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.

Letters

Good article Neil. I deal with these issues on a daily basis, as I run an auto leasing company in Toronto.

A further example - a new Cadillac Escalade is about $21 000 more expensive in Canada than in the US. Why? I concede that vehicle costs could be justified to be somewhat higher in Canada given the geographics and market size, but the gap is far in excess of what would be deemed reasonable.

The other effect this has is on values of Canadian used vehicles, particularly late models. There are so many US used vehicle flowing into Canada now that the effect is to greatly reduce the value of the Canadian vehicle.

In short, if you bought a Canadian Escalade, then got rid of it say 6 months later, it is worth only slightly more than the US equivalent that is readily available here, even though you paid $21 000 more to buy the vehicle. That's a big pill to swallow! The same thing applies if it's a 911, or most other vehicles.

I'd really hate to be a franchised new car dealer of high end imports, as those types of buyers have the means and wherewithal to buy American vehicles, and are doing so with regularity.

– Tom Keenleyside | Toronto

Bravo! Thank you for putting what is infuriating me to no end into black & white so eloquently. It's refreshing to see.

I get so tired of reading articles that say "there's no significant automobile pricing difference" and "yeah, but cheaper financing makes up the cost difference"; while cheaper financing helps ease the sticker shock somewhat, it doesn't come close to addressing what's happening to Canadians who buy vehicles in good faith in the present market.

Don't we pay the Competition Bureau enough to deal with this? I understand they're presently occupied with prosecuting Halloween candy manufacturers or something, which begs the question about which price fixing scheme is hurting Canadians more. While the Competition Bureau is frittering away its time looking at the price of Kit Kats it should be devoting its every waking hour to this instead.

– Dave Henderson | Lake Country, BC

Kudos to Neil McDonald for finally putting into perspective the gouging of Canadian consumers by the auto manufacturers. Local newspapers pander to their main advertiser by reporting only negative articles filled with half truths about importing vehicles from the U.S..

Importing a vehicle is relatively easy and lucrative for consumers who do their homework prior to importing. For every road block that auto manufacturers put up to deter the flow of vehicles there is almost always some way around it.

I encourage everyone to buy their next vehicle stateside and save a load of money. This is the only way that manufacturers will eventually start treating Canadians fairly.

– Dean Alexander | Regina, SasK

Neil I really appreciate your article and we are about 2,000 canadians fighting for the fair pricing but also trying to get the cars out of the garages in Canada.

Thank you for the article and we would appreciate if you would consult www.carswithoutborders.com It is our site that we created about 3 weeks ago to fight precisly what you mention in your article.

– Serge Bergeron | Cornwall, Ontario

Mr. Macdonald, you neglected to mention that a substantial portion of GM and Honda vehicles sold in Canada are actually MADE IN CANADA. A great example is the Pontiac Solstice, a sports car built in Oshawa that costs about $5000 more in the country it was built.

Some popular automobiles manufactured in the US have assemblies that are entirely built in Canada, for example Ford Mustang and Ford F-150 engines. Based on this, the theory of hurting our manufacturing sector, (of which automobile manufacture and subsidiary industries are a large part) by giving Canadians lower costs, does not hold water.

– Christian Wilson | Ottawa

I started looking to purchase a 2008 Toyota Sienna in September and at this time the vehicle was on the admissable list. At this time there was no word of engine immobilzers.

In October the dealer in Spokane found a Sienna and had it brought to his dealership, I wired the money, he sent the paperwork to the border. On the weekend of October 26 I drove down and picked up the van and brought it into Canada on the 29th of October - still no word on immobilzers but I new from the spec sheet it had one.

Once in Canada I went to the Registry and registered it without any inspections done - I was told if I had the original "certificate of origin" an out of province inspection was not required. Move ahead to November 4. RIV updates their site and puts the 2008 Sienna on the inadmissable list if manufactured after Sept. 1, 2007.

My Sienna was manufactured in Sept. 07. Of course I am now concerned and I am getting a run around from RIV in regards to getting the Form 2 so I can get the out of country inspection done to ultimatley get the sticker from Transport Canada saying the vehicle has cleared. A few weeks of hearing headlines surrounding all the vehicles in Canada that are parked, but I have insurance and registration so I am, well my wife is driving the new van.

Finally form 2 arrives and I get the out of country inspection done and sent back to RIV. Another two weeks of concern over the possibilty of Transport Canada deregistering the van and forcing me to export it to the US leads to last Friday when I receive a letter in the mail from RIV with the sticker and a note saying the van passed and is now in compliance with Transport Canada's regulations. Amen!

Still no word about the immoblizer meeting canadian regulations. The biggest problem I saw was the fact that RIV updated their list after the Sept. 1 date (Nov 4). If they would have been proactive they would have updated it back in July or August before the Sept. 1 date. But that goes with the engine immobilizer story.

I am in the market for a new truck and I was hopeful the Canadian manufacturers would lower prices to match the US so I could buy in Canada and support Canadian industry but it looks like I will be looking South to save some more of my hard earned cash. I saved $17,000.00 on the Sienna.

– Tim Burnie | Calgary

This restrictive trade practice by manufacturers has been going on for years. If they can sell the same product for more in one market over another they will; and they will restrict access to the cheaper goods from outside that market by restricting exports using threats to cut-off anyone who sells to a foreign market.

They claim that they do this to protect local networks but when the price differences are as great as they are on luxury vehicles they are just protecting inflated profits.

The simple solution? Don't buy that new car. If enough people don't buy, sooner or later the manufacturers will either have to lower the Canadian price or honour the warranty on a US purchase.

Corporate greed is insatiable and must be fed a steady diet of suckers. Resistance is not futile!

– Phil Gough | Vancouver

Mr. Macdonald neglects to mention how things were 5 years ago when our dollar was at 62 cents USD. Car prices in Canada for comparable models were not 40% higher.

The manufacturers absorbed a pretty large chunk of that for quite some time, until our dollar started coming back up.

– Ed Nicholson | Brampton, Ontario

I am extremely disgusted with the way car manufacturers in Canada are gouging consumers. I bought a 2007 Honda Accord back in March of 2007, and paid roughly $35000 for the vehicle including taxes. It was about 2 weeks after I bought the car that I went on the US Honda site and saw that the same car was selling for roughly $26000; same car, same options, regardless of what the dealer may say. I have had the car now for about 8 months, and have put 44,000kms on it. Because of the way Honda and other dealers in Canada are pricing their cars, I am thinking on getting rid of the car, and buying a second hand vehicle from the US.

There is absolutely no difference in cars sold in Canada or the US. DAy-time running lights are standard now in the US, and so are the emission standards, which are identical to Canada's. I can't for the life of me figure out why there is a pricing difference. Same car, same warranty, same BS, but higher cost in Canada.

We're not talking just a couple hundred dollars here. Somewhere around 6-7 thousand dollars in the price difference. There is absolutely no reason for this, and eventually consumers in Canada are going to make the car companies pay for it.

If I could do it all over again, I would have kept my 1991 Honda Accord I sold back in March, and put a couple thousand $$ of work into it, to make it last. As they say, Hind site is 20/20.

– Matt Gardiner | Cape Breton, N.S.

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