Eleven out of 20 car dealerships fail this year's W5-APA survey

Madeline McNair W5 Associate Producer
Published Saturday, April 9, 2016 9:00AM EDT

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Every year, W5 joins forces with the Automobile Protection Association (APA) which sends a team of undercover shoppers with hidden cameras to get an idea of what everyday consumers experience when they go out looking to purchase a car.

This year, the APA conducted its survey in Vancouver and focused on new vehicles.

The APA used online and newspaper advertisements from dealerships and car manufacturers. The mystery shoppers visited 20 dealerships in total and their goal was simple: to see if the advertised vehicle was available, and if so, was it available at the advertised price? A simple goal on paper, but one that the APA found was hard for several dealerships to meet.

“Our concern was that the extra fees that are sometimes not in the ads would change the deal,” said APA President George Iny. “And in some cases we had difficulty obtaining the vehicle at all.”

One of the issues the APA came across was extra fees. Under provincial law in British Columbia, the price you see advertised is supposed to be the total price. Any extra fees must either be included in the price, or listed somewhere in the advertisement. Other than sales tax, the dealer cannot charge extra fees not listed in the advertisement.

But the APA came across just that. At North Vancouver Nissan, there were a number of extra charges including $135 for paint, a $399 administration fee and $1,600 for a freight and pre-delivery inspection (PDI) charge. The APA shoppers were told by the salesman that the extra $1,600 fee was for the government.

Freight and PDI fees are not a government charge, and should be included in the advertised price, as per provincial regulations.

In an email to W5, North Vancouver Nissan’s general manager said the salesman was new and “is still learning and may have made a mistake in the verbiage during the presentation.” He also said that the freight and PDI charge would be offset by incentives.

The APA also ran into extra fees at Richport Ford, where the shoppers were told there was a $599 documentation fee that wasn’t listed in the online ad.

In an interview with W5, Dick Lau, Richport Ford’s dealer principal, explained why dealerships charge a documentation fee.

“There’s a lot of stuff that we have to do behind the scenes to make sure the customer is protected. There are searches and dealer fees that we pay,” said Lau. “So it depends on the transaction. Some transactions actually cost more fees than others, but for simplicity we just average it out to one amount.”

Lau said the documentation fee should be listed in the online advertisement and since speaking with W5, Richport Ford has updated its website to include the documentation fee.

The vehicle that the APA went looking for at Richport Ford, the advertised 2015 Escape S, wasn’t available at that dealership. According to the salesman, there were only three left in all of Canada, and none of them were local.

When contacted about this, Ford Canada said it had recently decided to change the way it advertises vehicles at the national level. Ford says it will now advertise “popular vehicle trim lines that dealers are stocking and selling, rather than simply advertising the lowest priced vehicle model.”

The APA found several other examples where the low priced, advertised vehicle wasn’t available at the dealership.

“Our concern here is carmakers that advertise a unicorn,” said Iny. “They want to bring you in at an impossibly low price but it’s for an impossible vehicle that you will almost never find.”

This was the case at two Honda dealerships when the APA went looking for a 2016 Honda Fit DX, which was being advertised by Honda Canada in newspapers across the country for a weekly lease of $44.

“We sent our shopper out to find one,” said Iny. “And she was told it would be two months before she could get a car and they hadn’t even built them yet.”

The advertised Honda Fit DX wasn’t available at Richmond Honda or Pacific Honda in Vancouver. When W5 told both dealerships that the advertised vehicle wasn’t available when the mystery shoppers visited, both Richmond Honda and Pacific Honda replied in separate emails, that the ads in question stated, “dealer trade may be necessary on certain vehicles.”

This apparently means that “the advertised vehicle may not be in each and every dealerships’ current inventory.” And both assured W5 that if a customer wanted the car in question, they would locate one from another dealership by dealer trade. Although this was not ever offered to the APA mystery shoppers.

In its email to W5, Richmond Honda also said that “Honda advertising policies require that there be a sufficient supply of advertised vehicles in the overall dealer stock nationwide, to endeavour to ensure that customer demand is met.”

Since the advertisement in question was a Honda Canada advertisement, W5 also requested an interview with someone at head office. Honda Canada declined our request, but in an email statement said that “vehicle availability and inventory mix may vary depending on local market demand.” Honda Canada also referenced the “dealer trade” wording in their advertising and indicated that they could “procure the vehicle through a dealer to dealer trade.”

Because the advertisement was a Honda Canada advertisement, it doesn’t fall under provincial regulations.

“We have a strange situation in five Canadian provinces where an ad placed by a car dealer is supposed to be all-in pricing. The same vehicle advertised by a car manufacturer doesn’t have to be all in,” said Iny.

The federal Competition Bureau is an independent law enforcement agency that is responsible for the administration and enforcement of the Competition Act, which contains general prohibitions against making false or misleading representations to the public.

Matthew Boswell is the Senior Deputy Commissioner for Cartels and Deceptive Marketing Practices with the Competition Bureau. When asked if the Bureau is looking into advertisements that can’t be enforced at the provincial level, Boswell said he was unable to discuss the specifics of what cases they do or don’t have ongoing.

“But we have looked at the auto industry and obviously any issues that come to our attention with respect to false or misleading advertising, to the extent we can on our resources, we will follow up,” said Boswell.

That’s something that APA President George Iny encourages. “We have excellent tools available. If they’re used you can hold companies to standards,” said Iny.

So what were the final results coming out of Vancouver? Eleven out of 20 dealerships failed this year’s APA survey.

“We were relieved because it’s a better result than we got last year,” said Iny, referring to the APA’s 2015 survey in Calgary where 19 out of 22 dealerships failed. “So there was definitely more discipline in the Vancouver market than we found in Calgary.”