Introduction to the APA report on used car sales

Mystery shoppers for the Automobile Protection Association visited 16 car dealers and five people pretending to be individuals selling their private vehicles in the classified ads.

The APA shoppers were accompanied by an expert car inspector and their visits were recorded on W5’s cameras. For this investigation, the APA relied on car ads placed by sellers on Kijiji, the popular online website, and in CarandTruck.ca, a print publication used by car dealers. The distribution of sellers breaks out as follows:

New Car Dealers: 5

Used Car Dealers: 11

Curbsiders: 5

Overall, only two of 21 visits resulted in a pass they were Auto Select and Good Fellow’s.

Read a more detailed report card here

Used Car Dealers

The 11 used car dealers included the two that passed. Overall, despite a poor numerical showing, the used car dealers performed better than the two other retailing channels. With the exception of two dealers specializing in selling badly hit cars, most of the failures were related to extra fees added on top of the advertised price.

Two used car dealers, S & S Auto Clinic and Toronto Used Cars Ltd., specialise in selling badly repaired insurance write-offs with deceptive representations.

The Mazda 3 from Toronto Used Cars was not in a condition to pass structural and mechanical safety inspections for a variety of reasons.

S & S Auto Clinic was selling a 2013 Toyota Corolla with just 1,486 km on the odometer; damage to the car grossly exceeded the seller’s representations.

The sales performances at Auto Select (two locations in Scarborough) and Good Fellow`s Auto stand apart from the rest of the pack. At those locations, the APA shoppers found vehicles in good overall condition, a knowledgeable salesperson, and genuine all-in pricing.

New Car Dealers

The small sample of new car dealers performed poorly with five failures out of five visits. At these new car dealers, the APA shopped used vehicles that had been traded in. Most of the vehicles offered for sale at the new car dealers the APA visited appeared to be in good condition, but failures resulted from a variety of advertising violations and deceptions regarding extra fees.

Old Mill Chevrolet had a substantially higher price at the lot than advertised in CarandTruck.ca for the vehicle shopped by the APA. Thorncrest Ford misrepresented an extra charge of $300 as payable to OMVIC – OMVIC charges $5.

Addison Chevrolet had two extra charges of $229 and $399, which were not included in its advertised price. The salesperson at Heritage Ford offered a courteous, no-pressure shopping experience, but the visit earned a fail rating because of extra charges of $399 and $70 for fuel, not specified in the dealer’s advertising.

Curbsiders

A curbsider is a professional who uses free online websites to pose as a private individual selling their personal vehicle. The APA shopped five curbsiders. Two were driving cars with a dealer or garage licence plate, which means they were more than likely acting as fronts for a licensed car dealer or a collision repair shop.

According to the Ministry of Transportation, a dealer plate cannot be used on a vehicle that is owned privately. These two curbsiders were selling badly hit cars.

In one case, the APA learned that the car it shopped, a structurally damaged 2012 Honda Civic offered for sale by a curbsider called “Jacob,” was later reclassified in the Ontario Ministry of Transportation records – its salvage status was erased and it became just an ordinary used car.

One curbsider said he was a dealer selling his personal vehicles. He provided a business card with the name of a dealership on it, operating at a different address. The licence plate on the vehicles was from a third business at yet another address. He neglected to disclose a structural damage declaration on one vehicle, and that both vehicles were from Quebec.

All-In Pricing

Accurate all-in pricing is very important consumer information. It’s also not a reality in advertising placed by most dealers in the Toronto market.

Of the 16 dealers shopped, only four offered an all-inclusive price, and not one of them was a franchised dealer. Extra charges at the 12 other dealers ranged from $229 at Addison Chevrolet to $695 Toronto Auto Group for safety and emissions testing.

At Toronto Quality Motors, the $495 extra charge for Certification and E-testing in the fine print of the ad increased to $695 at the dealership. At Canadian Fine Motors, the $695 extra charge for Certification and E-testing in the fine print of the ad decreased to $495 at the dealership.

Addison Chevrolet had the highest extra fees of $698, consisting of two charges -- one for a basket of warranty protections and a second administration fee. Neither fee was listed in the dealer ad shopped by the APA, which stated only “HST and licensing will be extra.” When the APA shopper challenged the salesperson, he offered to see his manager to offer a discount on the car or waive the extra fees.

Part of the difficulty surrounding all-In vehicle pricing in Ontario is caused by confusing rules that are subject to some loopholes and exceptions:

• A dealer is not allowed to charge an “administration fee” unless it’s included in the advertised price. They can charge an administration fee on the sales agreement, but only if the total price is not higher than the price in the ad.
• A dealer is allowed to charge extra for the safety and emissions certifications. The dealer pays about $80 for these certifications ($50 for the mechanical safety inspection, and $30 for the emissions test). However, in Ontario, dealers can mark up these certifications with no apparent limitation. The highest charge observed in this year’s APA investigation was $695. Dealers sometimes misrepresent these charges as payments to a third party, but most of the money goes straight to their bottom line or is spent to prepare the vehicle for sale.
• If an Ontario dealer is advertising an unfit vehicle for sale to a retail customer, OMVIC regulations state the advertisement must have the following disclaimers “this vehicle is not drivable, not certified and not e-tested. Certification and e-testing is available for XXX.” The APA’s position is “all-in” pricing becomes meaningless if it can be applied to a broken vehicle that may need expensive repairs at the customer’s expense.
• Extra charges are frequently misrepresented as remittances to a third party under the authority of the law for emissions testing, safety certification or OMVIC (the dealer regulator). Dealers claiming to make these remittances applied exorbitant mark ups. Thorncrest Ford quoted a $300 OMVIC fee, when the actual amount collected by OMVIC is $5.
• Jacob is the first curbsider ever shopped by the APA to charge extra fees on top of the selling price. He requested a $300 deposit from the APA shoppers to cover the safety and emissions inspections; he subsequently disappeared with the deposit and did not return calls from the APA.

Salvage and Rebuilt Vehicles

The APA’s sample of insurance write-offs came from two dealers (Toronto Used Cars Ltd. and S&S Auto Clinic) and the curbsiders. Curbsiders were much more likely to be selling rebuilt wrecks than dealers. The APA found serious flaws in the Salvage/Rebuild process including:

• Structural rebuild work not equivalent to original vehicle condition – damaged high strength steel heated, stretched, spliced and/or hammered into position (occupant protection may be compromised in a subsequent impact to the same area of the vehicle).
• Numerous wiring and electrical issues, including lights indicating air bag warnings, and improvised wiring to the engine cooling fan.
• Basic safety issues: one vehicle missing a wheel nut on each wheel, another had one wheel with a different offset from the others.
• One vehicle seen by the APA shoppers appeared to have a missing airbag, extensive structural repairs, and was branded “salvage.” A few weeks later, it was reclassified in the Ministry of Transportation database; the salvage brand was cancelled and it reappeared as an ordinary used car!
• Some curbsiders were working with either a dealer or a collision repair shop. One wreck transited through Stark Iron and Metal Company, a recycler of insurance write-offs that appeared prominently in a previous APA investigation of curbsiders.

For a consumer contemplating the purchase of a vehicle that was written-off by an insurance company, the salvage and rebuilding process, called the “Mandatory Vehicle Branding Program” in Ontario, is an unreliable guarantee that they are buying a safe and properly repaired vehicle. As currently operating, the system is in need of much more robust enforcement and higher inspection standards for the rebuilding of insurance write-offs.

For the buyer, having an insurance write-off properly inspected before the purchase is difficult. Very few general repair shops are competent to inspect a rebuilt vehicle – this includes shops that actually agree to perform an inspection. The APA discovered that the franchised Toyota dealer recommended by a used car dealer who was selling a wrecked Corolla will not check for collision damage during pre-purchase inspections, even though they have a body shop.

Daily rentals

Dealers in Ontario are required to disclose when a vehicle is a former daily rental, and most now appear to do so. However, obtaining accurate information on the collision history of a daily rental is difficult, as most rental companies do not report collision information to the publicly available databases. This is partly due to a loophole in Ontario’s reporting requirements for fleets and rental companies.

Since most dealers disclose only the damage listed in Car Proof reports, and Car Proof does not collect collision records for daily rentals, the collision information provided by dealers was frequently incorrect.

At Canadian Fine Motors in Scarborough, the salesperson did disclose the fact, that the car was a daily rental, however his collision disclosure was incomplete, because he didn’t disclose a previous accident on a 2012 Nissan Altima. The dealer said “If there was an accident, it should’ve been declared no matter what.” Car dealers know that when they use a vehicle history report to represent a used daily rental as collision-free, they are misrepresenting the report.

What you can do to protect yourself when shopping for a used vehicle

Don’t be a price junkie. No two used cars are identical, and sellers generally have a lot more information than the buyer about the vehicle. This means that a low, below-market price from a curbsider or auto dealer virtually guarantees there is a story behind the vehicle. A better strategy is to focus on higher priced examples of the vehicle you are looking for, and then use the lower-priced ad from a competitor as a bargaining tool to encourage the seller to drop their price.

Shop with an ad for the vehicle in hand. The APA learned that many dealers advertise a lower web price than is actually marked on the vehicle at their location. The advertised price can be $500 to $1,000 lower than the one at the dealership.

Try to have the vehicle inspected before you buy it. This year, almost all the dealers permitted the APA shoppers to have the vehicle inspected before buying it. Finding a reliable inspection service can be difficult. Most mechanical repair shops will not check for collision damage, and some will focus the inspection only on services they may be able to sell you, like new tires, brakes, or fluid changes.