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  #1  
Old 05-22-2002, 11:17 AM
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grey market - free trade

the following is an editorial from the Globe and Mail newspaper, based in Toronto:

"DaimlerChrysler is annoyed with its own customers. It seems Americans have been arranging to get DaimlerChrysler cars and trucks from Canadian dealerships, whose prices are as much as 25 per cent lower than U.S. prices for identical vehicles. DaimlerChrysler is so bothered by this so-called grey market that it has decided to stop honouring warranties on cars and trucks that are bought in Canada but end up in the United States.

DaimlerChrysler and the other Big Three auto makers have grown increasingly concerned about this cross-border phenomenon, which isn't illegal and is entirely consistent with the North American free-trade agreement. This is the same Big Three that have thrown their considerable weight around for decades to gain an open, integrated North American automobile market.

The Big Three like to freely move parts and vehicles across borders for added flexibility and cost savings. They like to build plants in the most cost-efficient locations and shut down inefficient facilities, a trend that in recent years has often left the companies' Canadian operations holding the short end of the stick. Strangely, though, it turns out they don't like the retail side of their markets to function without borders.

History suggests that the conditions that have allowed the grey market to grow will correct themselves without rash actions by the Big Three. In the early 1990s, Canadians flocked to the United States in record numbers to shop for bargains, because high Canadian interest rates had resulted in an overvalued Canadian dollar that didn't accurately reflect its purchasing power relative to the U.S. market. That cross-border shopping crisis disappeared when the Canadian dollar sank to a level that more realistically reflected its relative buying power.

Now the pendulum has swung the other way. The Canadian currency has been significantly undervalued for too long, and doesn't reflect the country's improved economic efficiencies in recent years. Neither the currency nor the Big Three's vehicle pricing policies have caught up with Canada's strong economic fortunes, and the imbalance has manifested itself in the cross-border gap in vehicle prices.

The markets will eventually catch up, and the grey market will evaporate. In the meantime, DaimlerChrysler would do best to embrace the open borders it has long supported, rather than punish its own customers."
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Old 05-22-2002, 01:13 PM
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I really don't understand why a manufacturer won't honor a warranty if the purchase was made in another country. A Mercedes Benz is after all, a Mercedes Benz isn't it? Do the ones in sold in Canada come off the Sindelfingen apprentice line?

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Old 05-22-2002, 01:51 PM
Matt Crooke
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Kuan, i think the reason they dont honour warranties from imports is that models made for different countries do vary quite a bit on many aspects.
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  #4  
Old 05-22-2002, 10:54 PM
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This is a common problem with international companies selling in multiple countries.

Same product in Canada is cheaper if you factor the dollar exchange. Manufacturers must sell their products relative to that respective country's price point. It just so happens cars are cheaper in Canada (again if you factor the dollar exchange).

Daimler Chrysler is doing what other industries do now to protect their respective markets and dealers. Manufacturers usually try to penalize the "guilty" dealer of knowingly sending product out of their territory but I guess it is not working for DC. Flooding Canadian cars to the USA will hurt the US dealers who are competing with the same product but at a much cheaper price.

No warranty is a good deterrent. I would think the other manufacturers will follow suite.
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Old 05-22-2002, 11:57 PM
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DaimlerChryslers decision to void warranties based on geographic location is despicable behaviour towards its customer. Imagine! DC Whining and moaning because we are buying their cars. They make the fortunes of kings selling these things and they are going start mewling and puking like babies "there, there, pookie did the big bad customer scare you? yes, yes, i know, some of them actually have brains and take advantage of the same trade laws you do, shame on them!"

what does my mb have to do with warranty location? if there are indigenous parts, then charge a premium to fetch them. i say itll just give independant shops a chance to sell a warranty for an amount that still makes the dollar difference worth it and third party warranties are commonplace in the used car market.
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Old 05-23-2002, 10:34 PM
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I wonder what DC would do if a Canadian tourist drives to the US in their new '03 DC car and needs emergency warranty service...keep your receipts!
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Old 05-25-2002, 03:38 AM
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Location or varying equipment has nothing to do with it...They just don't want Americans going to Canada and paying LESS for the same car! That's bulls**t.

Mike
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Old 05-25-2002, 08:00 PM
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Yes, I think its worth noting that Dc's decision is an insult to U.S. consumers and Canadian exporters;

MB once had more peculiar problems in Europe where, say, a car exported to the Czech Republic from Germany then imported by an Italian dealer would do strange things to the price after all the currency twists were factored in, but they solved the problem with the Euro dollar. However, North America has only 3 countries to worry about and the U.S. dollar really is the worthy currency of NA, hence we have no need of an uber currency to mitigate periodic price wavering.

One day perhaps all of north america will use the u.s. dollar, but i think at least some bill denominations should include renderings of Zapata or the Queen to reflect the history of mexico and canada (didnt the us at one point fight a revolutionary war aganst the british crown?)....just joking
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