Luxury Car Sales Show Even Canada's Rich Are Stretching Themselves Thin

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Luxury car sales have grown fast and furiously in Canada over the past three years.

A chart released by Bank of Montreal economist Alex Koustas demonstrates just how much sales have revved up lately.

luxury cars

The information shows that car sales with Manufacturers' Suggested Retail Prices (MSRPs) of $90,000 or more have grown by 37 per cent between January and July since 2013.

"Using these figures, the upper-upper-crust of the auto market now occupies a one per cent foothold; well above previous cyclical levels," Koustas said.

The economist went on to cite anecdotal evidence showing that "foreign money is fuelling the sales growth," much as it has boosted housing in Vancouver and Toronto.

bmw car driving
A BMW M760Li xDrive car is seen at the 86th International Motor Show in Geneva, Switzerland on March 1. (Photo: Denis Balibouse/Reuters)

But it's also possible that some of Canada's richest people are "stretching themselves" to buy these cars, The Globe and Mail reported.

"Depending on the source, the responsible price-to-income ratio for a car can range from 20 per cent to 30 per cent," the Globe quoted Koustas saying.

"That means that even a good set of the top one per cent of the Canadian income bracket would be stretching themselves to buy a car at $90,000-plus."

canadian currency
Canadian currency. (Photo: Getty Images)

Rich people are certainly not the only Canadians stretching their budgets thin.

Statistics Canada released a report last week showing the national household debt-to-disposable income ratio at 167.6 per cent.

That means, on average, Canadians owe $1.67 for every dollar of disposable income.

BMO economist Benjamin Reitzes noted that household debt has risen above 100 per cent of nominal gross domestic product (GDP) for the first time ever.

And that means, on a nominal level, Canadians' household debt level is bigger than the whole economy.

So anytime you feel like you're having trouble paying the bills, just remember — the rich might actually be having similar money problems.

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