Things You Should Know Before Importing

Cross border shopping for vehicles

Importing vehicles from the US has become less attractive since late 2007. Dealers in the US are less willing to sell to Canadians because of possible penalties from the manufacturers, and prohibitions in franchise agreements.

The import process is now more complicated due to technical obstacles raised by the manufacturers and bumbling by the Registrar of Imported Vehicles. Other obstacles include the requirement of a recall clearance letter, an absurdity for new vehicles, and possible cancellation or reduction of warranty coverage (see here).

Every new passenger vehicle, utility vehicle and light truck sold in Canada must have the following equipment which may or may not be on its US counterpart:

• An immobilizer

• Daytime running lights

• A speedometer which reads in kilometers

• Tether anchorage for child restraints

• Bumper protection

An engine immobilizer prevents the vehicle being started without a key, and its temporary theft mainly by young males. Most new cars sold in North America already had this feature before it became a Canadian requirement, but some did not, and those are the cars joyriders target.

The immobilizer standard came into force in September 2007, and  is expected to produce measurable reductions in property losses, injuries and the occasional death resulting from joyrides. Certain tricky automakers discovered they could rely on the immobilizer standard to close the border to US imports. Even though most U.S. vehicles come equipped with an electronic immobilizer, the Canadian branches of some carmakers claimed they were unable to certify if those immobilizers could meet Canadian standards – this despite the fact that vehicles for both countries generally come from the same plants! As of December 2007, the Registrar of Imported Vehicles permits the factory U.S. immobilizer or the installation of an approved aftermarket immobilizer that offers protection equivalent to the Canadian new vehicle standard (which ironically is based on a pre-existing aftermarket standard for aftermarket devices!).

Installing the approved immobilizer is more complicated than the $50 to $100 starter kill sometimes required by insurance companies. Installation requires a certified technician, and costs about $450. The aftermarket immobilizer has been mandatory on high risk vehicles in Manitoba, where most aftermarket installations are undertaken at car dealerships, and have not generated significant warranty or service issues.

Daytime running lights are a proven safety feature, required on all Canadian vehicles since 1989, and offered voluntarily on some U.S. vehicles. If not, the vehicles may require the installation of a daytime running light module, or reprogramming the body control module (that’s right, no wires, just an activation at a new car dealership… for a fee).

 A tether significantly reduces forward movement of a child seat in a collision: the anchorage used to be put in the glove box; it now has to be installed before delivery in Canada. That’s a small job.

8km/h bumpers. Canada followed the U.S. lead in improving bumper protection in the 1970’s. When the Reagan administration weakened the U.S. standard to 2.5 mph (about 4 km/h), Canada didn’t. As a consequence, according to some manufacturers, the Canadian-market  bumpers may be stronger on some models. Changing the front bumper for the supposedly stronger Canadian version is a big job involving more than just the skin of the bumper or its reinforcement. Included in the changeover are airbag sensors. This is generally a dealbreaker for importation.

The speedometer must read in kilometers – this does not apply to odometers which can read in miles. Dual markings with the kilometers in smaller type are accepted. If the speedometer reads only in miles, you may have to swap the entire cluster. Figure about $500.

Price reductions and much better incentives have closed most of the gap in pricing (to around $3,000 for most models). And the greater difficulty and risks involved in registering vehicles in Canada have increased the threshold at which importing makes sense – APA’s recommended brokers suggest you pass if the final savings to you are less than $5,000, especially if the warranty is not honored or if it is cancelled. APA recommends you consider using the services of a professional importer or U.S. dealer that is prepared to deliver the vehicle to the border to you with the relevant US paperwork completed and modifications already made or easily undertaken.

Note: US and Canadian pricing has never been identical. For much of the 1990s, the weak Canadian dollar and high taxes made it impossible for carmakers to pass along price increases to Canadians, and we had a large export market of cheaper new and used Canadian vehicles to the US reaching over 200,000 vehicles a year. In fact, even within the US, regional pricing differences can reach $3,000 due to differing inventories and promotions.

Significant savings are still to be had but are limited mostly to well-equipped or luxury vehicles. When comparing prices, investigate beyond the manufacturer's suggested retail price, as the actual price of the Canadian model may be subject to a cash rebate. Factory financing and leasing incentives which you can’t qualify for on an exported US vehicle will likely close the gap further. Compare the discounted price of the Canadian model to the final price of the US vehicle. Include the extra transportation from the US and conversion costs. Unless you are buying through an intermediary who knows what they are doing, you may have to pay sales tax in the state of origin to circumvent restrictions on sales to Canadian residents. Most brokers will charge $1,500 to $3,000 per vehicle imported plus their expenses; they may be able to negotiate a better price with their US supplier than a Canadian consumer making a single purchase.

The true cost of importing from the U.S.

Mere comparison of the US and Canadian MSRP (Manufacturer’s Suggested Retail Price) is not sufficient.  What you actually pay for a vehicle (the transaction price) depends on local market conditions, possible cash rebates and other incentives, and your ability to negotiate a discount from the selling dealer. Use the following checklist for a true comparison:

  additional 6.1% duty applies to vehicles not manufactured in North America

  federal excise tax on fuel-inefficient vehicles applies

  loyalty programs and grad rebates are excluded

  lease and finance rates are not available to cross border shoppers

  the standard equipment and features on a Canadian model may not be the same as on its U.S. counterpart.  Options and packages may also vary

  cash rebates and other factory incentives may be different south of the border

  generally,  it is easier to negotiate a discount in Canada because the U.S. dealer has less incentive to bargain with a cross border shopper

Problems with importing from the U.S.

the warranty may not be the same or void  - click here to check our website for warranty info -