Manufacturers Voiding Warranty on Export Vehicles

Manufacturers voiding warranty on export vehicles isn't something new. Despite that, I've read through many online forums how customers complain about their warranty on export cars from Canada not being honored in America.

The situation historically goes like this: A dealer buys an exported car from Canada/ Previous Canadian because it's cheaper than the original US model. Then they bring it back to the dealership and price it exactly like a US unit… making huge profits.

Then covid came along, and the shortages were so extreme that everyone was buying Canadian. The edge became the supply, not the price. Had to find something to harmonize Canadian cars with USA cars. They are all built in the same factories, after all. The only real separator was the voided warranty.

Customers don't want to buy cars without a warranty… needing to buy a warranty outside the price of the vehicle is a deal-breaker for them. A dealer may buy a warranty to make clients more persuadable, but this would cut out the revenue for the dealer. It seems pointless to engage in this arbitrage opportunity. But because of Can-Am warranty, dealers can now make profitable deals with previous Canadian even when the factory warranty is voided. How?

exasperated man in an office

Can-Am provides a cheap warranty designed to allow dealers to take advantage of the grey market without worrying about not getting enough profits. If you want to know more about how Can-Am warranty can help you, click here to be our partner dealer for free. (no credit cards needed). More about this later.

Although this is a remarkable breakthrough in cross-country arbitrage, it doesn't change the fact that manufacturers still void warranty on export vehicles. This article will shed some light on what manufacturers void warranty on exported cars.

What does voided warranty on export vehicles mean?

There are many instances where a vehicle's warranty is voided. For example, your family car gets damaged because you used it for drag racing (what could go wrong, right?). Then there's a good chance that your warranty will be voided. This reason makes so much sense. Of course, your car isn't built for racing, so it's justifiable for the manufacturer to void your warranty.

But another instance where the factory warranty gets voided (that doesn't seem to make sense) is when a Canadian vehicle is exported to the US. Before, these warranties were transferable from one country to another. Now, most manufacturers void warranty when a vehicle is exported. But you might be asking…

Why do Manufacturers void warranty on export vehicles?

Manufacturers void warranty on export vehicles to thwart vehicles from leaving the original intended market. It is primarily a protective measure by the manufacturer to keep allocation agreements with domestic dealers fair.

hand stopping wooden dominoes

For example:

A Ford dealer in New Orleans, "Joe Johnson Ford," is given a limited allocation of brand new Broncos by Ford Motor Company (the OEM or Original Equipment manufacturer). Once he has sold his allocation, he may not be entitled to more Broncos for an extended period.

Directly across the street is a business called "Billy Joe's Gas, Lube, Fishing tackle, and Car Sales."

If Billy Joe has good connections in Canada, he could buy 10 Brand new Broncos and have them for sale directly across the street from the Ford store that has none. Not fair for the Ford store that has Millions $$$ invested in a Franchise

Cars are priced based on what each individual market will bear. The actuarialists who make these pricing determinations follow complex and private/proprietary algorithms and strategies unique to them. Their primary goal is to win market share.

What these manufacturers cannot do is price vehicles to individual international markets based on currency and foreign exchange fluctuations. F/X is far too volatile.

All vehicles manufactured in North America were duty-free while in NAFTA (North American Free Trade Agreement). That changes slightly with the new USMCA (The United States Mexico Canada Agreement), where certain vehicles manufactured in Mexico have an enormous duty of 25%.

This currency situation, combined with supply and demand market forces, can create an environment conducive to making this Grey Market or Arbitrage opportunity possible.

This opportunity slowed once manufacturers voided warranty on export vehicles. But in this day and age, there's another way to take advantage of this grey market. You can now purchase a replacement warranty, which you can include in the vehicle's sale price. Your consumer now has a third-party limited warranty that mimics factory coverage.

Can-Am Dealer Services provides a warranty that mirrors the coverage of the limited warranty being voided by the manufacturer. The basic limited warranty coverage lasts for 36 months (starting from the original in-service date as shown on Carfax) or 36,000 miles, whichever comes first. The basic limited warranty covers the cost of all parts and labor to repair any original equipment item on your vehicle that is defective in material or workmanship. (Read our sample warranty here)

The powertrain limited warranty lasts 60 months or 60,000 miles, whichever comes first.

Can-Am Warranty has zero deductible, roadside assistance, rental coverage, and service at any ASE-certified garage. The warranty also goes with the VIN. This makes owner registration unnecessary, and the vehicle can be wholesaled 100x. It's cheap, easy, and reliable. To start leveraging this grey market opportunity, create an account for free by clicking here and get instant access to the Can-Am Warranty.

hand holding a list on a steering wheel

Here's a list of manufacturers voiding warranty on export vehicles:

Chrysler Dodge Jeep Ram - Chrysler was the first to void warranty on export cars. However, rental cars have a warranty that transfers.

Volkwagen Porsche Audi

Hyundai Genesis

Honda Acura

Mitsubishi

Mercedes

Kia

Convoluted policy - These manufacturers may or may not void warranty on export cars depending on their terms and conditions.

Toyota

Lexus

Nissan

Infinity

Clear policy where the warranty converts:

General Motors' current policy - The vehicle must be six months old and 8500 miles for the warranty to transfer. However, it's reported that they are seriously considering voiding warranty on export cars like their competitors.

Conclusion and Takeaway

The Great Philosopher Epictetus said, "It's impossible for a man to learn what he thinks he already knows."

If you just plain don't believe in the Previous Canadian supply opportunity, I understand and wish you well.

However, if you're a dealer who can look at "Obstacle" and see "Opportunity," then I invite you to become our partner dealer by clicking here and joining me and hundreds of other dealers who are already succeeding.

Have questions? Don't hesitate to contact us!

****Can-Am Dealer Services assumes no responsibility for the accuracy of the information regarding individual manufacturer policies or terms

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