More about exports

Cliffy1 · #1 (**permalink**) 03-21-2008, 11:34 AM

We just got a memo at the dealer yesterday about exporting vehicles. I thought I'd share some of the information so you have a better idea of why most dealers will NOT sell to Canadian customers.

The memo was very specific. Dealer are not allowed to sell to anybody whom they think will be taking the vehicle out of the country in the first 120 days. The vehicles must be titled in the United States within that time to a person who actually resides in the US. None of this is new. What is new (at least to me) was the description of how Toyota tracks this and what the consequences are for the dealer.

First of all, the memo discussed the fact that Toyota will be checking vehicle registration data with RL Polk of Canada. If they find a vehicle titled in Canada that was sold in the US and made it into Canada prior to the 120 day mark from date of first use, the dealer is in huge trouble. First, the dealer looses any vehicles allocated to them as a result of that sale. Next, they loose the "delivery assistance" money and any incentives including the rebates. One a Tundra, that's $2500 plus the DAP money which is several hundred more.

Next, the selling dealer is on the hook if a Canadian dealer decides to sue Toyota US. That was one that caught my attention. Canadian dealers have dealer agreements with Toyota. I'm sure Toyota has written protections built into those agreements for the dealers. There are likely sections that insulate the Canadian dealers against fluxuations in the market due to variance in the US dollar. If a Canadian dealer thinks its protections are not being enforced, they could have a pretty easy claim against Toyota. Toyota would then pass that on to the offending US dealer.

US dealers are on notice that selling for export is a BIG problem and will not be tolerated by Toyota. I was reminded by this memo that its not really a greed issue either. Its an issue of supporting the individuals in other countries that have trusted Toyota to grow their own business. Its a lot more complicated than it looks at first glance.

stuball · #2 (**permalink**) 03-21-2008, 10:58 PM

Quote:

Originally Posted by Cliffy1

We just got a memo at the dealer yesterday about exporting vehicles. I thought I'd share some of the information so you have a better idea of why most dealers will NOT sell to Canadian customers.

The memo was very specific. Dealer are not allowed to sell to anybody whom they think will be taking the vehicle out of the country in the first 120 days. The vehicles must be titled in the United States within that time to a person who actually resides in the US. None of this is new. What is new (at least to me) was the description of how Toyota tracks this and what the consequences are for the dealer.

First of all, the memo discussed the fact that Toyota will be checking vehicle registration data with RL Polk of Canada. If they find a vehicle titled in Canada that was sold in the US and made it into Canada prior to the 120 day mark from date of first use, the dealer is in huge trouble. First, the dealer looses any vehicles allocated to them as a result of that sale. Next, they loose the "delivery assistance" money and any incentives including the rebates. One a Tundra, that's $2500 plus the DAP money which is several hundred more.

Next, the selling dealer is on the hook if a Canadian dealer decides to sue Toyota US. That was one that caught my attention. Canadian dealers have dealer agreements with Toyota. I'm sure Toyota has written protections built into those agreements for the dealers. There are likely sections that insulate the Canadian dealers against fluxuations in the market due to variance in the US dollar. If a Canadian dealer thinks its protections are not being enforced, they could have a pretty easy claim against Toyota. Toyota would then pass that on to the offending US dealer.

US dealers are on notice that selling for export is a BIG problem and will not be tolerated by Toyota. I was reminded by this memo that its not really a greed issue either. Its an issue of supporting the individuals in other countries that have trusted Toyota to grow their own business. Its a lot more complicated than it looks at first glance.

One thing that the corporate world is able to retain is the power they have to be a big bully. I don't know if Toyota is listed on the class action law suit yet that is pending in Canada.

Cliffy1, I'm wondering how Toyota USA could punish a US dealer if I hire an American Citizen to buy me a new Toyota. Why not punish the American citizen I employed, or punish me (forgot, they can't punish me because of NAFTA). I guess all they can do to get even is to treat their dealers like their dog, and kick them. I think it would be detrimental for a Canadian dealer to go after Toyota USA due to a potential lost sale. If found out by Canadian customers they could end up being boycotted. Maybe Toyota should try and figure out why Canadians go south in the first place.

I would love to buy a Tundra in Canada if I could afford to, but the Canadian price is way out of my league. Now I'm getting the feeling that Toyota doesn't deserve the patronage of Canadians.

Stuball

stuball · #3 (**permalink**) 03-21-2008, 11:05 PM

U.S. Toyota dealer to American customer: "Before I can sell you this Toyota you will have to sign an affidavit that you are not now employed by a Canadian or Canadian firm, nor will you allow yourself to be employed by a Canadian or Canadian firm for at least another 120 days from date of this sale."

Stuball

Cliffy1 · #4 (**permalink**) 03-22-2008, 09:03 AM

Quote:

Originally Posted by stuball

One thing that the corporate world is able to retain is the power they have to be a big bully. I don't know if Toyota is listed on the class action law suit yet that is pending in Canada.

Cliffy1, I'm wondering how Toyota USA could punish a US dealer if I hire an American Citizen to buy me a new Toyota. Why not punish the American citizen I employed, or punish me (forgot, they can't punish me because of NAFTA). I guess all they can do to get even is to treat their dealers like their dog, and kick them. I think it would be detrimental for a Canadian dealer to go after Toyota USA due to a potential lost sale. If found out by Canadian customers they could end up being boycotted. Maybe Toyota should try and figure out why Canadians go south in the first place.

I would love to buy a Tundra in Canada if I could afford to, but the Canadian price is way out of my league. Now I'm getting the feeling that Toyota doesn't deserve the patronage of Canadians.

Stuball

If I were a Canadian dealer, paying Canadian dollars to buy Toyotas through my Canadian distribution system, I would be pretty concerned about this. I would know that because of United States monetary policy, my customers could drive South and get the same car I sell for a lot less. This has nothing to do with profit or business practices. It has everything to do with the value of the US dollar versus the Canadian dollar. As a Canadian dealer, there is only one place I can buy my cars and that's through Toyota and not some dealer down South.

That Canadian dealer signed a dealer agreement with Toyota. In exchange for the dealer paying a variety of fees and buying vehicles exclusively through the Candaian distributor, the dealer gets some assurances. They are assured that they will not have to compete against dealers in countries with rapidly devaluing money. They will not have to compete against dealers with non-Canadian specified vehicles. They will not have to compete against dealers who have an unfair advantage.

Do you know when this started? It was back in the 1990's when the US dollar was stronger than the Canadian. A small number of US dealers were using brokers to buy Siennas out of Canada. Canadian dealers were quite happy to sell their products at MSRP. Those few US dealers were glad to pay MSRP in Canadian dollars because that meant buying them at about 20% below invoice in the US. Even after paying broker fees and transportation costs, we were still into them light.

Toyota saw this happening. They put down bans on this practice. They tried at first to punish US dealers but there was only so much they could do. Then, they went after the Canadian dealers. Now that the roles are reversed, everybody is looking for a fair reaction out of Toyota.

Dealers are not huge corporate entities. Most are owned by families. They are just trying to survive in a capitalist system and just want fair treatment.

SFTundraMan · #5 (**permalink**) 03-22-2008, 12:05 PM

well that pretty much says it all for me. I follow the rules all the time and it doesnt get much more clear than that.

stuball · #6 (**permalink**) 03-22-2008, 12:30 PM

Quote:

Originally Posted by Cliffy1

If I were a Canadian dealer, paying Canadian dollars to buy Toyotas through my Canadian distribution system, I would be pretty concerned about this. I would know that because of United States monetary policy, my customers could drive South and get the same car I sell for a lot less. This has nothing to do with profit or business practices. It has everything to do with the value of the US dollar versus the Canadian dollar. As a Canadian dealer, there is only one place I can buy my cars and that's through Toyota and not some dealer down South.

That Canadian dealer signed a dealer agreement with Toyota. In exchange for the dealer paying a variety of fees and buying vehicles exclusively through the Candaian distributor, the dealer gets some assurances. They are assured that they will not have to compete against dealers in countries with rapidly devaluing money. They will not have to compete against dealers with non-Canadian specified vehicles. They will not have to compete against dealers who have an unfair advantage.

Do you know when this started? It was back in the 1990's when the US dollar was stronger than the Canadian. A small number of US dealers were using brokers to buy Siennas out of Canada. Canadian dealers were quite happy to sell their products at MSRP. Those few US dealers were glad to pay MSRP in Canadian dollars because that meant buying them at about 20% below invoice in the US. Even after paying broker fees and transportation costs, we were still into them light.

Toyota saw this happening. They put down bans on this practice. They tried at first to punish US dealers but there was only so much they could do. Then, they went after the Canadian dealers. Now that the roles are reversed, everybody is looking for a fair reaction out of Toyota.

Dealers are not huge corporate entities. Most are owned by families. They are just trying to survive in a capitalist system and just want fair treatment.

I agree that Canadian dealers should be concerned. They should be concerned because they too are victims of Toyota's 2-tiered pricing policy. And because of it Canadian dealers are denied the ability to compete in a free-trade environment. If I were a Canadian dealer I would be screaming my head off at Toyota. The extra profit from Canadian pricing doesn't go the dealer but to the manufacturer. That, IMO, is unacceptable. As you well know, it is Toyota that sets the MSRP.

Yes, I know about when the U.S. dollar was stronger a few years back and the Auto companies had a price difference due to the low exchange rate on the Canadian dollar. At the time I knew of a Canadian Ford dealer bringing in loaded F-250s, giving them to his friends to drive for six months and then taking them south of the border to sell. It was a winfall for Canadian dealers at the time.

However, at the present time the Canadian dollar is not stronger than the U.S. dollar, it is at par. And that's where the Canadian pricing should be; close to par. Even the Canadian Government has been critical of the auto manufacturers for not adjusting their Canadian pricing with the changing dollar. The Canadian government could have virtually closed the borders to U.S. imports with their new engine immobilizer law that came into effect last September. But what did they do? They changed the law so Canadians could continue shopping for new vehicles in the U.S. I guess that shows our government is on side with NAFTA.

I understand that the reluctance of the Auto Manufacturers to adjust the Canadian pricing is due to the leased vehicles presently out there that have a preset value when they are turned in. The value of the leases in Canada would drop if the prices of new vehicles were lowered. That could result in a huge write down for the auto industry. However, many businesses affected by the dollar parity have had to take write downs and in some cases like the lumber industry, close up shop.

Stuball

Cliffy1 · #7 (**permalink**) 03-22-2008, 01:12 PM

Hmmmm... you may not have meant to do this, but you just gave me an idea. I wonder if our employees would be interested in driving a new Tundra for 120 days in exchange for just paying the taxes on it? I may have to look into this.

SFTundraMan · #8 (**permalink**) 03-22-2008, 06:25 PM

Quote:

Originally Posted by stuball

I agree that Canadian dealers should be concerned. They should be concerned because they too are victims of Toyota's 2-tiered pricing policy. And because of it Canadian dealers are denied the ability to compete in a free-trade environment. If I were a Canadian dealer I would be screaming my head off at Toyota. The extra profit from Canadian pricing doesn't go the dealer but to the manufacturer. That, IMO, is unacceptable. As you well know, it is Toyota that sets the MSRP.

Yes, I know about when the U.S. dollar was stronger a few years back and the Auto companies had a price difference due to the low exchange rate on the Canadian dollar. At the time I knew of a Canadian Ford dealer bringing in loaded F-250s, giving them to his friends to drive for six months and then taking them south of the border to sell. It was a winfall for Canadian dealers at the time.

However, at the present time the Canadian dollar is not stronger than the U.S. dollar, it is at par. And that's where the Canadian pricing should be; close to par. Even the Canadian Government has been critical of the auto manufacturers for not adjusting their Canadian pricing with the changing dollar. The Canadian government could have virtually closed the borders to U.S. imports with their new engine immobilizer law that came into effect last September. But what did they do? They changed the law so Canadians could continue shopping for new vehicles in the U.S. I guess that shows our government is on side with NAFTA.

I understand that the reluctance of the Auto Manufacturers to adjust the Canadian pricing is due to the leased vehicles presently out there that have a preset value when they are turned in. The value of the leases in Canada would drop if the prices of new vehicles were lowered. That could result in a huge write down for the auto industry. However, many businesses affected by the dollar parity have had to take write downs and in some cases like the lumber industry, close up shop.

Stuball

please dont take this the wrong way but would you feel bad if the dealer that broke the rules and sold you the car got fined , penalized or lost their license just to sell you a truck?

Cuz personally I dont see how any dealership needed to sell a truck so badly that they are willing to take that chance.

Of course I do feel bad for the folks up there because of the pricing difference. Not to mention that I am half Canadian and I cant even sell to my own relatives there

stuball · #9 (**permalink**) 03-22-2008, 07:08 PM

Quote:

Originally Posted by SFTundraMan

please dont take this the wrong way but would you feel bad if the dealer that broke the rules and sold you the car got fined , penalized or lost their license just to sell you a truck?

Cuz personally I dont see how any dealership needed to sell a truck so badly that they are willing to take that chance.

Of course I do feel bad for the folks up there because of the pricing difference. Not to mention that I am half Canadian and I cant even sell to my own relatives there

I certainly would feel bad if a dealer was punished by Toyota. Although it is Toyota's rules the dealer would be breaking, not NAFTA rules. It is Toyota that is breaking the NAFTA rules as they may eventually find out in court.

All the auto manufacturers have to do to resolve this issue is bring the Canadian MSRP close to par with the U.S. Then the Canadian dealers can compete and win the business back and the Canadian Consumer would stop getting unfairly gouged.

Stuball

SFTundraMan · #10 (**permalink**) 03-26-2008, 10:29 AM

Quote:

Originally Posted by stuball

I certainly would feel bad if a dealer was punished by Toyota. Although it is Toyota's rules the dealer would be breaking, not NAFTA rules. It is Toyota that is breaking the NAFTA rules as they may eventually find out in court.

All the auto manufacturers have to do to resolve this issue is bring the Canadian MSRP close to par with the U.S. Then the Canadian dealers can compete and win the business back and the Canadian Consumer would stop getting unfairly gouged.

Stuball

I commend you for that. And to be honest, NAFTA dont sign my check so Toyota's rules are the only ones that matter to me. lol

I never even thought about the lease customers and what that would do to lease turn ins if they lowered all the pricing. That is a very good arguement on their part and without losing money, what do you think they can do? Just saying Toyota should right off the loss in unrealistic. I assume that they are in business to make money and not lose it. I dont have an answer where everyone can win, do you?

Maybe our lovely governments could pay the difference. Wishful thinking

Cliffy1 · #11 (**permalink**) 03-27-2008, 12:19 PM

I'm not sure NAFTA can over-ride a signed contract between two private entities such as a dealer and Toyota. Its been a while since I took an International Law class. If the Canadian government determined that the dealer agreement was in violation of NAFTA, I'd bet Canadian car dealers would have a real problem with that.

elitesquad · #12 (**permalink**) 04-12-2008, 07:16 PM

All I can say about this is that this policy screams "Racism/Prejudiced". What makes Toyota or any other company say they can not/will not sell BASED ON SOMEONE'S NATIONALITY. I am surprised no one has made a bigger fuss over this.
Toyota creates Tundras (or any other model) for Canada and the USA from the SAME auto plant. The cost to Toyota is the SAME whether it is for Canada or the US. If the dollar is at parity I expect the same vehicle to be at parity. If the dollar was trading at a 30% premium I expect the same vehicle to bought at a 30% premium.
To state that they are trying to protect Dealers in other territories is ridiculous. If Toyota priced them correctly in the first place they would not be in this situation of protecting dealers in other countries.

This policy of car dealers not selling to Canadians (or for that matter any other country) is truly RACIST. They are saying "I will not sell to you because you are a ****** (insert anythings here ie. chinese, black, canadian, french, etc)"

Cliffy1 · #13 (**permalink**) 04-13-2008, 04:11 PM

Ummmm... yeah. Any US dealership will sell to a Canadian or anybody else as long as the car is titled in the United States. I'm not sure how that has anything to do with race.

elitesquad · #14 (**permalink**) 04-13-2008, 06:08 PM

Fact: USA government allows brand new vehicles for sale to Canadians, and also allow for these brand new vehicles to be exported.
Fact: Canadian government allows brand new vehicles to be imported.
Fact: State governments will allow Canadians to purchase these vehicles and also allows the purchase of temporary transport permits to bring their vehicles back to Canada.
Fact: Automotive sector is in the retail business.

Now, no Toyota dealership I know will sell to a Canadian WITHOUT a USA driver's license and verifiable USA address. In my opinion that is discriminatory. Why am I required to have a USA DL and USA address in order to purchase a brand new vehicle. It makes no sense whatsoever. If I went to Banana Republic to shop and found a sweater I really liked and they said, sorry, I can't sell this to you because you are a Canadian and don't have a USA address, that's discrimination. Toyota and certain other auto manufacturers are only allowing a certain population to purchase their vehicles, the rest are excluded. That seems discriminatory to me especially when the respective governments permit such a transaction.

Cliffy1 · #15 (**permalink**) 04-14-2008, 10:22 AM

Discrimination and your original charge of racism are not the same thing. I discriminate all the time. Just this morning, I discriminated against Cheerios in favor of Frosted Flakes. Last night, I discriminated against CBS news in favor of Fox. None of that is illegal nor immoral. To call anything that doesn't go your way a racist act is to minimize true racism.

What we are talking about is a contract between a car dealer and the car manufacturer and contracts between distributors. Toyota is fulfilling its obligations to all parties with which it has contracts. Those contracts were meant to keep dealers from going out of business each time the value of the US dollar fluctuated against other currencies.

US dealers, including myself, would love to sell to Canadians right now. Sales to Americans are horrible right now. At the moment, its in our best interest to have that ability. Ten years ago, that wasn't the case. Back then, the US dollar was very strong and we lost sales to Canadian dealers until Toyota caught on and beefed up enforcement of its rules under the contracts.