The Results of APA's National Investigation of New Car Dealers - January 2000

Mystery Shopper Probe:
Car Dealers Caught in the ACT

January 2000

The Automobile Protection Association released the results of its latest undercover probe today. A report on the investigation which was funded by Industry Canada, will be aired on the CTV program W FIVE on Tuesday, January 25. APA researchers posing as ordinary shoppers visited five Canadian cities posing as buyers of popular cars and minivans. According to APA President George Iny, the overall customer satisfaction at the 45 dealerships visited declined this year, with 60% earning a failing grade. They are the worst results since the Association began its national survey three years ago.

The APA says the deceptive practices often began even before the APA shoppers got to the dealerships. In many cases, dealer ads left out important information, or the cars in the ads were simply not at the dealership, or they were at the dealership but selling at a higher price.

The APA shoppers learned to be wary of current model year cars with mileage on them. Shoppers were sometimes told these cars were "executive driven", which seemed odd, said Iny, "as the executives of large corporations don't usually drive the economy cars our shoppers were looking at." Those cars frequently turned out to be daily rental vehicles.

Dealership charges for paperwork in Vancouver and Toronto are frequently excessive, says the APA. In the Province of Quebec, dealers rightly included this cost in the price of the vehicle. In Vancouver, the total administration fees ran as high as $395.

Not all brands the same
The APA added Hyundai to its list of dealerships visited this year. Iny said the results for Hyundai were very disappointing. Over half the dealerships visited did not have the advertised base model Hyundai Accent in stock. And for some that did, mandatory extras meant it was unavailable for the advertised $169/month. Most Hyundai dealers were not up-front about the administration charges built into their lease calculations. Ford dealerships continued their tradition for having the most predatory practices in the showroom. Although more Ford dealers passed than in previous years, Iny said those that failed comprised "a veritable rogue's gallery".

Saturn continues to be the friendliest environment in which to shop for a popularly priced vehicle. Sales performance is consistent from one dealership to another, and pricing information relatively easy to obtain.

Some good news
There were some bright spots in this year's survey. The automakers have cleaned up their leasing ads considerably. Information is much easier to obtain directly in the ad, and most dealerships are able to provide disclosure of leasing terms before you actually sign the contract. Unfortunately, the information provided at the dealership is often biased or includes additional inflated charges. As in previous surveys, there were some salespeople who really distinguished themselves, but this year they were fewer and far between. Among them Lloyd Wood at Tower Chrysler in Calgary, who provided a complete product demonstration and pricing information, and an unhurried low-pressure shopping environment.

Vancouver
The APA says Vancouver is the most hazardous place to shop for a new car in Canada, with 8 out of 10 dealers visited earning a failing grade. Vancouver dealers had the worst ads, the worst sales practices and the highest administration fees. At Zephyr Lincoln Mercury, the last advertised Pan Am Games Windstar at $24,999 had been sold a month before the ad! At Regency Mazda, the sales manager told APA's shoppers that if they weren't buying the same day, quoting a price was a waste of time. At Lawson Oates Chrysler, the shoppers learned there would be a $300 "reputation fee" charged by Chrysler to perform a credit check - in fact, Chrysler doesn't charge any upfront fees before approving a loan.

Calgary
Calgary's satisfaction rating declined this year with 5 out of 8 dealerships failing. The major culprit appears to be misleading dealer advertising. At Precision Hyundai, there were no Accent models at the advertised $149/month. Sunridge Mazda's $99/ month special was no deal at all. After the first 6 months, payments rose to over $300 per month, and the overall cost was actually higher than the current promotion from Mazda.

Toronto
Toronto was a mixed bag, said the APA. "After promising to clean up their advertising practices last year, " said Iny, "the dealers are slipping up in the showroom." Trillium Pontiac Buick had no Sunfire coupes at the advertised price, only the cheaper sedan. And the APA was dismayed to be charged a mandatory $100 etching fee at area GM dealers, applicable to both new and used vehicles. Two of the three Hyundai dealers had no manufacturer's retail price stickers on their cars, and a third failed to mention lease administration fees, adding up to $535. The APA says Ontario has good industry guidelines but they need to be more strictly enforced.

Montreal and Quebec City
Overall results for Montreal were 5 passes out of 11 dealerships. As in previous surveys, Quebec City turned out to be the best place to buy a car compared to the other cities. Overall, 4 of 6 dealerships passed. Dealerships there performed better overall for a number of reasons. There was less pressure to buy and no one asked for a "commitment" (ie. credit card authorisation) before pricing the vehicle. Salespeople were more likely to provide realistic information about the advantages and disadvantage of leasing. And administration fees were almost non existent.

What you can do
The APA suggests taking a copy of a car ad with you to the dealership, and asking for exactly that car. If they don't have it, or it's there but selling for a higher price, the APA suggests you leave promptly and go to the same brand of dealer and ask them to match the deal in the ad. Chances are, they've already lost a few sales due to the ad, and may work a little harder to meet the price. Another possibility is to use the Internet or a car buying service or broker to help sort out the confusion over pricing. The APA says it has found little evidence that a real clean-up of retailing practices is occurring. The abuses are widespread, says the APA, and can't be explained away as the actions of a few "bad apples" among the salespeople.

Customer Satisfaction Chart

Cities Visited Dealers Visited Pass Fail Notes
Vancouver 10 2 8  
Calgary 8 3 5  
Toronto 12 4 8  
Montreal 11 5 6  
Quebec 6 4 2  

Total

45 18 27 60% FAILED


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