Report on the APA Used Car Dealer Investigation with CTV's W-FIVE

April 28, 2007 - The Automobile Protection Association released the results of its latest undercover investigation of used car dealerships today. Posing as ordinary consumers, APA mystery shoppers visited 57 car dealers in Montreal, Toronto and Vancouver to look for a used vehicle. Funding for this large-scale project was provided by the Office of Consumer Affairs at Industry Canada. Visits were recorded by W FIVE’s hidden cameras.

Overall, 32 (58%) of the 55 used car lots visited earned a failing grade. The two unlicensed dealers (called “curbsiders” in the industry), who were retailing vehicles from their driveways, also failed. Used car dealers were evaluated on the accuracy of their advertising and their verbal representations, as well as the condition of vehicles offered for sale.

What you can do to protect yourself:
HAVE THE VEHICLE INSPECTED before you buy it. Some dealers in Toronto, and especially dealers in Vancouver selling rebuilt wrecks, tried to make it very difficult for the APA shoppers to have a vehicle inspected without buying it first. Make it clear to the dealer that no pre-purchase inspection means no sale.

In 2005, six dealers in the Vancouver area recommended the same mobile inspector. When the APA mystery shoppers booked an inspection, he was unable to tell them a used silver-grey Camry advertised with 125,000 km was actually a camouflaged Vancouver Yellow Cab with more than 500,000 km in service. He even missed the holes from the taxi meter in the dash and signs of yellow taxicab paint in the nooks and crannies.

The APA has located and tested the following RELIABLE used car inspection services in the cities we visited for this investigation.

C. Martino Auto Center
2055 Clarke Drive
Vancouver, B.C.
Tel: (604) 255-3558

Mechanic Carmen Martino and his crew have worked with APA on many investigations.

Priority Plus Inspection Centres
120 Carlauren Road Unit #4
Woodbridge, Ontario, L4L 8E5
Tel: (905) 264-1142

Mechanic Vince Carnovale has worked with APA on several investigations. He can also help you order the history search that is appropriate for the vehicle you are considering.

Andrew Bleakley
Tel: (514) 751-0871

This mobile inspection service offers a complete body panel inspection, mechanical verification, and road test for $100. Call and leave a message on the pager to book an appointment.

Results for Cities Visited by the APA

In Vancouver, 9 of 19 dealers visited earned a pass rating. This is an improvement over a previous APA investigation in which 70% of Vancouver area dealers failed. In previous years, APA identified several Vancouver vehicles with rolled back odometers; this year there were none. “That does not mean that nobody is selling cars with spun odometers,” says APA President, George Iny, “but they are being more careful.” The APA believes that the improved quality of on-line information in provincial and private used car databases has made the dealers more careful, and has improved the quality of their representations. This year, APA found evidence that dealers are aware of the educational, and to a lesser the extent, the enforcement priorities of the BC Motor Dealer Council. The BC MDC is a relatively young body that had an enormous task when it took over dealer oversight from BC’s former Registrar of Motor Vehicles.

Two independent lots visited by the APA in the Vancouver area distinguished themselves. At Daytona Auto Brokers, 1342 S.W. Marine drive, seller Bill Gill provided full documentation to the APA mystery shoppers, including the dealer’s repairs, a third-party appraisal, ICBC claim report and where the vehicle came from. At Prime Auto, 240 12th Street in New Westminster, the vehicles offered for sale appeared to be in very good overall condition, and seller Zoran Unkovic provided accurate disclosure of prior collision damage (it was minor). Both dealers had no charges for extras not disclosed in their advertising or buried in the fine print.

In Montreal, 9 dealers passed out of 17 visits. Vehicles were in better condition, and asking prices lower than in Toronto and Vancouver. Although failing to report prior collision damage was common, no dealer tried to pass off a salvage or write-off vehicle as OK. Only one dealer claimed to be selling vehicles “as-is”; that’s prohibited in Quebec, unless you are selling a vehicle for parts.

Many of the failures in Quebec were due to advertising issues – extra fees sometimes not mentioned in ads, advertising payments without interest, advertised payments with no price for the vehicle. In January 2007, Quebec’s consumer protection office, the Office de la protection du consommateur, introduced sweeping reforms to cover used car advertising, with the backing of both Quebec’s new and used car dealer associations. Under the new rules, used car prices must be all-inclusive, with no extra charges for paperwork, inspections and repairs. A test drive and inspection at the request of the buyer must be permitted. To reduce the likelihood of bait-and-switch advertising, the number of vehicles available at the advertised price, as well as the highest-mileage and highest-priced vehicle in a group of similar vehicles (ie: “three to choose, from…”) must also be indicated.

In April 2007, three months after the new rules had come into force, the APA completed an audit of over 600 used car newspaper ads placed by Montreal-area dealers. Compliance was over 85% -- in large measure due to pressure from the dealer associations on their members.

This year’s results for Toronto are generally disappointing. With only 5 of 19 dealers failing (including two curbsiders), the results were the worst among the three cities. Advertising violations were so common – and obvious – that several dealers had already failed even before the APA shoppers went on the road. Ontario has the most sophisticated standards in Canada to govern how a car dealership conducts its business, but the results are not showing on the ground in Toronto. Ontario’s Ministry of Transportation appears to be moribund when it comes to automobile safety certification: bad dealers, and the bad mechanics who certify that bad vehicles are safe for the road, appear to operate with impunity. Ontario’s regulatory authority, OMVIC, is currently engaged in a fight for its independence, over extra fees it says are needed to improve its enforcement capability.

Failures occur for a variety of reasons

Collision damage
In Vancouver and to a lesser extent Toronto, dealers misrepresented prior collision damage as “cosmetic”, or simply didn’t mention it at all. At Global Auto Sells in Westminster B.C. the seller represented damage to a Toyota Corolla as “only one small accident on the rear door.” APA’s experts determined the entire rear end the car from the behind the doors was actually from a different vehicle – that’s called a “zipper car” by people in the car industry. Even properly welded, APA President George Iny says this sort of vehicle is almost impossible for a consumer who discloses the repair to resell it.

Some Vancouver-area dealers appear to specialize in rebuilding wrecks to low standards, and then misrepresenting the extent of the repairs and overcharging for the vehicles. Many of these vehicles appear to come from ICBC salvage auctions. At Super Choice Auto, 1205 Kingsway Avenue, all three vehicles advertised as “no accidents” had prior collision damage – including structural damage on the two Hondas. Super Choice’s answer? Auto Mart had made a mistake in the ad copy. An ordinary consumer would have no chance against the tangled spaghetti of deceptions the characterized some of the dealers selling rebuilt ICBC salvage vehicles and U.S. imports from states with porous registration systems. It took W FIVE’s cameras recording the dealers in action, and the help of a vehicle expert working with the APA to get to the bottom of the more sophisticated deceptions.

Misleading ads
Advertising representations regarding vehicle condition, like the terms “accident free”, and “original”, frequently do not correspond to the actual condition of the vehicle. Advertising in Vancouver and Toronto often neglects to mention the amounts charged for “extras” that should be included in the price of the vehicle for services like filling out the contract, or inspecting and repairing the vehicle for sale. These charges were sometimes very significant, over $500 in charges for items in the fine print or completely missing in ads. The highest overall charges for extras were $1,048 at Encan Direct H. Gregoire in Montreal (which has since dropped most of them). Toronto dealers were the most likely to charge for extras, including a couple that levy bogus “DOT” fees that are not remitted to any authority. Extra charges in the range of $500 were common, with Car Sense Auto, at 3925 Keele Street, adding $1,020, and Toronto Auto Group at 2380 Lawrence Avenue East, charging $979. According to George Iny, the high amount of the extra charges makes price comparisons between dealers very tricky. Two dealers advertising similar minivans for $8,000 could actually be up to $1,000 apart because of extra fees.

Worthless Warranties
Most dealers in Toronto and Vancouver who offered an extra-cost warranty from an independent warranty companies misrepresented the real level of protection the warranties offered, or omitted important information. For the dealer, the warranty is a marketing tool; dealers sometimes misrepresented a warranted vehicle as having gone through a rigorous inspection by the warranty company, but that’s rarely the case. Dealers who sell extra-cost warranties self-inspect. Why aren’t the warranty companies worried? Because many of them have a side deal with the dealer where they won’t pay for any repairs required in the first 14 or 30 days after you take delivery.

From the standpoint of the buyer, here are the important questions to ask before you rely on assurances about a warranty:

1. How much can I claim per repair? A “powertrain” warranty for less than $2,000 per claim is a misnomer. Just one powertrain repair can exceed that limit. Many dealers sell basic plans that only go up to $600 or $1,000. The best plans are from the car manufacturers. The usually have no claim limit, or provide repairs up to the value of the vehicle.

2. What is covered? Basic powertrain warranties exclude damage from engine leaks (“called seals and gaskets” coverage) that can be expensive to repair, and are very common on General Motors V6 engines. A better solution is coverage for “major components” that is more complete than a simple powertrain warranty.

3. Can I have a copy of the warranty contract to read it over before buying it? Most dealers are prepared to provide only a brochure, which says little about the limitations and exclusions.

4. Can I see a published price list for the warranty? Some dealers will mark up a warranty that costs them less than $250 to $750 or more. Protect yourself from the worst cases of price gouging by consulting the price list from the warranty company. Carmakers that do publish warranty price lists consider a markup of 30% to be fair. Most independent dealers are looking for about 50% on the extra-cost coverage they sell, but APA has seen markups as high as 300%.

In Ontario the situation is worse that elsewhere in Canada. Warranty companies operate with almost no oversight. Dealers knowingly offer Autogard Warranty coverage on junk (say up to 3 years or 60,000 km on a tired 8-year old car), without telling you the claim limit is a paltry $600 or $1,000. That’s not enough to pay for even one major powertrain repair. Worse still, some warranty companies operating in Toronto require a kickback from repair shops when your car breaks down, or they ask the repair facility to absorb their $600 maximum contribution. You’re presented a bill for a higher amount with $600 taken off, but the warranty company never paid a dime.

APA has met several credible warranty companies over the years, including Garantie Nationale, Coast to Coast, Lubrico, and Lion’s Gate in BC. Even the more professional independent warranty companies sell a large proportion of “basic coverage” warranties that are nearly worthless, so you will have to ask the questions above to know what you are getting. 

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