US car dealers turn away Canadian new-car buyers - is that legal?

Now that the Canadian dollar has reached parity with the US dollar (1
USD = 1CDN), the media here in Canada is running many news items
pointing out that US car dealers are turning away Canadians who want
to plunk down cash to buy a new car.

The dealers say that their franchise agreements prevent them from
selling vehicles to people who live outside their territory. I
remember from a few years ago where there were moderate differences in
prices in the Chicago area and all sorts of games were being played
(both by customers and dealers) to sell cars to people outside a
dealer's franchise area.

In any case, it seems like some of the off-brand vehicles (Hundai sp?,
Suburu sp?) are more likely to look the other way and sell to
Canadians.

But I'm wondering if franchise agreements that contain
geographic-based sales clauses are violating any trade laws that may
be on the books in the US, and hence could be used to break this rule
and open the floodgates to the many Canadians that are ready to save
$4k to $30k on a new vehicle.

In the mean time, can anyone point to entities called "independent
dealers" who buy new vehicles and turn around and re-sell them (as
used) even if they haven't been used?

In article >, MoPar Man >
wrote:

> Now that the Canadian dollar has reached parity with the US dollar (1
> USD = 1CDN), the media here in Canada is running many news items
> pointing out that US car dealers are turning away Canadians who want
> to plunk down cash to buy a new car.
They'll try anything to protect their excess profits from Canadians.

Several years ago when the CDN$ was about 0.67 US the shoe was on the
other foot. In the west Americans came from Washington and Alaska to buy
their vehicles at a discount in Canada.
A Vancouver, BC area Chrysler dealer had quite a business selling Neons
to USA buyers. The dealer split the C$4k difference with the USA buyer.
After several threats from Chrysler that dealer actually lost their
Chrysler franchise.

Some manufacturers, such as Honda, have stated they won't honor warranty
work on cross border vehicles.
>
> In the mean time, can anyone point to entities called "independent
> dealers" who buy new vehicles and turn around and re-sell them (as
> used) even if they haven't been used?
I don't remember the name, but I did see on TV several weeks ago a
Toronto independent dealer importing USA cars.

This is one way it is done:
http://www.canada.com/vancouversun/n...55f-83ff-4a71-
abe4-1ac2e48da188&k=88155
> Manufacturers can't stop Canadians from buying used cars and importing them,
> which is what some brokers and dealers that The Vancouver Sun contacted are
> suggesting.
> However, there is a way for Canadian buyers to get around that rule. Osler
> added that there are brokers, or independent auto dealers, with operations
> based in the U.S. that will buy new cars from American dealers. Those cars
> are registered in the U.S., Osler said, effectively making them used cars
> that the broker or dealer can pass on to a Canadian buyer.
> Wilson added that the influence of U.S.-purchased vehicles probably won't be
> felt for a few years, when they start showing up in the used market, which
> could push down prices.
The problem right now is Canadian buyers are buying lots of vehicles.
If buyers simply went on strike for a month or two, I'll bet things
would change.

Porsche just made an announcement of an 8 to 10% price reduction in
Canada.

Interesting. The EU has made restrictive practices illegal. Anyone can buy
any car from anywhere.

Earlier, manufactures would insert hurdles. E.g. when I bought a car in
Germany to bring to Britain I had to wait 2 years (mid-eighties); Mercedes
were quoting this lead time for RHD vehicles.

All gone and 6 years ago I bought another Merc in Germany and had no
problems, though I had to pay significantly more for RHD (but less than in
UK).

DAS

For direct replies replace nospam with schmetterling
---
"who" > wrote in message
...
> In article >, MoPar Man >
> wrote:
>
>> Now that the Canadian dollar has reached parity with the US dollar (1
>> USD = 1CDN), the media here in Canada is running many news items
>> pointing out that US car dealers are turning away Canadians who want
>> to plunk down cash to buy a new car.
> They'll try anything to protect their excess profits from Canadians.
>
> Several years ago when the CDN$ was about 0.67 US the shoe was on the
> other foot. In the west Americans came from Washington and Alaska to buy
> their vehicles at a discount in Canada.
> A Vancouver, BC area Chrysler dealer had quite a business selling Neons
> to USA buyers. The dealer split the C$4k difference with the USA buyer.
> After several threats from Chrysler that dealer actually lost their
> Chrysler franchise.
>
> Some manufacturers, such as Honda, have stated they won't honor warranty
> work on cross border vehicles.
>>
>> In the mean time, can anyone point to entities called "independent
>> dealers" who buy new vehicles and turn around and re-sell them (as
>> used) even if they haven't been used?
> I don't remember the name, but I did see on TV several weeks ago a
> Toronto independent dealer importing USA cars.
>
> This is one way it is done:
> http://www.canada.com/vancouversun/n...55f-83ff-4a71-
> abe4-1ac2e48da188&k=88155
>> Manufacturers can't stop Canadians from buying used cars and importing
>> them,
>> which is what some brokers and dealers that The Vancouver Sun contacted
>> are
>> suggesting.
>> However, there is a way for Canadian buyers to get around that rule.
>> Osler
>> added that there are brokers, or independent auto dealers, with
>> operations
>> based in the U.S. that will buy new cars from American dealers. Those
>> cars
>> are registered in the U.S., Osler said, effectively making them used cars
>> that the broker or dealer can pass on to a Canadian buyer.
>> Wilson added that the influence of U.S.-purchased vehicles probably won't
>> be
>> felt for a few years, when they start showing up in the used market,
>> which
>> could push down prices.
> The problem right now is Canadian buyers are buying lots of vehicles.
> If buyers simply went on strike for a month or two, I'll bet things
> would change.
>
> Porsche just made an announcement of an 8 to 10% price reduction in
> Canada.

"Who" has it wrong. I worked for DC in Western Canada during the Exporting
times in the mid 90's through early 2003. No dealer lost there franchise for
exporting vehicles. That is against the law. There is no law stating that a
US person cannot buy a vehicle in Canada. However the law stated that all
vehicles "sold within Canada" must meet Canadian Federal safety vehicle
standards" If you look at the vehicles in Canada you will have the sticker
stating that in your car. The US has the exact same sticker and wording for
the US. So if an american purchased a vehicle from Canada and brought it
down to the US the Vehicle's warranty was voided by DaimlerChrysler because
technically it does not meet US safety laws. After the first year of
exporting to the US DC re-wrote the dealer agreements stating any vehicle
found to have been exported outside of Canada is against the franchise
agreement, but the punishment was a chargeback of any warranty repairs done
on the vehicle prrior to being reported exported, as well as all rebates
paid to the dealer.

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wrote:

> I worked for DC in Western Canada during the Exporting times in
> the mid 90's through early 2003. No dealer lost there franchise for
> exporting vehicles.

You are missing the point of my original post.

I said NOTHING about the issue of EXPORTING or IMPORTING.

I an talking about a Canadian walking into a US car dealership and
plunking down cash to buy a new car, then putting his own plates on
the car and driving it off the lot. The Canadian customer is the one
who will be importing the car back into Canada, and who will have to
deal with any regulatory, compliance, or tax issues.

The point is that the US dealerships are saying that their franchise
agreements prohibit them from selling cars to Canadians - the reason
being that their sales territories (or customer residency addresses
restrictions) are strictly defined in the franchise agreements.

I'm wondering if there are US laws (constraint of trade, etc) that
would make such clauses illegal.

For example, can a General Motors franchise agreement in Dallas say
that I am not allowed to sell a new car to a resident of Fort Worth?
Would such a clause violate any existing state or federal trade laws?

If indeed Americans came to Canada 5 to 10 years ago and bought new
cars (NEW cars) right off the lot, then why weren't the dealerships
afraid of violating their franchise agreements? Weren't the same
restrictions in their franchise agreements as we are being told are in
the US dealer's agreements?

I realize that this isn't exactly what you're talking about, but
Pennsylvania has a 6% sales tax. Allegheny and Philadelphia Counties
have a 1% sales tax, thus making a 7% sales tax paid on items
purchased there. If a person goes to a surrounding county and makes a
major purchase they can save 1%. BUT, eventually you will be billed
for the 1% if the out of County dealer didn't collect it. And now they
notify the county if you make major purchases other than vehicles,
ie., appliances, furniture, etc..

"Pete E. Kruzer" > wrote in message
ups.com...
>I realize that this isn't exactly what you're talking about, but
> Pennsylvania has a 6% sales tax. Allegheny and Philadelphia Counties
> have a 1% sales tax, thus making a 7% sales tax paid on items
> purchased there. If a person goes to a surrounding county and makes a
> major purchase they can save 1%. BUT, eventually you will be billed
> for the 1% if the out of County dealer didn't collect it. And now they
> notify the county if you make major purchases other than vehicles,
> ie., appliances, furniture, etc..
>

With a cash and carry situation, it is fairly simple to get around some
taxes. Registering a motor vehicle is much different. I don't know how the
Provinces work, but here, you cannot register a vehicle unless the proper
taxes are paid. Importing can subject you to certain regulations also
since the vehicle must comply with Federal regulations for emissions and
safety.

All of that said, I don't see why a dealer should turn away a buyer that
walks into his store. I can see where GM may want the dealer to refuse so
they can keep the Canadian dealers happy, but I doubt any laws can be made.

Canadian dealers have the same restrictions on selling new vehicles to
US purchasers. There are even stickers on the vehicle that state "not
intended for sale in the US', or something like that. There is no
problem selling into neighbouring cities, or provinces, as I understand
it, just across international boundaries.

Edwin Pawlowski wrote:
> "Pete E. Kruzer" > wrote in message
> ups.com...
>> I realize that this isn't exactly what you're talking about, but
>> Pennsylvania has a 6% sales tax. Allegheny and Philadelphia Counties
>> have a 1% sales tax, thus making a 7% sales tax paid on items
>> purchased there. If a person goes to a surrounding county and makes a
>> major purchase they can save 1%. BUT, eventually you will be billed
>> for the 1% if the out of County dealer didn't collect it. And now they
>> notify the county if you make major purchases other than vehicles,
>> ie., appliances, furniture, etc..
>>
>
> With a cash and carry situation, it is fairly simple to get around some
> taxes. Registering a motor vehicle is much different. I don't know how the
> Provinces work, but here, you cannot register a vehicle unless the proper
> taxes are paid. Importing can subject you to certain regulations also
> since the vehicle must comply with Federal regulations for emissions and
> safety.
>
> All of that said, I don't see why a dealer should turn away a buyer that
> walks into his store. I can see where GM may want the dealer to refuse so
> they can keep the Canadian dealers happy, but I doubt any laws can be made.
>
>

Wes 94 ZR580 wrote:

> Canadian dealers have the same restrictions on selling new
> vehicles to US purchasers. There are even stickers on the
> vehicle that state "not intended for sale in the US', or
> something like that.

My question remains.

Do US franchise agreements between CAR DEALERS ->and<- AUTO MAKERS
(such as Ford, GM, Chrysler, Toyota, Honda, Nissan, Volkswagon, BMW,
Mercedes, Volvo) stipulate that they cannot sell new vehicles to
purchasers with out-of-boundary primary residential addresses?

Can a dealer in Michigan refuse a sale to a resident of Ohio, for
example?

Are there not US trade laws (restraint of trade?) that would make such
a practice illegal?

Would it be the case that the prohibition of selling to a Canadian
customer is technically illegal, but the Canadian customer has no
recourse under US law?

There are no such laws. Franchise dealers have no obligation to sell to
anybody, just as they have no obligation to sell at a particular price.

There are restrictions when it come to which VEHICLES can be sold in some
instances, however. I. E. cars sold in states that do not require
California emission system can not be sold in states that do, like the
states in New England. Even that does not restrict the dealer from selling
the car, but it does prevent it from being licensed in that state. In other
words a vehicle without California emission, that would be driven only on
private property, but not only the public highways, could be sold in a
California emission only state.

mike


"MoPar Man" > wrote in message
...
> Wes 94 ZR580 wrote:
>
>
> My question remains.
>
> Do US franchise agreements between CAR DEALERS ->and<- AUTO MAKERS
> (such as Ford, GM, Chrysler, Toyota, Honda, Nissan, Volkswagon, BMW,
> Mercedes, Volvo) stipulate that they cannot sell new vehicles to
> purchasers with out-of-boundary primary residential addresses?
>
> Can a dealer in Michigan refuse a sale to a resident of Ohio, for
> example?
>
> Are there not US trade laws (restraint of trade?) that would make such
> a practice illegal?
>
> Would it be the case that the prohibition of selling to a Canadian
> customer is technically illegal, but the Canadian customer has no
> recourse under US law?