Gray market tires are hurting Canadian dealers, says association

Nov. 16, 2007

Think tire dealerships in Canada are getting rich due to the strong Canadian dollar? Think again, says the Tire Dealers Association of Canada (TDAC). "In fact, the opposite is true," says TDAC President Eric Gilbert, partially due to the proliferation of gray market tires.

According to the TDAC, activity in gray market products in the commercial tire segment of the Canadian tire industry "at sub-market pricing has continued to escalate as our currency strengthens.

"Now this once (commercial dealer-only) issue has exploded to encompass all segments of the tire business in Canada, and has incensed consumer and commercial tire dealers alike."

Gilbert is calling for the development of a "North American market equalization price structure" to resolve "the disparity between the Canadian and U.S. markets.

"Our membership recognizes the additional costs associated with servicing the Canadian market and accepts the need for a reasonable spread between Canadian and U.S. prices. However, this spread in pricing has grown to a level that challenges (dealers') very survival."

Gilbert adds that if "cross-border shopping and the gray market continue to exist, in addition to eroding the brand equity of Canadian companies, we risk destroying the traditional Canadian market."