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

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.

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:

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.

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" 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.

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..

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.

My question remains.

Do US franchise agreements between CAR DEALERS ->and

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

Yes they have agreements that state where a dealer can sell vehicles. They don't restrict the dealer from selling to other customers they just state that Joe-Bobs Chevrolet will be the only authorized dealer for a certain area, and that the company won't set up another dealer for a set time period. As for restricting the sales to other areas, it depends on the federal and state emission and safety laws. In NY for example a NEW vehicle must meet NY standards (which are the same as California) You cannot buy a vehicle new in another state and register it in NY unless it meets those standards.

As for buying in Canada and registering it in the US. It is usually restricted due to the emissions and the high importation fees. Those are Federal importation rules. Same ones that apply if you buy a Ferrari and try to import it. They have to go through a Federal inspection and retrofit so they comply with the laws in the US. Doesn't matter if the car was bought in Canada or Africa they still have to be imported the same way.

The same import restrictions apply taking the vehicle into Canada. No laws saying that those restrictions are illegal exist.

The dealer can refuse to sell to anyone. They own the vehicles and can sell or not sell to whomever they please. They can even have you removed from the dealership and arrested for trespassing if they desire.

there may be an issue with warranty as well. I had a Ram 3500 pick up come in with the check engine light on. we found it needed a gas cap but warranty would not cover it because the vehicle was manufactured and sold in Mexico. we were told the vehicle has no warranty in the USA.

Can a Denny's refuse to serve or do business with black customers? There is no law against it?

Why would a franchise owner refuse someone paying MSRP, paying in cash (or bank draft, or some other registered security) ???

Why do US dealerships say that it's their FRANCHISE AGREEMENT that prohibits them from selling to Canadians?

What salesman would be happy with the franchise owner nixing such a sale?

Why are we hearing reports of US dealerships getting letters from auto makers reminding them that they can't sell to Canadians?

What about this:

We are not talking about restrictions on where (physically, geographically) a dealer can operate from.

We are talking about a US dealer refusing to sell a new car to a Canadian customer soley on the basis that the customer is Canadian.

There is no question as to the ability of the Canadian to produce funds or sufficient payment. There is no issue as to how the Canadian customer moves the purchased vehicle away from the dealership to it's destination (where-ever that may be). The sale is not contingent on the dealer delivering the car to the Canadian customer's place of residence, or a responsibility to insure the car can be registered for operation in the customer's jursidiction.

Restraint of trade laws say that it is illegal to have a contract between two parties that restricts trade between them.

That would make it illegal for a car maker to have a clause in a franchise agreement stating that the dealer is prohibited from selling products to specified persons or groups.

If a GM franchise agreement with a Detroit car dealership states that the dealership can't sell new cars to Canadian citizens, then couldn't a MacDonald's franchise agreement have a clause saying that Big Mac's can't be sold to blacks?

Are you saying there is no law that would make such a clause illegal?

For the last time.

This is not about warranties, This is not about emmissions or other regulations This is not about import/export issues, duties or taxes

This is about a Canadian walking into a US dealership and plunking down a money order or cashiers check for the full MSRP window-sticker (Monroney) amount for a given new vehicle (plus any applicable state or local retail sales tax) and loading the vehicle onto a flatbed truck and driving away with it.

Why on earth would a US car dealer turn away a sale like that?

The reason being offered is that the FRANCHISE AGREEMENT prohibits sales to Canadians. So I'm asking if such an agreement is legal, given restraint-of-trade laws.

I have no horse in this race, but from a legal standpoint, blacks are a protected class. Canadians are not.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

Blacks: Protected class.

Canadians: Not protected class.

Certain laws trump others.

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

Ok, replacem blacks with Asians, or native indians.

Ok, what law trumps what other law then?

Yes it is legal. Restraint of trade has NOTHING to do with Federal Import/Export laws.

A franchise agreement is a private contract. If the franchisor stipulates a condition that the franchisee cannot sell across an international boundary, then the franchisee has to choose to honour, or defy the conditions of the agreement. If the penalty for breaching the contract is loss of the franchise, then that is the result.

I believe that only discrimination that you can't include in a contract would be areas protected by constitutional provisions, or by specific legislation. Certainly here in Canada protection from racial discrimination is provided by the Charter of Rights. Any service business has the right to refuse service to anyone they choose, as long as it does not violate Charter Rights.

Ford > Bill Putney wrote: