Even with the introduction of provincial “all-in” pricing regulations, Canadian car buyers still struggle to get optimal vehicle pricing, according to two recently published studies.
To improve price transparency, a number of Canadian provinces, including Quebec, Alberta, Manitoba and Ontario have legislation that requires auto deals to advertise all-in prices. British Columbia requires disclosure of all fees and charges, but not necessarily an all-in price.
Research from the Automobile Consumer Coalition (ACC) found substantial non-compliance, with 24% of consumers purchasing a vehicle in breach of the all-in price advertising rules. It found that dealerships that did not match the advertised price added an average of more than $2,000 in additional charges, and of those who purchased a vehicle for the advertised price, 38% reported it was “very challenging to get the dealership to honour the advertised price.”
An annual report from the Ontario Motor Vehicle Industry Council (OMVIC) reported more than 40 per cent of its dealers failed the 2020 mystery shop program, which included all-in pricing among the multiple elements of compliance. OMVIC noted this represented a significant improvement over 2019 results.
Dealer non-compliance results in consumers spending far more than they should on vehicles and “creates an unfair advertising advantage for non-compliant dealerships over compliant dealerships,” the ACC report observed. Also: “The use of deceptive advertising also contributes to an environment of mistrust and contention for consumers who are in the market to purchase a vehicle. Many consumers may lose confidence in the vehicle shopping process and end up feeling taken advantage of by dealerships.”
The ACC report includes compliance results from other sources. Quebec research showed 53% non-compliance with all-in price advertising. Alberta found advertising compliance concerns with 76% of advertisements. And even dealerships surveyed recognize the problem. Only 10% of the 52 surveyed dealerships claim that dealerships never break the rules, compared to 60% that claimed to break the rules very often (16%) or somewhat often (44%).
The overall lack of compliance suggests enforcement issues. The OMVIC release noted that 13 dealerships were sent caution letters from OMVIC’s business standards team, and 13 will be forwarded for discipline. The ACC report includes comments from multiple provincial authorities with enforcement responsibilities. Most use graduated penalties, starting with letters and licensing conditions, but some note that fines were too small and court proceedings to make enforcement measures stick could be lengthy.
The ACC report also wrote that increased online sales exposed consumers to additional risks by purchasing vehicles unseen in a condition other than what was advertised with “little to no recourse for cancellation or rescission.”
It recommended naming dealerships with registered complaints, adding compliance officers to review and monitor advertising, expanding penalties and disciplinary action, particularly for repeat offenders, and allowing cancellations for online purchases.