APA Report Summary: visiting new car dealers in Vancouver
Automobile Protection Agency President George Iny (W5)
In the winter of 2016, secret shoppers from the Automobile Protection Association visited 20 new car dealerships in Greater Vancouver.
Using advertising in the daily newspapers and on the dealers' own websites, the APA’s secret shoppers tried to obtain the advertised vehicles. All visits were recorded on W5's hidden cameras. Overall, nine out of 20 dealers visited earned a Pass rating.
Five provinces require all-in price advertising by auto dealers (another province, Quebec, requires all-in pricing for ALL advertising to consumers, including dealerships and manufacturers).
"All-in" means that the price in the ad is the price you're supposed to pay for the vehicle, except for the sales tax and perhaps a fee to register a loan and a small tire levy. In British Columbia, all extra chargesmust be disclosed in the ad, including the amount, but the final, total price doesn’t necessarily have to be shown.
Extra charges, like Documentation fees (sometimes abbreviated as D.O.C., for Dealer Overhead Charge), that should have been included as part of the all-in price or listed in the ad, were common. Overall, Vancouver dealers appeared to apply fewer extra charges than the dealers in Calgary visited by the APA in 2014.
Many dealers charge a $100 air conditioner "tax"; this should be included in the all-in price as it has been prepaid by the manufacturer, and the dealer doesn’t remit the money collected to a governmental authority.
Some dealers charged extra to install wheel locks and fill tires with nitrogen; these mandatory extra charges were of negligible value for the base cars with steel wheels shopped by the APA. The extras were less common and less expensive than observed at the Calgary dealerships visited by the APA with W5 in 2014. When questioned about the charges, a couple of dealers were prepared to remove the wheel locks or waive the charge.
Some dealers misrepresented their extra charges as payable to government or a third party authority. One Nissan salesperson said the Freight and Pre-delivery Inspection charge of $1,595 is a "government charge." Two dealers applied a $25 “battery levy.” British Columbia dropped the levy in 2010; contact the APA if you purchased a vehicle in B.C. after 2010 and were charged for a battery levy.
Tricks with payments
Small increases in weekly and biweekly payments add up to a significant amount of money over the term of a loan or lease. An 84 month loan, which is a fairly standard term nowadays, has 364 weekly payments, and a 60 month lease has 260 weekly payments.
Some Honda dealers bumped up advertised weekly payments by seemingly small amounts like $2.34 or $10 a week. These small discrepancies added up to a lot of money, because there are so many payments in a weekly offer. The extra $2.34 weekly a dealer charged over the 260 payments in Honda's advertised lease works out to $608. The $10 a week upsell from the unavailable Fit DX to a Fit LX resulted in a $2,600 jump in the price.
Dealer advertising not always the dealer’s
The APA secret shoppers often chose ads with a local dealer’s name in them. However upon closer examination, the artwork, price and fine print were almost identical for ads placed by different dealers, and even between provinces.
We wondered how Nissan, Honda and Toyota dealers shopped by the APA in Vancouver, Calgary and Montreal ran low-ball ads that were nearly identical. For an answer to that, you have to look at the long shadow of the automakers. They provide car dealers their advertising templates, and take advantage of loopholes in provincial rules that exempt automakers from oversight by the dealer regulators in British Columbia, Ontario, Alberta, Manitoba & Saskatchewan.
Cars not Available
Many vehicles featured in national advertising and in the dealers' own ads were not available at dealerships. Two Honda dealers told the APA shoppers they would have to wait between two to three months for a base Fit DX like the one in Honda’s ad.
Results for vehicle brands
The Automobile Protection Association “mystery shopped” twenty dealerships from eight major brands. Eleven of the twenty dealerships failed for a variety of reasons, as noted above, from not having the advertised vehicle available to extra fees and misrepresentation. Detailed information about the APA’s survey, the dealerships visited and the reasons for pass or fail are available in the APA’s full report.
What you can do
Many salespeople were not familiar with the details of their dealership’s vehicle promotions. Bring along a copy of the dealer or manufacturer ad for the vehicle you are looking for with you when shopping.
Read the fine print: in Ontario, Alberta, British Columbia, Manitoba (as of July 2015), Saskatchewan (as of January 2016) and Quebec, a dealer ad for a new vehicle must include all charges. If you are quoted additional charges above the advertised price, try to obtain a print-out from the dealer and report the incident to the provincial dealer regulator. You should also include a copy of the ad.
For a list of provincial regulators that require all-in pricing, clicks on the links above. Note: laws vary by province. Not all provinces have vehicle regulators, some provinces rely on consumer protection agencies.
Dealer extra charges encountered by the APA Mystery Shoppers
The additional products and services sold by new car dealers carry mark-ups as high as 400 percent. Many products are overpriced and several are of little or no value. If they are mandatory, they must be included in the advertised price – that’s the essence of “all-in” pricing.
One example the APA encountered were so-called Green Tire levies, which refers to a variety of tire-related charges, some of which are worthless, some are marked up excessively, and some were not necessary for the vehicles shopped by the APA.
Note that these tire add-on fees are allowed as a recycling fee, but only at minimal cost ($5 per tire). Examples of some of the extras encountered include:
- Nitrogen gas in the tires: regular air is already 80 percent nitrogen. Many tire retailers will fill a tire with pure nitrogen for free or for a small charge of up to $8 a tire.
- Road hazard warranty for tires: Sometimes bundled with nitrogen and the provincial tire recycling levy of about $20, this coverage pays part of the cost of replacing a blown tire. The coverage costs the dealer about $60 for all four tires on the small cars the APA shopped, to about $100 for an SUV. The road hazard warranty is more valuable on vehicles with large, expensive-to-replace tires.
- Wheel locks: some dealers charged almost as much for the locks as the value of the steel wheels on the base models the APA shopped. The locks cost the dealer $50 to $60 for four and make it harder to steal alloy wheels. Wheel locks are not effective for steel wheels with a design that does not have recessed wheel nuts.