APA Used Car Investigation - March 24, 2004

March 24, 2004

The Automobile Protection Association released the results of its latest undercover investigation today. APA mystery shoppers visited 30 dealers selling used vehicles in the Montreal area; only half earned a passing grade.

The APA shoppers presented themselves as ordinary customers looking for used
$3,000 to $8,000 small cars or minivans. Where no vehicles fit the criteria, they looked for more expensive or cheaper vehicles. The APA paid special attention to the new class of mega used car dealers that has sprung up around Montreal in the last two years.

Compared to Toronto, where the APA recently completed a similar investigation, buying a used car in Montreal appears to be a safer undertaking, thanks to better selling standards and fewer really bad cars for sale. Unlike Toronto, not one Montreal-area dealer was selling vehicles as-is or with no warranty.

Big Box Used Car Superstores perform unevenly
Overall, the APA found that the new big box used car stores benefit from significantly lower posted prices than those at franchised dealers, more convenient hours with Saturday opening, and a much larger selection, including late-model Japanese small cars, which are hard to find elsewhere at reasonable prices.

However, many of the new mega dealers failed for a variety of reasons. Their
advertising is frequently deceptive: APA shoppers learned that the advertised $399 over the auction price is not necessarily $399 over the dealer`s cost, but actually corresponds to a much higher markup. Encan Direct H. Grégoire could not supply even one of six advertised vehicles, or similar vehicles, at the advertised prices. At Albi Mazda, the ad showed only one of 50 1999 Protegés at the advertised $6,950; it had been sold, and prices for the 49 other 1999 Protegés started at $9,995!

At some of the big stores, an inspection at the buyer`s garage is not possible until after signing a contract of sale and leaving a deposit. This is absurd, as several of the same stores do no preparation of their own until after the customer has signed an offer!

As for advertised representations concerning LIQUIDATION and ENCAN (auction), the APA says you can probably forget it. There were no auctions going on when the APA shoppers visited, and almost no repossessed vehicles undergoing a bankruptcy sale -- just regular used cars, mostly lease returns.

Monthly payments advertised by several dealerships do not include the interest on the loan. Consequently, an advertised $99 a month at Lallier Honda for a used Civic turned out to be more like $140-$150 a month with the extra fees and interest. Other dubious practices included excessive administration or preparation fees tacked onto the selling price -- up to $450 at Albi Mazda and a whopping $595 at Desmeules Hyundai, the highest such charge the APA has ever seen in Quebec.

Some dealers perform well
In contrast to Toronto, the APA says several Montreal-area dealers stood out for their above-average performance; even some salespeople at dealerships that earned a failing grade because of their misleading advertising performed very well, actually steering the shoppers around the false promises. Among dealers with strong performances, the APA highlighted les Courtiers d’Autos M.G. on Metropolitain East in Montreal, and J.J. R. Automobile in Laval.

Better enforcement needed
The APA says misleading advertising by the mega stores calls for a stronger presence from Quebec’s Office de la protection du consommateur. The APA says the dealer associations know the advertising is misleading but they have been unable to discipline their members, let alone the new entrants, some of whom do not belong to a dealer association. The OPC needs additional strength in its investigation and legal services to meet new challenges from the auto industry. Unfortunately, instead of beefing up the OPC, the APA has learned that the provincial government is considering a proposal to hand over the job to the dealers themselves, who are planning to create a new industry body called the CIA. APA president, George Iny, says that Quebec has better retailing practices than Ontario and Alberta where these sorts of programs exist, and that the solution is to beef up enforcement, not neutralize the OPC. "If self regulation is so hot," said George Iny, "why haven`t we noticed? Dealers in Quebec regularly outperform those of other provinces in our mystery shopping surveys, and we believe the difference is due to higher standards of consumer protection and more independent enforcement by government." Self regulation is not cheaper, says the APA; auto industry regulatory programs frequently cost more than the government services they were designed to replace.

What you can do
Use the deceptive car ads to drive a better bargain at a franchised dealer. Most are still posting inflated asking prices, but they are more than willing to drop their prices not to lose a client to the competition.

Have your vehicle inspected by a mechanic before you buy it. If the dealer says this is not possible, or a road test is not possible, take your business elsewhere. The APA recommends a mobile inspection service that will check your vehicle on site in the Montreal area for $80 (tel: 514-751-0871).

View the full report with results for individual dealers.