Where Did My Warranty Go?

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 American Honda Motor Co. Ltd, Honda Canada Inc., Chrysler LLC, Chrysler Canada Inc., General Motors 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 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.

Ricci says, “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.”

Says a Nissan spokesman: “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.”

Chrysler, Honda and GM decline comment. Honda and GM confirm they do not honor warranties in Canada for new vehicles that are imported after they are purchased in the U.S.

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.
— with Byron Pope and James M. Amend