Riding high from a windfall that has the long-suffering loonie on par with the U.S. dollar, Canadian consumers are railing against auto makers for allegedly blocking cross-border shopping.
A Toronto law firm has filed a class-action suit challenging the auto industry’s practice of voiding the warranties of new vehicles purchased in the U.S. and imported privately into Canada.
Filed on behalf of four Toronto residents, the suit seeks C $2.1 billion ($2.1 billion) from AmericanMotor Co. Ltd, Honda Canada Inc., LLC, Chrysler Canada Inc., Corp., General Motors of Canada Ltd., Nissan North America Inc, Nissan Canada Inc., the Canadian Automobile Dealers Assn. and National Automobile Dealers Assn.
Jonathane Ricci, partner in Juroviesky Ricci LLP, tells Ward’s his firm was contacted six months ago by consumers disgruntled because their Canadian-market vehicles were priced as much as 39% higher than the same vehicles in the U.S. Meanwhile, less than 10% separated the Canadian dollar from the U.S. greenback.
Importation, however, was not an option because auto makers adopted policies to discourage the so-called gray market.
“They’re not letting the natural laws of competition take effect,” Ricci says of the defendants. “The government of Canada does allow Canadians to import vehicles, and there’s a whole (legal) procedure that allows them to do it.
“The issue is, when you prevent Canadians from doing that because of your own policies, your own agreements; your own directives, that’s preventing Canadians from taking advantage of a weaker U.S. dollar at a time when they should be able to do so.”
Once the defendants respond, Ricci says his firm will seek official class-action status for the suit – a process that could take several months.
Says aspokesman: “We think the suit is without merit. We adhere to all applicable laws, and we know of no legitimate basis for the lawsuit or allegations against Nissan. We will be fighting it.”
declines comment on the advice of counsel. and GM also decline comment, saying they have not seen the claim.
Honda and GM also confirm they do not honor warranties in Canada for new vehicles that are imported after they are purchased in the U.S. Though GM picks up the warranty after six months or 12,000 km (7,500 miles), whichever is longer.
GM’s policy is designed to discourage wholesalers from undercutting native dealers.
“Pricing is a complicated formula that is based on more than just exchange rates between countries,” Honda says in a statement. “Many factors weigh into the pricing decision. For competitive reasons, Honda does not disclose its pricing rationale.”
The situation is a mirror image of one that arose in 2003, when the Canadian dollar was valued so low – less than $0.62 compared with the U.S. dollar – it negated the pricing premium built into Canadian stickers.
Meanwhile, Porsche Cars North America Inc. revises its ’08 pricing in Canada. Differences range from $4,900 for the Cayenne to $16,100 for the GT3 RS.
“We cannot ignore our customers and dealers in Canada who can look to the U.S. and recognize a substantial price difference,” PCNA President and CEO Peter Schwarzenbauer says in a statement. “We listened to the market and did what is best for our customers in Canada.”
– with Byron Pope and James M. Amend