Not-so-free car market 

On Oct. 13, Ben Eisinger, owner of Eisinger Honda in Kalispell, received a certified letter from Honda ordering him to stop selling cars to Canadians. Bob DePratu, owner of DePratu Ford Volkswagen in Whitefish, says he’s received a similar letter from Volkswagen.

With the U.S. and Canadian dollar nearly on par, Montana businesses have been awash in new cross-border customers seeking deals, car dealerships included.

According to Brian Osler, president and CEO of the Ontario, Canada-based nonprofit North American Automobile Trade Association (NAATA), car and truck prices in Canada matched the U.S. five years ago, when the Canadian dollar was worth 65 cents here. But as the Canadian currency’s value has risen, Osler says new car prices have stayed the same, making U.S. cars cheaper.

As a result, Olser says, a record 112,826 cars were sold to Canadians by U.S. car dealerships last year. NAATA expects that number to increase to at least 160,000 cars this year.

Eisinger declined to reveal precisely how much business his dealership has received from buyers across the border, but he told the Independent that sales to Canadians have generally tracked the Canadian dollar’s rise in comparison to the U.S. dollar.

But manufacturers want to slow the flow of new cars over the border. Osler says that nearly all of them have recently warned their dealerships to stop making cross-border sales. He believes the manufacturers are trying to protect their Canadian dealerships from losing sales.

But a Honda spokesman, Chris Martin, says his company has had a long-standing agreement with U.S. dealerships that allows sales only to U.S. residents. He says Honda sent the letter out to remind dealerships of the agreement, in part because of the situation caused by the new exchange rate.

Osler says that the recent move by manufacturers may discourage sales of cars that are technically new, but there are loopholes. “Manufacturers have no control over used cars,” he explains. In many places across the United States, he says, “used” car dealerships have sprung up that buy new cars and immediately sell them back to Canadian customers.
 
“Certainly there are dealerships that do that in Montana,” Osler says. “You’re buying the same car at a relatively large price difference, so it’s an easy sale.”
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