Automotive News - Stude's Import of VWs Stirs Hassle In Canada

[2R2]

From the 10/31/66 Automotive News:

Studebaker's Import of VWs Stirs Hassle in Canada

Ottawa, Ont - A spirited debate in the House of Commons was touched off last week by the disclosure that Studebaker of Canada had imported thousands of VWs from Germany duty free and then resold them to VW of Canada.

Alfred Hales, a member of Commons called it "a scandalous and shocking situation in which the taxpayers of Canada have been shortchanged by $2millon by means of tax evasion".

Gordon Grundy, president of Studebaker of Canada, defended the action and said the arrangements were made "fully in accord with the regulations of the Government of Canada".

"They have been and are available to to any Canadian automobile manufactur and were made with the full knowledge and consent of the Canadian Government" he added.

A spokesman for VW Canada said the company had bought about 10,000 VWs which Studebaker had imported between January and June 1965. Studebaker discontinued auto production last spring.



The article goes on (which I am not going to type), but I find it interesting that this was just coming to light in October of '66

[Milaca]

Sounds like Studebaker of Canada was a bit corrupt. Maybe that's why they were able to make a profit while producing so few Studebakers?

[8E45E]

Sounds like Studebaker of Canada was a bit corrupt. Maybe that's why they were able to make a profit while producing so few Studebakers?

There was nothing corrupt about it. As Gordon Grundy stated, it was a legal channel which VW of Canada and Studebaker of Canada took full advantage of.

Craig

[Stu Chapman]

There was nothing corrupt about it. As Gordon Grundy stated, it was a legal channel which VW of Canada and Studebaker of Canada took full advantage of.

Craig

As Craig has stated, there was absolutely nothing corrupt about it. At the time, the Canada/U.S. Auto Pact was in place which allowed domestic automobile manufacturers to import/export vehicle across the border, thus bringing excellent economies to us all on both sides of the border. For example, the big 3 could concentrate certain model production in one or two plants in the U.S. and build other models in Canadian plants.

As it happened, Volkswagen was not manufacuring in North American so their vehicles were not brought in duty-free. Gordon Grundy's ingenuity allowed Studebaker to be the manufacturer of record for VW and we brought in 31,600 Volkswagens during the period at a profit of $165.00 each, being the former unit duty on these cars. We reimbursed Volkswagen $15.00 per car as part of the deal. Both companies were happy. We made $4.75 million and VW was ahead the sum of $474,000. The deal also helped us reach our Canadian Value Added quota, required under the terms of the Auto Pact. For the record, we also were showing a profit in our Canadian manufacturing even without the VW deal.

Volkswagen had talked to us earlier with the thought of Studebaker handling VW distribution in Canada. It would have been great for both companies but Studebaker Corporation in South Bend said no. Just another thorn in our sidein our attempts to save the company. Interestingly, Studebaker and Volkswagen had been associated in South Africa.

[8E45E]

As it happened, Volkswagen was not manufacuring in North American so their vehicles were not brought in duty-free. Gordon Grundy's ingenuity allowed Studebaker to be the manufacturer of record for VW and we brought in 31,600 Volkswagens during the period at a profit of $165.00 each, being the former unit duty on these cars.

I wouldn't be the slightest bit surprised if GM and Ford did the same with their own captive imports from England and Germany at the time. And perhaps Chrysler did the same, as they bought Rootes Group and Simca around that time as well and became their importer.

Craig