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The Pros & Cons of Buying a Car in the U.S.

By Gordon Powers, MSN Sympatico Finance

As the loonie surges to a 33-year high with the U.S. dollar, Canadian consumers here have been complaining about the price gap between the two countries on many goods and services. The loudest screams, however, have come from car buyers who uncover thousands of dollars in savings from U.S. dealers only to find they're not available here.

Pretty well everything is more expensive in Canada, based on selling small volumes in a large country. And when it comes to cars, the gap is quite dramatic. Nonetheless, most Canadians continue to buy their cars here. Industry analysts estimate that about 150,000 U.S. cars might be imported this year, which is less than 10% of our market for new cars.

Nor, it seems, is heading across the border to buy direct getting any easier. Some auto makers have been rumbling about warranties on cars Canadians buy in the United States, while others have been accused of barring U.S. dealers from selling to Canadians. The roadblock is often a distribution agreement that prohibits dealers in one region from selling to someone who's going to register their car in another dealer's territory.

Some car buyers, however, are fighting back. A Newfoundland couple who say they were turned down regularly when they tried to buy a new car in Maine have filed a formal complaint with the Maine Human Rights Commission and plan to sue a number of car companies. And another group recently filed a class-action lawsuit seeking $2-billion in general damages from several companies for allegedly scuppering cross-border vehicle shopping.

Until recently, many auto makers and importers have been hoping this whole currency issue would just disappear. Well, it hasn't and it probably won't anytime soon.

Don't look for giant price decreases though. Rather than tinker with sticker prices, manufacturers so far seem more interested in providing additional product features for the same price.

Some auto makers have cut prices as well. The biggest differences are at the luxury end with cash buyers most able to take advantage of the changes. Mercedes announced that rebates will be around $7,500 on the company's high-powered AMG models. BMW, Volvo, and Audi announced a similar move on their higher-end offerings.

Honda will offer incentives of as much as $5,500 to those paying cash for the crossover Pilot and up to $1,500 to buyers of the compact Civic.

So, should you wait for the auto makers to close the gap further, or should you head to the closest border city for your next set of wheels?

Well, if you can find a willing dealer, it's not that difficult, maintains Zabin Somani, a B.C consultant who recently created ucanimport.com to help people buy cars across the border.

First, you need to find out if the vehicle you want to import is admissible and can be modified to meet Canadian regulations for things like bumpers, metric speedometer and odometer markings, and daytime running lights, she advises. Check with the manufacturer to find out who is authorized to do the modifications to avoid putting your warranty in jeopardy.

Next, you have to obtain a recall clearance letter that states whether your particular vehicle is subject to any recalls in Canada. If so, these have to be taken care of as well.

In addition, before checking in with U.S. customs at the border, you need to give them at least 72 hours notice that the vehicle is leaving the United States permanently.

Once that's done, make sure you have all the right documentation: title, registration, sales receipt, statement of compliance, and recall clearance letter to satisfy the Canada Border Services Agency, which will collect a non-refundable fee of a little more than $200.

You'll also have to undergo an inspection to see if the car meets Canada's safety and emissions standards. If there's work to be done, you need to attend to it within 45 days of importing the vehicle, at your cost and at a Canadian Tire location exclusively.

Expect to pay GST, the $100 air conditioning excise tax, plus an import duty of 6.1% if the vehicle was manufactured outside North America.

Is it worth it? Well, some people sure think so. Somani has put together a list of case studies outlining the savings her clients have realized in recent months. Just last month, a Quebec City buyer saved a bundle on a new 2007 Nissan Infiniti G37 by buying it in Saint James, New York rather than at home.

Although they had to make a couple of trips, total expenses - including the purchase price, taxes, levies, inspection fee, meals, hotels, and both bus and airplane tickets - amounted to $48,040 in Canadian dollars. The same vehicle in Canada, including taxes, would have been $59,254, the buyer notes, for a saving of $11,214 in our currency.

Nice work if you can get it.