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Automakers are breaking U.S. law in order to prevent Canadians from buying cheaper cars there, according to an Ottawa trade lawyer and anti-trust expert, by ordering their American licensed dealerships not to sell new cars to Canadians.

The big five automakers — Ford, GM, Chrysler, Honda and Toyota — fear they could lose their Canadian franchises if people were crossing the border to buy their vehicles, says Michael Hart, who holds the Simon Reisman chair in trade policy at Carleton University. This forces Canadians to buy from dealerships north of the border, where prices tend to be thousands of dollars higher.  The Canadian prices for Canadian-made vehicles tend to be lower or on par with American prices for the more affordable vehicles like the Honda Civic or Toyota Corolla, consumer advocates have told CBC News.  But for more expensive vehicles, the price differences are particularly noticeable, especially considering the relative dollar parity between Canada and the United States.

Dealerships fear breaking rules  Hart added the companies are guilty of "refusal to deal," which is an automatic offence under U.S. anti-trust laws, but the government is not acting to help consumers. "It can also be solved, in part, by the government," said Hart. "I mean the government can reduce the current incentives not to buy in the U.S."  Jack Backus, who owns Backus & Sons GM in Ogdensburg, N.Y., said he received a letter five years ago from General Motors directing him to sell only to Americans. The dealer sales and service agreement included a clause that authorized his dealership to sell "only to customers located in the United States".  A Chevrolet-Oldsmobile dealership owner in Massena, N.Y., confirmed he has received a similar letter from GM. He said the first-time breaking the rule would only lead to a slap on the wrist, but after a few sales there is a fear he would lose his business.

Customs system discouraging  Hart added the Canadian government has played its part, too, in setting obstacles for Canadian car buyers who want a deal. The paperwork is both complicated and costly, costing hundreds of dollars depending on the vehicle.  "The whole customs system is set up to discourage Canadians from going down to the U.S. and saving money," he said.  Hart also alleged car companies are making purchases less attractive by refusing to honour warranties on their own models when Canadians buy them in the U.S.

He said there is currently a class-action suit in a U.S. court against several automakers alleging anti-competitive practices, but it has lagged there for many years.  The Competition Bureau has said in an email response it conducts its investigations confidentially and so would not comment on whether it had received any complaints about anti-competitive practices by car manufacturers or whether it has any investigations on the subject.

Price disparity

A look at manufacturer's suggested retail prices (MSRP) in Canada and the U.S. for selected vehicles produced in Canada. 

Vehicle

Canada MSRP (Cdn)

U.S. MSRP (US)

Manufactured in

Acura ZDX 54,990 46,120 Alliston, Ont.
Acura MDX 52,690 43,030 Alliston, Ont.
Chrysler Town & Country 31,645 29,995 Windsor, Ont.
Dodge Grand Caravan 19,995 20,995 Windsor, Ont.
Chrysler 300 32,995 28,670 Brampton, Ont.
Dodge Charger 29,995 24,495 Brampton, Ont.
Dodge Challenger 26,995 24,995 Brampton, Ont.
Ford Edge 27,999 27,525 Oakville, Ont.
Lincoln MKX (AWD) 47,650 41,395 Oakville, Ont.
Ford Flex 30,499 30,885 Oakville, Ont.
Chevy Camaro 27,965* 23,280 Oshawa, Ont.
Chevy Impala 28,125† 25,760 Oshawa, Ont.
Buick Lacrosse 34,935† 30,170 Oshawa, Ont.
Chevy Equinox 26,445 23,530 Ingersoll, Ont.
GMC Terrain 28,395 25,560 Ingersoll, Ont.
Cadillac XTS 2013 48,995a 44,075 Oshawa, Ont.
Honda Civic sedan 14,990 15,995 Alliston, Ont.
Civic Si 25,990 22,555 Alliston, Ont.
Civic coupe 18,240 15,755 Alliston, Ont.
Toyota Corolla 15,540‡ 16,130‡ Cambridge, Ont.
Lexus RX350 (AWD) 44,950 40,710 Cambridge, Ont.
Toyota Matrix 16,795‡ 18,845‡ Cambridge, Ont.
Toyota Rav4 24,865ⁿ 22,650ⁿ Woodstock, Ont.
Volkswagen Routan 28,575 27,020 Windsor, Ont.
*$2,280 credit available some places

† $2,000 credit available some places

‡ Freight and PDI of $1,465 in Canada, $760 in U.S.
ⁿ Freight and PDI of $1,565 in Canada, $810 in U.S.
a Add $1,595 destination fee
(Sources: Manufacturers online listings)

 

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