Part 1: The infamous Recall Clearance Letter
So you’ve been admiring BMWs from afar when a quick perusal of Autotrader.com or ebay quickly reveals that it’s raining cheap BMW’s in the US. Choice and a higher depreciation from a significantly lower retail price are the advantage of a large and competitive market.
But you are a Canadian, where getting bent on cars is a way of life. Let’s face facts, the Canadian auto industry will charge you more because they can, pure and simple.
The Famous Recall Clearance letter
Before we get into the import procedure we need to address the biggest piece of FUD (fear, uncertainty, and doubt) about the Recall Clearance Letter being propagated by BMW Canada today.
What is a Recall Clearance Letter you ask? It is the one critical document you need to begin the import process with the RIV. In principle it is a letter issued by BMW stating that any and all factory recalls have been addressed on the vehicle in question, hence the famous term “Recall Clearance Letter”.
In practice a printout of BMWs centralized Warranty Vehicle Inquiry, available to all authorized BMW dealers will, by it’s very nature, indicate if recalls have been rectified and as such be accepted by the RIV as equivalent to a Recall Clearance Letter.
Enter the RIV
I mentioned the RIV several times so exactly who and what is the RIV? Here is how they describe themselves on their site at http://www.riv.ca/AboutUs.aspx:
“Transport Canada has contracted with Livingston International Inc. to establish and operate Canada’s national program of vehicle registration, inspection and certification known as the Registrar of Imported Vehicles. This program aims to ensure that vehicles originally manufactured for the U.S. market and subsequently imported into Canada meet Canadian road safety standards.”
Some time ago, I believe in 2006, BMW & Mercedes decided that they had to do something to stop vehicles from being easily imported, after all, how could they defend their prices when ordinary citizens like you and I where importing cars for as much as 40% less!
The first thing they did was make sure that all American dealers where contractually prevented from selling to Canadian residents by insisting on a valid US address. There were some reports of dealers selling to Canadians anyway, but they quickly stopped when they realized they were putting their dealership at risk.
The second thing they did was try to restrict US dealers from printing the Warranty Vehicle Inquiry for any reason. Mine was marked “Confidential” and stated that “This document is not be used or relied upon for import or export purposes and is not to be distributed or shared with 3rd parties”.
The last thing they did was lobby the Registrar of Imported Vehicles (RIV) to add enormous and unnecessary costs to licensing a used BMW in Canada by convincing the RIV that only BMW Canada could issue the Recall Clearance Letter and that only they could inspect and certify a BMW as compliant, which is completely counter to the RIVs stated reason for existing.
So far it sounds like an inconvenience and you shrug off the $350.00 inspection letter and $500.00 Recall Clearance Letter as standard punishment for being a Canadian. But BMW is just getting started.
So you show up at the dealer where SURPRISE you are informed that several very expensive control modules need to be changed in order to permanently activate the daytime running lights and convert your console to metric, even if it already has dual MPH/KPH scales like in the 335i.
Both of these requirements are patently ridiculous because the RIV not only accepts KPH stickers, but they actually provide them for free if you need them at the time of inspection (it says so right on the form). Furthermore, simple dealer programming can turn on daytime running lights (DTRL) and change the electronic scales to metric. You can even do it yourself if your car is equipped with an iDrive.
Can you believe that BMW and Mercedes managed to persuade the RIV that owners could endanger themselves by turning off the DTRLs? Using the same illogic, they could also argue that the brake light bulbs need to be welded in to prevent owners from deactivating them.
Throw in a couple of stories of being put at the back of the line at the dealer, being treated like dirt, and most people simply feel it is not worth the hassle. So that is the story of how BMW Canada justifies their pricing and punishes you for importing a BMW.
Justice is Sweet
Luckily for us, some commercial importers were seriously pissed off at these new and seemingly illegal requirements. They argued that BMW had no business colluding with the RIV to keep prices high and filed a nice fat billion dollar class action law suit in 2008. Here is an article from the February 28, 2008 Globe and Mail that nicely summarizes the suit and BMWs response:
“Two vehicle leasing companies have launched a class-action lawsuit on cross-border vehicle shopping with a new twist, alleging Transport Canada and the Canada Border Services Agency were participants in a conspiracy to keep vehicle prices high.
The two arms of the government have been named along with BMW Canada Inc., Mercedes-Benz Canada Inc. and Mercedes-Benz USA LLC in a lawsuit that alleges actions they required of people or companies trying to import U.S. vehicles into Canada reduced competition and enabled prices of vehicles sold here to be 20 per cent to 35 per cent higher than similar U.S. models.
The auto makers, Transport Canada and the CBSA imposed restrictions on vehicle importers that created additional fees and charges, said a statement of claim filed with the Ontario Superior Court.
Fournier Leasing Co. Ltd. and Canadian Auto Associates Ltd. are seeking damages that total in excess of $1-billion.
“These additional charges, fees procedures and restrictions prevent more competitively priced Mercedes vehicles from entering into the Canadian market, thereby enabling the Mercedes defendants to charge higher prices for new vehicles sold and leased by them in Canada,” the statement said.
For Mercedes and BMW, “these additional fees and charges are not payable under Canadian law,” the lawsuit said.
The charges have not been proven in court and none of the defendants in the lawsuit has filed a statement of defence.
JoAnne Caza, a spokeswoman for Mercedes-Benz Canada, would not comment. BMW Canada spokeswoman Stacy Morris said the auto maker was not aware that any such lawsuit has been filed.
The two luxury auto makers were among the first companies to offer cash incentives in Canada last fall when the Canadian dollar hit par against the U.S. currency. The rise of the loonie enabled Canadians to potentially save tens of thousands of dollars in the U.S. on such luxury vehicles as those sold by BMW and Mercedes Benz.
Luxury vehicles are believed to represent the bulk of the record 189,738 vehicles imported into Canada last year.
Transport Canada is named in the suit because of its role in certifying vehicles imported into Canada through the Registrar of Imported Vehicles program, which maintains a list of vehicles allowed to be imported and outlines the modifications necessary to make sure vehicles comply with Canadian regulations.
Among the requirements is one that importers provide proof to the CBSA that any repairs required under recalls have actually been made.
The auto makers forced importers to pay “artificially high fees and charges” for information about recalls, the lawsuit alleges.
BMW Canada's website says importers require a letter of admissibility from the company that costs $350. The fee for a letter saying the vehicle has been repaired under any recall orders is $500.
“There is a process. The law is quite clear that if you follow that process, you're entitled to import a vehicle into Canada,” said Brian Osler, one of the lawyers for the two leasing companies.”
You can view, and presumably join, the lawsuit here: http://autolawsuit.blogspot.com/sear...urer%20lawsuit
So what does this mean to us? 10 years in courts before we see benefits? No, it scared BMW and Mercedes silly because it was subsequently reported by http://www.willz.ca/importusatocanada.htm
“As of July 9, 2008 BMW and Mercedes very quietly dropped requirements that made importers pay for and procure admissibility letters from these manufacturers at a cost of $350 per letter. Furthermore, the manufacturers have also indicated to the RIV that recall and final compliance letters do not need to come from the Canadian head office of these manufacturers at a cost of $500 per letter. It seems that the Canadian government or perhaps some litigators finally forced these manufacturers to drop the requirements and allow for federally regulated compliance inspectors at Canadian Tire to review the cars, as has always been the requirement in the past. This means that we can install km/h speedometers and day time running lights at whatever cost and supplier we so choose.”
Dispelling the FUD
Don’t even bother calling BMW Canada or USA to confirm this because they are still spouting the same FUD, even today. The proof that this has changed can be found right on the RIV’s website at http://www.riv.ca/***************.aspx
where option 2 states:
“A printout from an American or Canadian dealership’s vehicle service database.
This document must be produced by an authorized dealer and not a reseller. You can confirm whether or not a dealership is authorized by visiting the manufacturer’s web site or by calling their head office and providing them with the dealership’s location. The printout must also contain the 17-digit vehicle identification number (VIN), year, make and model, and indicate that there are no outstanding recalls. RIV routinely forwards a copy of these printouts to the manufacturer for authentication.”
And that's exactly what I did. One of the terms I negotiated was to have the vehicle Warranty Service Inquiry printout sent to me after I made the deposit, but before I signed. When I received the document, I immediately scanned it and emailed it to the RIV who promptly acknowledged receipt. I called an hour later and they confirmed it was acceptable. With the biggest roadblock eliminated, I proceeded to physically import my car, which took less than 40 minutes to pass both borders.
In Part 2: The import Recipe, I will detail the links, addresses, procedures, paperwork, and catch 22s you may encounter. Don’t let the bogey man scare you, importing a vehicle is easier than pie.