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Five-Year Sw(itch): BMO Poll Reveals Canadian Car Owners Spend Average of $26,000 Every Five Years on a New Vehicle

- Drivers spend $5,250 annually on payments, insurance, gas

TORONTO, ONTARIO -- (Marketwired) -- 07/08/14 -- 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 the inaugural BMO Auto Report released today. Overall, vehicle expenses account for the third-largest household monthly expense for Canadians.

According to the 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 BMO Auto Report, conducted by Pollara, 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
--  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. 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. 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."

Mr. O'Kane added that it's important to stress-test your budget before purchasing a vehicle. BMO offers a number of products and services that can help Canadians get more out of every dollar. For more details, drop by a BMO branch or visit bmo.com.

Results cited above come from an online Pollara survey with 1,004 Canadians, conducted between May 23 and May 25, 2014. Data has been weighted using the latest Canadian census information to be representative in terms of age, gender and region. The margin of error for a probability sample of 1,004 is +/- 3.1 per cent, 19 times out of 20.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had total assets of $582 billion and more than 45,500 employees at April 30, 2014.

Internet: www.bmo.com

Twitter: @BMOmedia

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