Annual auto industry investigation finds bait-and-switch ads, additional fees a perennial problem
Brian Mellersh, W5 Producer
Published Saturday, April 14, 2018 7:00AM EDT
A vehicle is the second largest purchase most Canadians make in their lifetime. A home is the largest. But unlike purchasing a property, most people go through the car sales process alone, without lawyers or real estate agents watching their back.
The Automobile Protection Association is there to help. The APA took this year’s annual auto industry survey to the streets of Vancouver and the surrounding area to investigate the new car shopping experience.
The APA’s secret shoppers brought along hidden cameras to document the experience a typical consumer might face while shopping for a new car in British Columbia.
George Iny of the APA explained the process: “So we’re like a regular customer. We start with an ad and then we went to put the sellers through their paces to see if we can get the advertised vehicle for the advertised price,” he said.
The secret shoppers visited 16 Greater Vancouver dealerships. The team scanned through ads in print and online to find vehicles that were being promoted by manufacturers and dealers.
According to Iny, a big issue revealed during this year’s survey was additional fees that are added to the price of vehicles being advertised, when a buyer arrives at the showroom. Additional fees are legal in B.C. so long as they are disclosed in the total price, or somewhere in the advertising, including the fine print.
The APA found cases where additional fees added nearly $2,000 to the advertised price of a vehicle. What the sellers claimed the fees actually cover was also an issue. For example, one salesperson claimed that part of a $395 additional fee covered waxing and polishing a brand new car.
British Columbia regulations state that any additional fees must be disclosed, but what the fees cover, and what they amount to, is not covered by legislation.
To combat this, the APA is urging the B.C. government to adopt all-in pricing, a rule that is found in provinces like Quebec and Ontario.
According to George Iny the situation in British Columbia is unique and problematic. ”British Columbia is a bit strange. They allow that all the numbers have to be in the ad but nobody had to add them up.”
Another issue the APA found prevalent in B.C. was something called ‘bait and switch’ advertising. Dealerships or manufacturers advertise a very low priced “bait” vehicle in the hopes of luring consumers through the door, and then they work to “switch” customers over to a higher priced vehicle during the sales process. The bait cars are usually stripped down vehicles with few options, which manufacturers build in very limited numbers.
When these vehicles are promoted through national advertising campaigns it can put local dealerships and customers in a difficult spot. Customers may be searching for a $16,000 vehicle found on a billboard or online ad, but upon arriving at a dealership only find models available on the lot that are priced thousands of dollars higher than the vehicle they are shopping for.
During the survey, the APA tried to locate a 2018 Honda Fit DX priced at roughly $16,000 on Honda’s national website and through local dealer online ads. They were unable to locate a single vehicle of this type in the entire Lower Mainland of B.C.
According to Iny, the APA has found this issue during past surveys as well. “In four years of looking for a Honda Fit (DX), advertised according to the Honda promotion around $16,000 and up, we never found one in a showroom that you could get for the advertised price,” said Iny.
Part of the problem lies in the fact that manufacturer advertising, which is considered national, is not covered by provincial legislation.
The Vehicle Standards Association of British Columbia is the provinces auto industry watchdog. Doug Longhurst, the agencies Director of Learning and Communications said dealerships face a difficult situation.
”Well it’s difficult for the dealer…if they can get it [the advertised vehicle], it might take 3 or 6 months or the number that had been assigned to Canada is so low that they’ll never get one,” said Longhurst, in an interview with W5.
With a lack of vehicles available for consumers, customers continue to face dealership sales tactics designed to up-sell them on higher end vehicles costing thousands of dollars more.
This is a loophole that George Iny insists needs to be closed.
"The market in BC and in other provinces, to some degree, are not under control. The regulator has no authority over the manufacturer advertising and manufacturer practices," he said. "That’s a big loophole."
The majority of the dealerships visited by the APA failed this year’s survey. A concerning result according to George Iny and the APA.
“In this market an honest dealer, a straight deal, is actually at a disadvantage compared to the competition. What you’re doing is incentivizing deceptive behaviour.”
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