossover/SUV

8.4%

$34,880

Honda

CR-V

Small Crossover/SUV

5.9%

$39,925

Hyundai

Tucson

Small Crossover/SUV

3.0%

$36,124

Mazdai

CX-5

Small Crossover/SUV

2.6%

$34,345

Nissan

Rogue

Small Crossover/SUV

2.5%

$35,278

Hyunda

Kona

Small Crossover/SUV

2.4%

$29,924

Ford

Escape

Small Crossover/SUV

2.4%

$37,544

Kia

Seltos

Small Crossover/SUV

2.3%

$29,095

Subaru

CrossTrek

Small Crossover/SUV

2.0%

$31,190

Kia

Sportage

Small Crossover/SUV

2.0%

$33,945

Ford

Bronco Sport

Small Crossover/SUV

 2.0% $41,090

Volkwagen

Tiguan

Small Crossover/SUV

1.8%

$36,545

GMC

Terrain

Small Crossover/SUV

 1.7% $36,945

Ford

Edge

Small Crossover/SUV

1.6%

$42,495

Mitsubishi

Outlander

Small Crossover/SUV

 1.6% $35,898

Subaru

Outback

Small Crossover/SUV

 1.6% $36,190

Nissan

Kicks

Small Crossover/SUV

 1.5% $24,128

Chevrolet

Equinox

Small Crossover/SUV

 1.5% $33,345

Hyundai

Venue

Small Crossover/SUV

 1.4% $22,824

Mazda

CX-30

Small Crossover/SUV

 1.3% $30,245

Jeep

Wrangler

Medium Crossover/SUV

2.4%

$53,860

Jeep

Grand Cherokee

Medium Crossover/SUV

1.9%

$58,415

Toyota

Highlander

Medium Crossover/SUV

1.7%

$47,580

Hyundai

Santa Fe

Medium Crossover/SUV

1.4%

$39,974*

Volkswagen

Atlas

Medium Crossover/SUV

1.3%

$52,045

Ford

Explorer

Medium Crossover/SUV

1.1%

$50,435

Dodge

Durango

Medium Crossover/SUV

1.0%

$57,065

Ford

Bronco

Medium Crossover/SUV

0.9%

$53,355

Honda

Pilot

Medium Crossover/SUV

0.8%

$53,650

Nissan

Pathfinder

Medium Crossover/SUV

0.8%

$48,928

Ford

F-Series

Truck

13.4%

$63,305

Ram

P/U

Truck

9.1%

$61,415

GMC

Sierra

Truck

6.9%

$63,699

Chevrolet

Silverado

Truck

6.1%

$58,899

Toyota

Tacoma

Truck

1.7%

$46,000

* Note: The current study used 2023 model-year pricing for vehicles for which prices were not yet available for 2024 model-year. All prices are given before applicable taxes.

6.2     Other Operating Cost Adjustments for the Territories

The methodology to calculate fixed and variable expenses for the Territories remained the same as for the Provinces. However, by virtue of using different vehicle classes, total costs are higher than for the Provinces.

The Territories usually display more elevated costs for fuel due to the higher costs of transportation and servicing. At the same time, by adding Pick-up Trucks and eliminating the more fuel-efficient Compact Sedan and Electric Vehicle (Battery Electric/Plug-in Hybrid) classes, overall fuel consumption is also higher than for the ten Provinces.

In terms of vehicle maintenance, adjustments were also made to reflect the extra equipment necessary for safe driving in the North, as well as the use of special off-road or winter tires. The extra equipment that most acutely influences total maintenance costs for the Territories includes, but is not limited to, winter preparation packages, specialized tires, off-road survival kits and specialized signalling and communication devices. In addition, the use of special engine oils and other freeze-resistant liquids, as well as increased idling add to the operating expenses. For this reason, repair costs were increased by 25%, tire costs by 50% and fuel costs by 20% for the Territories.

7       Operating Cost Summary and Recommendations

We recommend continuing the practice of reimbursing government- authorized personal vehicle use on the basis of both fixed and variable expenses, referred to as the Travel Rate (also known as “Kilometric Rate” in the National Joint Council Travel Directive). At the same time, we recommend reimbursing employees for use of personal vehicles to commute to their designated remote worksites on the basis of variables expenses only, referred to as the Commuting Rate (also known as “Lower Kilometric Rate” in the National Joint Council Commuting Assistance Directive). This is consistent with current practice. All rates have been rounded up to the nearest 0.5 cents.

The following table provides calculated evaluations for both the Travel and Commuting Rates, as well as rates determined in the previous Annual Report (November 2022, for publication on January 1st, 2023) and the latest Fuel Update (August 2023, for publication on October 1st, 2023), for comparison.

2024 Reimbursement Schedule (in dollars per kilometre)

 

Travel Rate

Commuting Rate

Province/Territory

Current Annual Report

Oct 1 2023 Fuel Update

Jan 1 2023 Annual Report

Current Annual Report

Oct 1 2023 Fuel Update

Jan 1 2023 Annual Report

Alberta

$0.535

$0.530

$0.540

$0.220

$0.220

$0.230

British Columbia

$0.580

$0.565

$0.565

$0.275

$0.275

$0.280

Manitoba

$0.560

$0.545

$0.555

$0.240

$0.240

$0.255

New Brunswick

$0.590

$0.575

$0.575

$0.260

$0.250

$0.250

Newfoundland and Labrador

$0.605

$0.590

$0.595

$0.265

$0.255

$0.260

Northwest Territories

$0.705

$0.705

$0.715

$0.330

$0.325

$0.340

Nova Scotia

$0.595

$0.580

$0.580

$0.255

$0.250

$0.250

Nunavut

$0.680

$0.675

$0.640

$0.310

$0.305

$0.270

Ontario

$0.605

$0.590

$0.590

$0.245

$0.245

$0.240

Prince Edward Island

$0.575

$0.560

$0.565

$0.255

$0.255

$0.255

Quebec

$0.580

$0.575

$0.575

$0.265

$0.260

$0.260

Saskatchewan

$0.550

$0.525

$0.530

$0.240

$0.240

$0.245

Yukon

$0.720

$0.705

$0.710

$0.355

$0.350

$0.355

 Note: All figures were rounded up to the nearest half-cent.

The current Travel Rates (for publication on January 1st, 2024) only display slight increases versus the Travel Rates from the previous Fuel Update (August 2023, for publication on October 1st, 2023), ranging from no change in the Northwest Territories to a maximum increase of 2.5 cents in Saskatchewan. Correspondingly, as compared to the rates published in the previous Fuel Update (August 2023, for publication on October 1st, 2023), Commuting Rates have only seen a maximum increase of 1.0 cent in New Brunswick and Newfoundland and Labrador.

Year-over-year, as compared to the previous Annual Report (November 2022, for publication on January 1st, 2023), Travel Rates have varied between a decrease of 1.0 cent in the Northwest Territories to an increase of 4.0 cents per kilometre in Nunavut, primarily due to Nunavut starting to align their fuel prices with the rest of Canada. Correspondingly, the Commuting Rates varied between a decrease of 1.5 cents in Manitoba to a similar 4.0 cents increase in Nunavut.

For illustrative purposes, the following chart provides a cost component comparison by Province and Territory for Travel Rates:

 

In conclusion, overall, both the Travel and Commuting Rates have only exhibited slight variations across Canada as compared to the previous Fuel Update (August 2023, for publication on October 1st, 2023). The main factors that led to the increase in vehicle-related costs for most Provinces and Territories were the higher cost of ownership, maintenance and insurance, primarily driven by higher-than-normal inflation rates. The recovery of the public vehicle insurance premiums in Saskatchewan after the discounts provided during the COVID-10 Pandemic added to the elevated costs in this province. All other cost components had only a minimal effect on reimbursement rates.

While most other cost components remain fairly constant over the course of a year, fuel prices fluctuate significantly on a daily basis. With the continued volatility of the energy markets, determined by global factors that are hard to forecast, it is difficult to make any predictions regarding future gasoline prices. Therefore, fuel price updates will be carried out every three months. All future changes in fuel prices and sales taxes will be reflected in the subsequent Fuel Updates.