Canada is a mouse in the global automotive market. And mice, however polite, don’t get to dictate terms to elephants.
In 1969, then prime minister Pierre Trudeau described Canada’s relationship to the United States in similarly law-of-the-jungle terms: “Living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.”
The continuing market shift away from cars to SUVs is more than a twitch or grunt; the elephant has rolled over and crushed Canadians’ chance of getting more European-style cars – but not completely.
Mercedes-Benz Canada recently managed to sneak in a couple of “Canada-only” models – the European A-Class hatchback and C-Class wagon – that Mercedes-Benz USA won’t sell. This is quite a rare coup, and harder to pull off than you might imagine thanks to the byzantine process by which cars are certified for sale.
“The stars have to align somewhat to get a Canada-only car,” said Ryan Lee, product manager at Mercedes-Benz Canada.
It comes down to profit. “Both safety and emission certifications are required to sell cars in Canada,” Lee explained. Canada’s standards (CMVSS) are closely aligned to the United State’s (FMVSS), and quite different from UNECE standards used in Europe. The cost to certify a vehicle is sky high and often not worth it for niche vehicles that will be sold only in the northern part of North America.
Americans purchased more than 17 million new vehicles last year; Canadians bought only two million.
“Whatever vehicles we have in Canada are largely dictated by the States,” said David Adams, president of industry association Global Automakers of Canada (GAC).
There have been a handful of exceptions in recent memory. In 1994, for example, BMW Canada managed to import 45 European-spec M3s (that have since become collectables) through a nifty regulatory provision allowing small numbers of cars certified in Norway to be sold in Canada. Nissan made a business case to sell the $10,488 Micra hatchback in Canada, but not in the United States. Same goes for the now-departed Acura CSX, an up-market Honda Civic, which was built in Ontario. It’s worth noting that these are all compact or sub-compact cars, as are the two new Canada-only models from Mercedes.
The process to get the A-Class hatchback in Canada began about a decade ago. “Management plans out [vehicle] lifecycles 10 years in advance,” Lee explained. By the time the third-generation A-Class debuted in 2012, Mercedes knew it wanted to try selling the fourth-generation model in North America. As a result, the A-Class sedan and hatch we have today were designed from the beginning to meet North American safety regulations. “It would have been impossible if it hadn’t been designed with that in mind from the start,” Lee said.
The Mercedes X-Class pickup truck wasn’t designed to meet U.S. regulations, he added. So, anyone who was hoping it would come to Canada will likely have to wait at least until the next-generation version.
Meeting safety requirements is only half the homologation, or approval, process. Emissions standards are the next hurdle. Since the A-Class sedan sold in the United States has the same motor as the hatchback, Mercedes Canada was able certify it. “We start building the initial business case, but there’s a whole homologation team in Germany that does 90 per cent of the work,” he said.
Why bother? “We think there’s seriously untapped potential in the market for the A-Class hatch. Where do those buyers go when they want to move beyond a [Volkswagen] Golf?” he asked.
It’s surely no coincidence that just as BMW is discontinuing the compact 3 Series wagon in Canada, Mercedes is bringing in a new compact wagon. A BMW Canada spokesperson cited the market shift to SUVs and low overall sales of the wagon as reasons for its demise.
“We expanded the C-Class family to include the wagon so that we can challenge the established competitors in the segment,” Lee said, diplomatically.
Car companies realize Canadians have different taste when it comes to cars. But, with regard to the vehicles they can sell here, companies’ hands are tied as long as Canadian regulations are bound to American ones.
“Part of what we’re doing is to say, can we break down these walls and make it a little easier for a Canadian distributor to fill the market needs of Canadian consumers by providing a broader range of vehicles,” said Adams of the GAC.
If there is small hope for fans of odd French hatchbacks and high-performance German station wagons, it is that Canada could decide to recognize and accept UNECE vehicle certification in addition to current standards.
Doing so would help extricate Canadian drivers from under the sleeping elephant.
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