Ford Motor Co. of Canada Ltd. is raising the price of Thunderbird models by more than $4,000 for 2003 in another drastic move designed to halt a flood of Canadian vehicles into the United States.

Ford Canada spokeswoman Lauren More confirmed that the auto maker made the move because many Thunderbirds that were supposed to be sold to Canadians in the past year ended up in the driveways of Americans instead.

"For the rest of our products, we'll continue to price based on what's right for the Canadian market," Ms. More said.

The flow of Thunderbirds south is just one example of an export trade that Ford and other auto makers are trying to stamp out, saying vehicles shipped to Canadian dealers are supposed to be sold to Canadians and not sent south of the border.

They're reacting to what has become a thriving business for so-called "grey market" sellers, created by the low value of the Canadian dollar against its U.S. counterpart and lower vehicle prices in Canada compared with the U.S. market.

Thunderbirds were among the more popular of the estimated 30,000 to 40,000 vehicles that were sold on the grey market last year.

"The 2002 pricing just made it a nightmare," said one dealer, who said he cancelled 18 separate sales of Thunderbirds because he feared they were being sold to export brokers. "Then you've got ticked-off customers."

The soft-top 2003 Thunderbird carries a manufacturers' suggested retail price of $56,615, compared with $52,550 in 2002. The hard-top Thunderbird goes for $61,615, compared with $57,550.

Another dealer said a colleague was told that a Thunderbird sold at his dealership turned up at an auction in Seattle and was instructed to go buy it back.

Dealers who sell General Motors of Canada Ltd. vehicles said the auto maker also has increased prices on two key vehicles that are popular among U.S. buyers and in short supply south of the border.

The price of the base model Denali sport utility vehicle has risen 4.2 per cent for 2003 models to $63,540 from $60,970. A two-wheel-drive version of the Sierra Crew Cub 2500 pickup truck with a short box has risen 8 per cent to $44,085 from $41,005.

Both those increases are more than GM Canada's average price jump of about 2.5 per cent.

"Pricing for those vehicles is more reflective of the competitive marketplace" and not the export situation, said GM Canada spokesman Richard James.

Dealers said, however, that those would be key GM vehicles to focus on as part of a campaign to clamp down on export sales.

Ford Canada has also priced its limited-edition Mercury Marauder sedan with an eye on the export market. The Marauder fetches $34,495 (U.S.) at U.S. dealerships, but around $50,000 (Canadian) or about $31,653 (U.S.) based on Friday's Canadian dollar close.

That gap between the U.S. and Canadian prices is much narrower than most vehicles in that price range.

Industry officials said the best way to cut off export sales would be to raise prices in Canada to match those in the United States.

But it's almost certain that won't happen.

"There's absolutely no way they can increase prices across the whole line because sales would collapse," said Dennis DesRosiers, who heads DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.

"In some of these, I suspect they'll be forced to back off down the road."

The price increases follow other actions auto makers have taken, including penalizing dealers if cars originally shipped to them are found in the United States, voiding warranties on Canadian cars in the U.S. market and increasing awareness among dealers. Auto makers operating in Canada prohibit selling vehicles originally allocated here to buyers outside the country, although the practice is completely legal.

The auto makers' actions have stemmed the flow, acknowledged Brian Osler, president of the North American Automobile Trade Association, a group that represents export brokers.

GM's decision that its U.S. dealers won't do warranty repairs on cars originally destined for Canada has had a major impact, Mr. Osler said.

"A lot of GM vehicles from Canada are just staying in Canada," he said.

Meanwhile, new court cases are arising over the issue, including one in which a Canadian dealer is suing vehicle importers based in Michigan and New York over who is permitted to claim the goods and services tax rebate on an exported vehicle.

The Canadian dealer, Acura West of London, Ont., is suing the two importers under the U.S. Racketeer Influenced and Corrupt Organization Act (RICO) to recover more than $450,000 (U.S.) it was assessed by Revenue Canada (now Canada Customs and Revenue Agency) for GST payments between 1995 and 1996.

The statement of claim filed in Michigan alleges that the two U.S. importers falsely claimed GST rebates on vehicles, even though they were not entitled to do so.

In another case, Port Chevrolet Oldsmobile Ltd. in Port Coquitlam, B.C., has notified creditors that it intends to file a proposal under the Bankruptcy and Insolvency Act. Port was assessed several million dollars by Canada Revenue for GST related to transactions from 1995 to 1998.

Industry sources said the case involves sales to exporters. Michael Wolfe, Port's president, would not comment.

Canada's auto makers and their dealers are banding together to urge the federal government to eliminate the GST exemption for vehicle exporters, arguing that such a move would help reduce the flood of new Canadian vehicles heading into the United States.

Officials from manufacturers and the Canadian Automobile Dealers Association (CADA) concluded at a recent meeting "that these 'grey market' sales and associated [penalties] to Canadian dealers present a significant problem that has a major impact on our industry," Rick Gauthier, president of the CADA, said in a memo to dealers.

"This strategy includes lobbying the federal government to end the vehicle broker's current exemption from paying GST on exported vehicles and removing the broker's present ability to claim GST input tax credits."

"The manufacturers are definitely on board," Mr. Gauthier said.

"This is probably the most serious blow we could deliver."