Two major attempts by Ford Motor Co. to penalize Canadian dealers for selling so-called gray-market cars to American buyers have been stalled by legal actions.
In one decision that casts doubt on the legality of automakers' bans on the sale of cars and trucks to U.S. buyers, an Alberta provincial court blocked Ford of Canada from fining its dealers for the practice.
In a related action, Ford of Canada has terminated a dealership in Quebec for exporting vehicles to the United States. But the dealership, Poirier Valleyfield in suburban Montreal, remains open during court-overseen arbitration.
A weak Canadian dollar, coupled with the automakers' policy of charging Canadian dealers less for vehicles than U.S. dealers, has created a flood of gray-market imports into the United States. According to the National Highway Traffic Safety Administration, which tracks the flow, some 200,000 gray-market vehicles came in from Canada last year, up from only 15,771 vehicles in 1996.
The staggering increase has sent makers scurrying to find ways to stanch the flow, ranging from not honoring warranties to imposing fines to terminating dealerships.
The Alberta decision, handed down by the province's Court of Queen's Bench last fall, stopped Ford from collecting $200,000 Canadian, or about $125,500, in charge-backs from Marlborough Ford in Calgary, Alberta, for exporting 23 vehicles. Ford later reduced the amount to the U.S. equivalent of $52,180 for 10 vehicles.
The charge-back penalty is the difference between a vehicle's Canadian and U.S. sticker prices.