North American automakers slapped with $2B class action suit by new vehicle owners
Wed Sep 26, 2:13 PM
The Canadian Press Email Story IM Story Printable View
By The Canadian Press

TORONTO - North American auto manufacturers have been slapped with a $2-billion class action lawsuit by four Toronto residents who claim the auto industry conspired to inflate the price of automobiles in Canada and also inhibited cross-border vehicle shopping on the strong Canadian dollar.

The suit, filed with the Ontario Superior Court by Toronto-based law firm Juroviesky and Ricci, covers consumers who bought cars between August 2005 and August 2007.

They say they forked out more money to buy cars in Canada than similar or identical models cost in the United States.

Named in the lawsuit are the Canadian and U.S. divisions of General Motors (NYSE: GM), Honda, Nissan and Chrysler.

The plaintiffs called the plan between automakers a "conspiracy" that involved a "series of concerted actions, agreements and directives" between the companies designed to minimize cross-border competition and the number of new cars that crossed the border.

Included in the allegations are claims that the automakers agreed not to honour warranties for vehicles purchased across the border, forcing Canadian consumers who wanted a manufacturer's warranty to pay 25 to 35 per cent more on average for a vehicle in Canada.

None of the allegations has been proven in court.

Also named in the suit are the Canadian Automobile Dealers Association (CADA) and the National Automobile Dealers Association, a U.S. partner based in Virginia.

CADA spokesman Huw Williams said Wednesday afternoon that the association had yet to receive a copy of the class action lawsuit.

"We're obviously not prepared to either comment on it or anything revolving it," Williams said from Ottawa.

The suit also claims some auto sales contracts included "no-export clauses" that prevented buyers from taking their cars from the U.S. to Canada, or vice-versa.

Another allegation says the industry penalized dealers if the cars they sold were then exported, either threatening to delay shipment of certain models or by issuing "chargebacks."