Survey finds 36.6 per cent of purchasers forced to pay markup, ranging from $1,000 to $10,000, and 41.3 per cent required to pay for extras, such as extended warranties and protection packages.
…Car Help Canada conducted a national survey of people who bought cars recently and it revealed that 36.6 per cent of purchasers were forced to pay a markup, ranging from $1,000 to $10,000, over the MSRP. Additionally, 41.3 per cent of car-buyers were required to pay for extra products, such as extended warranties and protection packages. In one example, a Toronto dealer’s bill of sale lists a protection package priced at $3,399, a “top-up” warranty at $899 and an administration fee of $599, adding $5,533 (including tax) in unnecessary costs to the price of a $28,000-economy-car. That’s on top of the usual freight, predelivery inspection, fees and taxes.
It’s no wonder the average transaction price of a new vehicle in Canada reached $52,900 for the first time ever. The figure is supplied by DesRosiers Automotive Consultants. It represents a $10,000-increase in the average price over the last four years, says Andrew King, managing partner at DesRosiers, who blames the chip shortage, broader inflationary pressure and a shift in buyers’ preferences in favour of pricey trucks and electric vehicles.
Beyond escalating prices, there’s still the matter of delivery wait times. In the past, most light vehicles in North America were “build-to-stock” (BTS), where dealers buy vehicles in advance to hold in inventory. Then Tesla found success with a “build-to-order” (BTO) approach, in which consumers place their order and wait.
“Out of necessity, this approach became widespread in the last couple of years among all manufacturers due to the shortages,” King says. “The future path is uncertain. It seems fairly certain, however, that the new normal may be different than pre-pandemic times.”
Shari Prymak (senior consultant with Car Help Canada) has some advice for auto-buyers navigating showrooms today: “Don’t sign a sales contract without the final price clearly stated! If the dealership attempts to add more charges and fees as the delivery date draws closer, that’s unprofessional conduct.”
He recently attended a regulatory conference that included provincial dealer regulators and representatives from the Ontario ministry that oversees OMVIC, the Ontario Motor Vehicle Industry Council.
“Everyone was well aware of these issues, but my impression was that there was no real sense of urgency to address them,” says Prymak, although he does note that the Ontario government is updating the Consumer Protection Act.