LOS ANGELES - Honda dealers are in a tiff with American Honda Motor Co. Inc. because the automaker will not honor warranties on gray-market vehicles from Canada.
Normally it wouldn't be an issue. But with Odysseys and Accord V-6s in short supply, Honda dealers are trying any method - even going to Canada - to get additional units.
Some dealers near the border use brokers to acquire new vehicles from Canadian dealers, then sell them in America as used vehicles with zero miles on the odometer. But without a Honda warranty on the vehicle, the dealer is forced to put his own service contract on it, which cuts the profit margin.
'Honda won't warrant them, even though they're selling the same damn car in Canada as in America,' said Jerry Powers, owner of West Hills Honda in Bremerton, Wash., about 80 miles from Canada.
'What happens if that car gets traded in to a Ford store, and another customer gets that traded-in Canadian Honda model? He may not know the Honda doesn't have a warranty, and that's a big problem when he brings it to us,' Powers said.
Honda spokesman Art Garner said federal law requires dealers to inform a customer if a vehicle is from the gray market and not under factory warranty. Honda has yet to hear from a customer who bought a Canadian-market car without knowing it, he added.
Joe Featherstone, service manager at Honda of Fife (Wash.), said each zone has a certain amount of money set aside for warranty repairs. Honoring Canadian warranties would eat into that fund.
'If you're spending money on a car not sold in your zone, then you're wasting the money allocated for your zone,' Featherstone said. 'Honda has been beating around the bush on this. They're all Honda cars. Let's fix them and make it right.'
Garner said Honda's policy of not honoring gray market vehicles differs little from that of other automakers.
'It's no different than a dealer not wanting another store coming into their territory. American Honda distributes cars in the U.S., and Canadian Honda distributes cars in Canada,' Garner said.
About 70,000 gray-market vehicles were imported for sale into the United States last year, of which 'several hundred' were Canadian Hondas, Garner said.
Garner said Honda will review gray-market warranty claims on a case-by-case basis.
One domestic-make dealer in Washington state imported some gray-market Odysseys, but stopped when he found out he had to warrant the minivans. Until he stopped, it provided some temporary competition for local Honda dealers, who were in short supply of Odysseys.