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General Motors, Ford warn dealers on autos funneled from Canada

November 24, 2010

Officials at General Motors and Ford are warning dealers to stay out of the "gray market" trade of funneling lowprice Canadian vehicles back into the U.S. market. But the two largest automakers said they have so far ruled out following DaimlerChrysler AG, which last week moved to cancel the warranties on the affected vehicles. Instead, GM and Ford have ordered their franchised dealers to stop the traffic or face losing out on the supply of popular models.

The dealers could also face demands from the companies for incentive money repayments. GM estimates that 6,000 to 7,000 of its new cars intended for Canadians were funneled back into the United States last year. Ford said 5,800 of its vehicles returned to the United States this way. DaimlerChrysler has significantly higher estimates than Ford and GM. The automakers acknowledge the trade, which is legal, would be hard to stop because of the fat profits involved