If you live in Canada, you're probably already aware the Canadian dollar matched the U.S. dollar for the first time since 1976 yesterday. Canada's currency has been inching toward par all year, finally coming in line with the greenback on Thursday. Unfortunately for Canadians, car prices have not kept up with trend. But that may be about to change.

Back when it took $1.50 in Canada to match one U.S. dollar, Canada's higher car prices were perfectly logical. A car the sold for $50,000 in America would sticker for $75,000 at a Canadain dealership. Those days are long gone, but car prices remain high.

Take the Porsche Cayman S, for example. If a car shopper in Canada heads to his or her nearest Porsche dealership this weekend, they will have to shell out nearly $85,000 for the mid-engine coupe — a whopping $26,000 more than the U.S. MSRP of $59.000. Similarly, a BMW M5 retails for $83,000 in America and $113,000 in Canada.

According to Quebec's Guide Auto website, luxury automakers including BMW, Mercedes-Benz, Audi, Porsche, and others are preparing to cut their Canadian prices by up to 15 percent in response to the currency changes. According to the French publication, Porsche plans to drop the price of its Cayman S by $10,000 in Canada — a modest cut, but a far cry from the full $26,000 difference.

As for the rest of the auto industry, Guide Auto didn't say whether domestic prices would be adjusted. Even the entry-level Saturn Sky costs $7,000 more in Canada than in America. Even the Dodge Charger — which is built in Canada — costs $6,000 more at Canadian dealers.

The currency problem poses a serious dilemma to automakers, who have to keep new car shoppers happy, without sending the value of used cars plummeting or enraging buyers who make their purchase before price cuts.

Automakers are expected to announce Canadian pricing for the 2008 model year next month. Many analysts suspect Canadians will turn to importing vehicles from America if major price cuts are not implemented.

Canadians look at sharply lower auto prices in States and feel it's very unfair they're paying thousands more while the buck hovers near par; Wheels talks to buyers, dealers and car makers
Mark Toljagic

Special to the Star

Sep 22, 2007


Like Seinfeld's non-fat yogurt, the pitch seems too good to be true.

A brand-new Ford Focus with air conditioning for just $9,999, a factory-fresh VW Rabbit for $12,999 and a 2007 Chevy Trailblazer 4x4 for $21,999 are three pinch-me-I'm-dreaming bargains advertised recently in The Boston Globe.

Prices like these take the breath away of vacationing Canadians who open a local newspaper in the U.S.

The lease deals seem even more unbelievable: Boston's Kelly Nissan offers a new Altima for $139 per month (with $2,723 due at signing) and a Pathfinder 4x4 for $239 monthly.

While priced in American dollars, the gap between the two currencies is closing, making the U.S. stickers especially appealing.

Yet it begs the question: with the loonie's rise against the U.S. currency, why aren't Canadians seeing lower automobile prices here?

Reader Tom Becker asked the same question of Porsche North America, the importer of his 2001 911 C4. He's contemplating purchasing a new 911, but noticed the wide chasm between American and Canadian prices on the auto maker's website.

"Why do I and every other Canadian get unfair pricing?" Becker wrote in an e-mail. "You list a GT3 at $147,300 Canadian and $106,000 American. After conversion, I would have to pay more than $24,000."

When he posed his question last December, one American dollar cost $1.16. Plug in a more recent exchange rate ($1.06) and the gap between the two prices has widened to more than $33,000 (Canadian) (the GT3 is now listed at $107,500 in the U.S.).

Porsche wrote back, explaining that its German-built cars are valued in Euros, not American greenbacks, so the Canada-U.S. exchange rate was moot.

But when Becker crunched the Euro's exchange rates, he discovered that Canadians were still paying well over $20,000 more than Americans for the same model.

"Wow, that would buy many sets of tires, gas and insurance!" he wrote to us.

Despite growing awareness of the loonie's favourable exchange rate, auto manufacturers seemingly have done nothing to address the situation. If anything, they've let the price disparity grow unchecked.

"The gap has become embarrassingly large," confirms George Iny, president of the Automobile Protection Association (APA). "The potential is there to erode the Canadian dealers' business," he says, as more consumers go new-car shopping south of the border.

Iny knows of one Montreal-area Porsche dealer that has seen one-quarter of its sales volume migrate to the U.S.

"The phenomenon is most pronounced in the super high-end market where the savings are substantial," he says.

Like other car-buying services, the APA has begun purchasing vehicles in the U.S. for its members, but it's strictly a cash-only proposition, which precludes two-thirds of the buying public, says Iny.

Broker Mark Derry says his clients increasingly have been asking about importing new cars from the U.S., but he has declined to do so.

"It is a very detailed transaction that must be done perfectly or you will have difficulties at the border, such as faxing the title to the border you are crossing 48 or 72 hours beforehand," he says. "I am busy enough with regular business that is very straightforward."



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WHILE IMPORTING VEHICLES from the U.S. is not as complicated as it used to be – thanks to the North American Free Trade Agreement – it is time-consuming and intimidating for the novice.

But where there's a problem, an entrepreneur can often spot an opportunity.

Originally a decades-old Pontiac dealership in Hamburg, N.Y., Superior Auto Sales opened a satellite showroom in Oakville two years ago under the name Fournier Auto Sales, where it could display new and used American-sourced vehicles and explain how Canadians could tap into the savings without leaving the GTA.

"We offer a 10 per cent savings by the time all is said and done," explains sales agent Jim Reddy. "The more expensive the vehicle, the more significant the savings."

The Fournier showroom offers a mix of pristine used vehicles and brand-new models, including a Porsche GT3, Mustang Shelby GT500 and Dodge Charger Super Bee.

Fournier promises a dealership experience virtually identical to that of a new-car dealer, a convenience factor that has considerable appeal given the do-it-yourself alternative.



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"IMPORT THE CAR yourself and you have to present the title to U.S. Customs, which could take 72 hours," cautions Reddy. "The consumer basically has to book a week's vacation to shop in the U.S."

That's if the buyer can find an American dealer willing to deal at all.

"U.S. dealerships have clamped down and will not sell new cars to Canadians anymore," warns Fournier general manager Bob Barker. "Used cars are a different kettle of fish, however."

The company has amassed plenty of experience, having exported some 30,000 vehicles from Canada to the U.S. back when American dealers took advantage of the 65-cent dollar. Now Fournier hopes to reverse the flow by making it easy to shop American.

In a study conducted last year, DesRosiers Automotive Consultants determined that the typical new vehicle was $5,842 more expensive in Canada than in the U.S., a 17 per cent price premium (after the exchange rate was factored in).

Dennis DesRosiers believes auto makers are addressing the yawning price gap by offering Canadians better incentives.

"They are taking some of their exchange rate bonus and putting it out into the market in the form of aggressive incentives," he says.

"Not much movement on MSRPs yet, but we expect these to come gradually with the new models being priced aggressively this fall."

Stew Low, communications director at General Motors of Canada, maintains that Canadians are getting better deals on the showroom floor, regardless of the disparity in manufacturers' suggested retail prices.



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"ANY PUBLIC COMPARISONS of pricing I have seen does not take the discussion to the actual transaction level, which is important because of the high percentage of Canadians that finance/lease and the level of finance/lease incentives in the Canadian market," he wrote in an email.

But when pressed to provide an example of a superior Canadian deal, Low could not supply one.

Spotted in the Boston Globe was an advertised GMAC lease on a 2007 Chevrolet Silverado 2500 4x4 for $249 per month, while a GMAC SmartLease on a similar Chevy pickup truck in Ontario costs about $400 per month (with $2,000 down in both cases).

It would take a Cray supercomputer to uncover all of the differences between Canadian and American sales incentives, but suffice it to say American consumers are no strangers to deep discounts.

To suggest Canadians are getting better deals is open to debate. Just try negotiating a $79 per month lease on a new Nissan Sentra with $1,995 down (as offered by Colonial Nissan of Medford, Mass.).

Robert Dexter, a spokesperson for BMW Canada, was more forthcoming with some answers as to why Canadians are paying more.

He says adjusting prices to reflect currency fluctuations can introduce "instability" in the marketplace, impacting the residual values of leased vehicles and ticking off owners who purchased earlier at higher prices.

Then there's the negative perception of falling prices, Dexter says, which can hurt an upscale image.

"There's a reluctance to discount, which can affect the `premium' brand," he says.

Rather than tinker with sticker prices, BMW and other manufacturers prefer to give Canadians more product features for the same price.

"We've made efforts to address the currency (valuation) by adding content to our products," Dexter says. "Base models are better equipped in Canada than in the U.S."

He explains the reason Canadians will never see identical prices on both sides of the border is because the cost of doing business in the Great White North is higher.

"The U.S. has economies of scale with 10 times the population. Marketing costs are higher here by doing everything in two languages. There is only one port of entry in Canada (for BMW), while there are three or four in the U.S. Taxes are higher here."

Meanwhile, the volume of U.S. vehicles being imported into Canada continues to grow. Last year's sum was 112,826 units while this year's total to June was 64,096 – 29 per cent ahead of last year's cumulative total to June.

The types of vehicles crossing the border have changed, too.



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FIVE YEARS AGO, the list reflected Canada's top sellers, such as the Honda Civic and Toyota Corolla, while the popular 2006 and 2007 models now entering the country are Chevrolet Trailblazers, Cadillac Escalades and Hummers, according to information compiled by the Registrar of Imported Vehicles (www.riv.ca), which is authorized by federal authorities to provide information to importers and make sure regulations are followed.

While most imported vehicles are pre-owned, it is new and nearly new products that are experiencing greater importation volumes now.

"Basically everything that enters the RIV is considered used despite the fact you may have purchased it off the lot minutes prior to importing (it) into Canada," says deputy registrar Gary Moriarty.

"It does give an idea of the increasing trend towards current-year models going through the program," he says of the latest data.

The trend suggests dealers, brokers and fleet buyers are getting involved in importation in a big way, likely to circumvent the manufacturers' Canadian pricing.

Beyond the obvious higher prices Canadian consumers pay, it is new-car dealers here who bear the brunt of the fallout.

Mike Karim, president of the Toronto Automobile Dealers Association, is hopeful a meeting between his association and car makers can take place to discuss the issue of price differentials.

"We would like the manufacturers to do away with the cost disparity between the two countries, especially as the dollar approaches parity," he says, adding that "we have to tread carefully."

Fat chance, says the APA's George Iny. The automobile manufacturers ultimately don't care, he maintains, since a car sold is a unit moved – regardless of which side of the border the transaction takes place.

"The manufacturers view it as one market, a continental economy," says Iny. "Only the dealers lose."

Iny believes the dealers' protests will fall on deaf ears. The only hope, he suggests, is to bend the rules so that they can import cars, too.

"Create a partnership with U.S. dealers to control the importation and service of the vehicles," Iny advises.

For the most part, new-car warranties that are often cited by many as the biggest impediment to importation already transcend the U.S.-Canada border.

Among major manufacturers, only Chrysler and Honda/Acura do not honour their warranties on vehicles imported from the U.S.

In the case of GM, the car has to be six months old before warranty repairs are honoured.

"We find when we properly explain the warranty situation to the consumer, they can make an informed decision," says Fournier Auto Sales' Bob Barker.

As a consequence, Fournier sells a lot more Lexus RX 350 crossovers than it does Acura MDXs, thanks to the full factory warranty provided by Toyota.

Some customers, however, wouldn't think twice about driving their Honda or Acura down the QEW to Buffalo for warranty work, Barker says.



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FOURNIER EVEN SELLS a Lubrico warranty that mirrors factory coverage on Chryslers and Jeeps, for example, whose exported products are not supported by the manufacturer.

Chris Travell, vice-president of the Automotive Research Group of Maritz Research, believes the manufacturers view U.S.-Canadian pricing as a nuisance issue, despite the growing trend of private importation.

He draws a comparison with Internet-based auto sales, which five years ago were predicted to make bricks-and-mortar dealerships obsolete. Needless to say, that hasn't happened.

"Maybe five per cent of vehicles will be sold by enterprising dealers as U.S. imports," he says. "That five per cent factor will always be there."

Among major manufacturers, only Chrysler and Honda/Acura do not honour their warranties on vehicles imported from the U.S.

The Toronto-based law firm of Juroviesky and Ricci has announced a class-action lawsuit against automakers due to unfair sales practices. The lawsuit — which is seeking $2 billion — claims automakers have kept vehicle prices artificially high despite the increased value of the Canadian dollar. Currently, a Canadian vehicle can cost as much as 38% more than its U.S. counterpart.

The suit was filed on the behalf of four Toronto citizens who claim they paid more for the same car in Canada than they would have in the U.S. According to the National Post, the lawsuit covers consumers who purchased cars in Canada during the two year span from August 2005 to August 2007.

Earlier today, Porsche announced it would lower its Canadian pricing by 10% while increasing standard features.

3) Distribution chain -- we are such a big country and so little populated ... see #1

4) Taxes -- need I say more?

Tony Wong

Business Reporter

Sep 27, 2007

The MDX, a flagship SUV for Acura, Honda's upscale car brand, is proudly built in Canada at the company's plant in Alliston.

But a funny thing happens when the award-winning vehicle crosses the border into the United States. The car gets cheaper.

RELATED STORY: Shopping for cars in the U.S.
Canadians pay $52,500 for the popular automobile that was redesigned for 2007, while Americans pay $40,195 (U.S.).

With the Canadian dollar almost at par, Acura isn't the only automotive brand with a whopping price gap, and consumers have not been slow to notice it.

Few would dispute there are price differences on either side of the border.

But a $2 billion (Canadian) class-action lawsuit launched yesterday alleges collusion between the Canadian and American head offices of some automakers to allegedly inflate the prices of cars in Canada while inhibiting cross-border shopping.

The suit, by four Toronto residents through Toronto-based law firm Juroviesky and Ricci, alleges that each person paid more money to buy a vehicle in Canada than the price tag would have been in the United States.

One Toronto man paid $58,645 for a Jeep Cherokee in Canada, when the same car was advertised for less than $40,000 (U.S.) in the United States, says the statement of claim.

It's also alleged that some manufacturers do not honour warranties on U.S.-bought vehicles, forcing customers who want those warranties to buy in Canada.

The lawsuit also claims that some dealers were penalized for selling cars that were later exported to Canada, and vendors that did not comply have been threatened with termination of their dealerships. Some consumers were made to sign "no-export" clauses for automobiles purchased, according to the suit.

"The manufacturers have a perfect right to charge whatever the market will bear," said law-firm partner Jonathane Ricci. "What we are concerned with is when you place roadblocks that end up enhancing your prices.

"We have had calls from many frustrated Canadians who have tried and been quite frustrated at buying a car from a U.S. dealer for export to Canada."

Under Canada's Competition Act, it is an offence to conspire to set prices or lessen competition.

The allegations have not been proven in court.

The suit covers consumers who purchased cars between August 2005 and August 2007.

The Canadian dollar has been almost at par since last week, after a long climb from a record low of 61.79 cents (U.S.) in 2002.

The suit names the U.S and Canadian divisions of General Motors, Honda, Chrysler and Nissan.

Also named in the suit is the Canadian Automobile Dealers Association and its American counterpart, the National Automobile Dealers Association.

Huw Williams, a spokesperson for the Canadian dealers, said the association had not seen the lawsuit.

"We haven't seen anything, but given that litigation is in progress, we will likely not have a comment," Williams said.

Bowing to consumer pressure, Porsche Cars North America is lowering prices an average of 10 per cent on 2008 models, compared with prices and standard equipment of 2007 models, the car maker said Tuesday.

A study released this month by automotive consultant Dennis DesRosiers found that, while car pricing is starting to narrow between the two countries, luxury vehicles show the biggest discrepancies. A luxury sports car costs an average of $13,694 (Canadian) more in Canada. Large SUVs had a $9,153 price difference, while subcompact cars had only a $437 difference.

A separate study by BMO Nesbitt Burns, released last week, says Canadians pay 24 per cent more for a basket of similarly priced goods, ranging from iPods to cars, than in the United States.

Tony Van Alphen

Business Reporter

Oct 25, 2007

John Mainse thought he could get the deal of a lifetime after surfing online and finding a GMC Acadia sport utility vehicle at least $10,000 cheaper in the U.S. than in Canada.

But then the Oshawa firefighter read further on the website of a New York state dealer and found a message to Canadians slamming the brakes on any big savings.

"Please do not call," said the message from Fox Auto Group in Painted Brush, N.Y. "We are unable to sell new vehicles out of the country due to our dealer franchise agreement with GM.

"It is understood that buying new vehicles in the U.S. may save you a few dollars and, trust me, I would appreciate the extra business. But we will not/cannot jeopardize our good standing with GM."

General Motors of Canada doesn't plan to lower prices to U.S. levels but Mainse wonders why he can't exercise his right as a consumer by shopping south of the border and buying the same 2008 model there.

"I really do feel they're taking advantage of Canadians," he said.

He's not the only one. Many consumers are angry that prices for many products here haven't dropped as the Canadian dollar shot up during the last year.

But several auto manufacturers are sticking to a policy prohibiting U.S. dealers from selling to Canadians, who see thousands of dollars in savings on dealer websites.

"I tried buying a Honda vehicle from the U.S. to save $5,000 to $10,000 but the dealerships from New Hampshire to North Carolina in the east and from Washington to California in the west refused to sell to Canadians," said Bernard Au of Toronto. "Dealers claimed that Honda U.S. had threatened to close down their dealership if they do sell new vehicles to Canadians."

In Ekland, Pa., Brad Orchowski, a salesperson at Walters Ekland Chevrolet, said inquiries from Canadians have increased in recent months. "Sure we'd love to sell to Canadians and anybody else, so long we can do it legally," he said, referring to the franchise agreement.

Other auto makers ranging from Chrysler to Toyota have also warned their U.S. dealers not to sell to Canadian consumers or brokers. Most franchise agreements state that a dealer can't sell to a resident of another country.

The federal Competition Bureau says there is nothing illegal about the practice.

Au noted that staff at Honda's customer relations office in the U.S. told him the company refuses to issue the Canadian Motor Vehicle Safety Standards compliance letter that would allow entry here.

Several auto makers have indicated they won't honour warranties here on vehicles bought in the U.S.

However, a Ford of Canada spokesperson said her company will honour warranties in both countries. Public affairs manager Gina Gehlert also said she is unaware of any company rule prohibiting a Canadian consumer from buying in the U.S. At the same time, she noted Ford will continue to set its prices for the Canadian market, and not to match the U.S.

The North American industry faced the same situation in reverse several years ago. It prompted auto makers like Chrysler to threaten sanctions against Canadian dealers who sold vehicles to U.S. buyers.

A group of shoppers recently filed a claim seeking class-action status in Ontario, alleging collusion between many major auto makers to inflate prices in Canada while inhibiting cross-border shopping.

Although many consumers have noticed major price differences in the same U.S. and Canadian models in their online research, company officials and some analysts said other factors and actual transaction prices would narrow the gap.

For example, Canadians must bear the cost of retrofitting U.S. models to meet Canadian regulations. Canadians would also need cash to make the purchase because financing is not available.

After receiving an inquiry from Mainse about the wide difference in pricing, GM replied that Canada and the U.S. are separate markets and the company's divisions operate independently of each other. Economic differences between the two countries mean vehicle, parts and service pricing plus incentives are not the same, the company said.

Meanwhile, Mainse plans to find out what he must do to legally bring a new vehicle into Canada by attending a seminar offered by the Canada Border Services Agency.

He is still confident of buying a new fully loaded Acadia sport utility vehicle for about $38,500 (U.S.), instead of about $50,000 here.

"If prices don't come down, I'll get one in Florida because, as of yet, they don't have the restrictions on selling to Canadians like they do in the border states," said Mainse.

Au noted that staff at Honda's customer relations office in the U.S. told him the company refuses to issue the Canadian Motor Vehicle Safety Standards compliance letter that would allow entry here.

Nov 21, 2007 06:20 PM
THE CANADIAN PRESS

A soaring loonie pushed the number of cars Canadians purchased south of the border in October to nearly 25,000 – an increase of more than 100 per cent over the same month last year.

"We have been seeing a steady increase throughout 2007 and it really reflects the fact that the Canadian dollar has been appreciating against the U.S. greenback, making it more attractive for Canadians to go down into the U.S. and pick up a vehicle," said Carlos Gomes, senior economist with Scotia Economics.

According to Transport Canada, 24,873 cars were imported from the United States in October, more than double the number of cars – 12,289 – imported in the same month last year.

Simultaneously, the number of new car sales in Canada has declined from 158,394 in August to 121,000 in October.

Some experts say the number of Canadians who are holding off making purchases hoping to see lower vehicle prices here in Canada has added to that decline, which has prompted warnings that a steady rise of the loonie is hurting the economy.

However, that argument does not seem to stop tens of thousands of Canadians who cross the U.S. border every week looking for bargains.

And savings can be nowhere more significant than when purchasing a car. Many motorists who have purchased a car south of the border say they've saved in some cases up to $20,000.

But not all car bargain hunters have been able to take their newly bought wheels for a drive.

A new regulation by Transport Canada that requires that all vehicles be equipped with an electronic immobilization system means about a thousand cars without the anti-theft device purchased by Canadians in the U.S. may never be licensed.

While Transport Canada says the new regulation is here to stay, it admits some of those cars may have been purchased between Sept. 1, when the new regulation came into effect, and the time when the agency posted it on its website.

"There was a delay before the website was updated," Patrick Charette, a spokesman for Transport Canada admitted in an interview with The Canadian Press.

"I know that people clicked on the website and the car wasn't listed as not admissible. They bought the car and by the time they came back they said `Oops, now it's listed as not admissible."

The confusion arises from the fact that not all cars and models can be equipped with the anti-theft device.

To avoid having those cars held at the border, Transport Canada has authorized Canada Border Service Agency agents to allow owners to drive their cars home with a form clearly marked "not admissible."

"There's no guarantee that this car will ever be admissible and will ever be allowed to stay in Canada with plate and license," said Charette.

However, he said authorities were working to find a temporary solution.

" We want to make sure that we can get a balance between our safety approach and the situation obviously consumers are facing," Charette said.

But experts are looking for a long-term solution, which would be same vehicle standards in the U.S. and Canada.

"Most of the cars that we produce here in Canada are sent to the United States, so it would make sense that we would have a uniform standard . . . so that when you are assembling a vehicle you don't have to be putting in certain technical requirements for the Canadian markets as opposed to the U.S.," said Gomes.

"You would be able to produce the same vehicle for both markets."

A new regulation by Transport Canada that requires that all vehicles be equipped with an electronic immobilization system means about a thousand cars without the anti-theft device purchased by Canadians in the U.S. may never be licensed.

Number almost tripled from November 2006
Tony Van Alphen

Business Reporter

Dec 06, 2007

The rush of Canadians importing cheaper new and used autos from the United States has turned into a stampede.

Canadians' purchases of autos in the U.S. almost tripled to a record 30,002 cars and trucks in November from the same period last year, statistics from Canada's Registrar of Imported Vehicles program showed yesterday.

Analysts say the strong Canadian dollar and thousands of dollars in more savings at dealers south of the border spurred the huge increase in sales.

"It's certainly escalating," said Carlos Gomes, senior economist and auto industry specialist at Scotiabank Group.

"It tells you that people were continuing to go to the U.S. for good deals rather than buy in Canada," Gomes added.

However Gomes said he expects the volume to ease off this month because of the quick decline of the dollar to just below parity with the U.S. greenback in recent days.

Statistics from the registrar, a program Ottawa set up in 1995, indicated the number of imports in November smashed the previous record of 24,873 in October.

The numbers show increasing levels almost every month this year as the dollar rose and consumers became more aware of significant savings on transaction prices south of the border despite red tape and other restrictions.

Until the late spring of last year, the Registrar of Imported Vehicles program had never recorded a month with more than 10,000 auto imports from the U.S.

The statistics also show used autos account for a majority of the imports but the percentage of new vehicles has climbed to 22 per cent of the total from 11 per cent during the last two years.

Analysts say the increase in imports was a factor in a 5 per cent decline in new auto sales by Canadian dealers during November.

The increasing number of imports this fall and soaring dollar prompted Canadian automakers to introduce the biggest package of incentives in their history last month.

Chrysler has already indicated it will sweeten its package of incentives even more to keep consumers buying in Canada.

Other automakers will likely follow with more incentives, analysts say.

Automakers in Canada have been reluctant to cut their suggested retail prices because of the potential negative impact on the prices of used vehicles and on residual values at the end of leases.

The registrar program, which is now operated by Livingston International Inc., a private customs broker, is now receiving more than 7,000 calls a day on how to properly import vehicles into Canada.

Want a cheaper car? Sorry, you're Canadian
December 7, 2007

Everybody seems to agree that the shiny new 2008 Hondas sitting in the automaker's showrooms all over the United States are superb vehicles. They are redesigned, extremely well-reviewed and a tremendous bargain, at least when compared to the virtually identical versions Honda's Canadian dealers are offering.

But the cars here are off limits to Canadian consumers. Honda and the Canadian government have been seeing to that.

Right now, the big car manufacturers are gouging Canadians. And pandering to Americans. That should be apparent to anyone with a computer and an internet connection.

When it comes to cars, Canadians constitute a captive market, fenced in behind the world's longest economic barrier — the U.S.-Canada border. And Honda, along with most of the other big automakers, is determined to keep them there.

By now, the tactics are pretty well known. Most manufacturers have told their U.S. dealers near the Canadian border to simply refuse Canadian customers. They've also warned that they'll refuse warranty service to Canadians who buy their cars in the States.

Such behaviour should be no surprise. Companies exist to make money and the Canadian consumer has been a fattened cash cow for the automakers since the loonie rose to the same level as the American greenback.

A Honda Accord EX, for example, starts down here at $23,060 in American dollars. The same car in Toronto costs $27,490 Canadian.

Honda's Odyssey EX minivan costs $28,960 US here, as opposed to $36,990 in Canada. At this writing, the currencies are virtually at par.

Where are the breaks?
At the more exotic end of the new car scale, the differences are staggering. GM's Corvette coupe, for example, starts down here at $46,225 US In Canada, it's $70,920.

A Cadillac sedan in the States starts at $50,350 US In Canada, $67,220 Canadian.

And so on.

It wasn't supposed to be this way. Back in 1988, when Brian Mulroney's government was trying to persuade the electorate that free trade was in Canada's best interest, Conservative politicians dangled the prospect of lower consumer prices to nervous, uncertain voters.

Each side would get access to the other's market. The so-called playing field would be leveled. Everything would be cheaper. That voice at the end of the TV commercial that muttered: "Void where prohibited, not available in Canada" would disappear.

And publicly, at least, the private sector made brave noises of support. Rugged free-enterprisers all, they'd compete in an unshackled market to the good of everyone.

The fact is, though, business loves being regulated, at least when it's in their interest. So when the Canadian government promulgated a new regulation in September, stipulating a standard for anti-theft immobilizers in new cars sold in Canada, the car manufacturers, anxious to keep the two markets separate, stampeded to comply.

But it's the same device!
In short order, companies like Honda and GM stated that none of their new, 2008 American models complied with Canadian standards and therefore, regrettably, had to be declared inadmissible to Canada.

In fact, in Honda's case at least, the immobilizers buried in the guts of its American-sold vehicles are identical to the immobilizers in the cars it sells in Canada. Precisely the same, right down to the last wire.

But Canadian government was asking the manufacturers to make the casing housing the immobilizer a little more resistant to cracking. That provided the excuse to declare it inadmissible.

As a result, Transport Canada banned import of the much cheaper American cars. The ones that cost thousands less. What's more, it did it, the department says, for Canadians' own good.

"Where we are coming from is a safety perspective," says Patrick Charette of Transport Canada. How the immobilizer specification would make Canadians safer, Charette wasn't able to say.

The bottom line, says Bruce Cran of the Consumers' Association of Canada, is that "Canadians are being victimized by the car industry, and the government is supporting it."

What consumers want
Who asked for this new immobilizer regulation, asks Cran? "What benefit is this to consumers? It's absolutely none.

"No consumer group ever asked for it, that's for certain. We certainly weren't included in the discussions."

As a result of these rules, about a thousand enterprising Canadians have been stuck with cars they've imported from the U.S. but that can't be driven in Canada. And untold thousands of prospective Canadian buyers are being told by the Transport Canada website that most new cars sold in the U.S. are barred from Canada.

Cran calls it all "pretty disgusting," and he's called on consumers to write their MPs. Which, evidently, they have.

Abruptly, last week, Transport Canada rewrote the immobilizer regulation. It is now open for public comment. If the new regulation makes it into law (and there's no guarantee it will), any American car with any immobilizer, or any American car that can be fitted with one, should be admissible to Canada.

At least on paper.

The fact is, however, the Canadian system leaves it to the car companies to certify new vehicles for admissibility into Canada. And they clearly don't see it as in their interest to have Canadians importing lower-priced vehicles from the States.

Indeed, they like the immobilizer regulation as it is.

Honda of Canada spokesman Jim Miller says the company's Canadian division doesn't want to have to start certifying cars meant for the American market as admissible to Canada. Honda thinks that job ought to be up to the government.

"The consumer may have gotten a political break, but administratively, it's a different matter. It's a bit of a quandary."

One big market
Still, in the end, says a consultant hired to represent automakers, the manufacturers will probably bend, if that's what the Canadian government really wants.

Speaking on condition of anonymity, he concedes that the U.S.-Canada price differential right now is ridiculous and notes that consumer anger has already forced the manufacturers to narrow the gap somewhat.

But, he says, the Harper government is "in a desperate fight to win a majority government, and so populist, so consumer-driven, that nothing else matters. They are making policy on the back of an envelope, and handing it to bureaucrats to fix."

Ottawa, he says, seems to want to move things to the point where barriers are completely removed, creating a situation in which there is, effectively, complete free trade on cars. And that, he says, will have consequences.

Many production costs are dropping in the U.S., particularly as its dollar declines and automakers have been able to get out from under expensive health care and pension obligations.

So, he asks, why would an automaker continue to manufacture in Canada, if everything becomes one big unimpeded market?

Real free trade, in other words, might mean lower prices, but it also, eventually, means Canadian factory workers might have to accept less benefits or lose their jobs. Which was the anti-free trade argument in the first place.

In the end, it's a choice.