GM fights cross-border sales
July 17, 2002
BY ED GARSTEN
General Motors Corp. dealerships in the United States that
sell or perform warranty service on some vehicles built in Canada
risk losing their allocations of the hottest new products, the
automaker told them in a letter Tuesday.
Approximately 25,000-30,000 so-called gray market vehicles are
exported from Canada each year, mainly by brokers, because of the
favorable exchange rate and the demand for hot products such as
the Chevrolet Suburban, GM spokesman Tom Henderson said.
The practice, while not illegal, is discouraged by the
automakers because they want to be able to control the product mix
and pricing in the two countries. Exporting also threatens
franchise agreements, they say.
GM did not eliminate warranty coverage out of consideration for
customers who might be unaware they are driving a gray market
GM's Canadian unit told dealers in that country they are
prohibited from selling new vehicles for resale or primary use
Vehicles must be registered in Canada for at least six months
of primary use and be driven about 7,500 miles before sale outside
the country would be permitted.
The rule answers complaints from the GM dealer council,
according to cochairman Glenn Ritchey, a Daytona, Fla., Chevrolet
Rochester Hills dealer Russ Shelton said the policy puts much
of the onus on dealers to catch gray market vehicles, but "I'm
glad they're taking action."
About 5,000 gray market GM vehicles enter the United States
each year, Henderson said.
Ford Motor Co. is allowing its dealers to perform
warranty work on gray market vehicles because the company doesn't
want to inconvenience a customer who might have been unaware of
the vehicle's origin, Krusel said.
The Chrysler Group of DaimlerChrysler AG voids
the warranty of gray market vehicles.
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