Buying Cars in the U.S. - A Roadblock at the Border

[Rob]

THE STRONG DOLLAR: BUYING CARS IN THE U.S.
A roadblock at the border


GREG KEENAN
AUTO INDUSTRY REPORTER
November 9, 2007


Ian Patterson was all set to fork out more than $70,000 (U.S.) to a Chevrolet dealer in Atlantic City, N.J., for a new, sparkling red Corvette, but he had a problem. He's not allowed to bring the car into Canada.

The same ban applies to all other General Motors Corp. 2008 vehicles built after Sept. 1 and bought in the United States, most 2008 Honda Motor Co. Ltd. models and 13 Toyota Motor Corp. vehicles, including four of the most popular.

The problem is a Transport Canada regulation that requires 2008 vehicles to have a device that deters car thieves, something known as a theft immobilizer.

Vehicles sold in the United States are not required to have the component.

In the case of the Corvette, Canada also has a more stringent standard for bumpers than the United States and Corvettes sold there don't meet it.

"I was going to pay cash," said Mr. Patterson, a software developer for Research In Motion Ltd. "I had some money stashed away for a rainy day."

He was also going to save more than $30,000. That's based on a price of $72,290 after a $5,500 rebate in Atlantic City, compared with $102,130 (Canadian) - including options - he figured on paying for the high-end Z06 model in Canada.

Mr. Patterson's story is another twist in the saga of Canada's high-flying currency and how much Canadians are able to benefit from its rise either through lower prices here or by shopping abroad.

The Canadian anti-theft requirement, meanwhile, has auto makers seeing red because they have been pushing Ottawa for years to harmonize our regulations with those south of the border and not introduce standards that apply only in this country.

Some auto makers are not installing the devices in cars built for the U.S. market, are putting them only on selected vehicles, or installing systems that don't meet the Transport Canada standards. (Auto makers say there is no after-market kit for installing the devices that will meet the Canadian regulation.)

Vehicles without the immobilizer systems are banned from importation into Canada by the Registrar of Imported Vehicles, the Transport Canada department that decides which cars and trucks are allowed in.

In one way Mr. Patterson lucked out, because he was set to make the deal, but stopped when he discovered that Corvettes are inadmissible.

Honda Canada Inc. senior vice-president Jim Miller said his company is aware of two Canadians who actually bought Honda vehicles in the United States, but aren't allowed to drive them in Canada because they don't have theft immobilizers. Mr. Miller said he believes one of the buyers was able to get his car into Canada before it was identified as a banned vehicle on the Registrar of Imported Vehicles website, while the other buyer was turned back at the border.

Mr. Patterson, who owns a black 2001 Corvette Z06 and is an instructor at high-performance driving schools, said he would prefer to buy the car in Canada. "But I'm not going to spend an extra $30,000 on a car."

Ottawa first notified auto makers four years ago that the theft immobilizer had to be in place for the 2008 model year.

So while the timing of the change in regulations accidentally coincides with the rise in the value of the Canadian dollar, it's a strong deterrent to buying a vehicle in the United States.

Several companies have introduced special incentives to reduce the gap in prices between vehicles in the two countries, including a new General Motors of Canada Ltd. program announced yesterday that offers $5,000 (Canadian) on the 2008 Corvette.

Any notion that car companies are using the issue to bolster their battle to keep Canadians buying here is misguided, spokesmen for several auto makers say.

"There are conspiracy theorists everywhere," said Stephen Beatty, managing director of Toyota Canada Inc., which installs theft immobilizers on all but one of its Lexus line of luxury vehicles in the U.S. "But I'm not so wise as to have figured this out five years ago. It's happenstance."

GM Canada is simply complying with the Canadian regulation, said spokesman Stew Low.

"The other question is why Transport Canada has chosen to continue a path of unique Canadian standards and not worked to harmonize standards across North America," Mr. Low said.

Transport Canada tried to persuade the auto makers to agree voluntarily to a Canadian standard but was unable to do so, spokeswoman Jessie Chauhan said.

A mandatory device

THE PHILOSOPHY

Designed to resist attack by a thief for five minutes, based on the theory that a thief will move on if breaking in takes too long.

HOW IT WORKS

A transponder in the key connects with the electronic control unit in the immobilizer, which in turn communicates with the engine control unit. If one is not present, power won't go to several electronic circuits necessary to start the car.

POTENTIAL DOWNSIDE

It may increase muggings and home break-ins, said Bryon Stremler, manager of government affairs for Toyota Canada Inc. "You make the vehicle so resistant to attack that they'll go after the key," Mr. Stremler said.

WHY IT'S NECESSARY

More than 160,000 vehicles were stolen in Canada last year, according to Statistics Canada.

Greg Keenan

The number of Canadians heading south to buy a car appears to be growing daily, according to the Registrar of Imported Vehicles. Here's a breakdown:

25,000

Number of Canadians who bought U.S. vehicles last month.

170,000

Estimated number of Canadians who will buy a vehicle in the U.S. this year.

112,000

Previous record for number of Canadians buying U.S. vehicles.

40%

Estimated number of vehicles purchased in the U.S. that will be new.

5,000


Number of Canadians calling the registrar per day, looking for information on importing American cars.

7,000

Number of Canadians who called earlier this week, when the dollar hit $1.08 (U.S.)

Source: Registrar of Imported Vehicles

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SOURCE - The Globe and Mail, Canada's National Newspaper.