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Report on the APA Used Car Retailing Investigation with CTV’s W5

March 6, 2010

Report on the APA Used Car Retailing Investigation

The Automobile Protection Association released the results of its latest undercover investigation of used car retailing today. Posing as ordinary consumers, APA mystery shoppers visited 34 used car dealers and eight curbsiders in Toronto and Vancouver to look for a used vehicle. Visits were recorded by W-5’s hidden cameras, and a television report on the investigation will air on the Saturday March 6 broadcast of W5 at 7:00 p.m.

Overall, two thirds of the used car dealers visited in Vancouver, and all but one dealer in Toronto received failing grades. Sellers were evaluated on the accuracy of their advertising and their verbal representations, as well as the condition of the vehicles offered for sale. The eight unlicensed dealers (called “curbsiders” in the industry), who were retailing vehicles from their homes and collision repair facilities also failed.

See the report on the W5 website.

 

Toronto

View the full results for Toronto

Used Car Dealer Visits

This year the APA saw the best selection of vehicles at good prices in any Toronto survey. Even small used car dealers working from a trailer had a good selection of well-priced lease returns, no more than 5 years old. As late as 2003, when APA shopped at this class of facility, we would have been looking at much older vehicles in variable condition.

The best performance in Toronto was at Jimiline Fine Cars. The dealership offers all-in pricing, and the salesman made a superior presentation of the Mazda3s offered for sale, as well as correctly disclosing cosmetic damage.

 High Extra Charges

This year, Toronto had the highest amount of extra fees of any mystery shopper survey undertaken by the APA. The APA allows up to $350 in misrepresented extra charges without awarding a Fail. (At one time few Toronto-area dealers exceeded this threshold). Among the common misrepresentations:

· Marking up safety certification and e-test fees and representing them as remittances to government or regulatory bodies.

· Excessive charges for completing paperwork and administration.

Quality Auto Wholesale in Scarborough had the highest extra charges of $1,100 for administration, and emissions and safety inspections.

Four dealers failed solely due to their policies on excessive extra charges. New rules that came into force in January have changed the requirements for price advertising in Ontario, which must now include all extra charges in the price of the vehicle. All four dealers have since modified their policies on charges and would have been awarded a pass.

Deceptive or misleading practices around collision reporting

Claim histories on vehicles are much more complete and widely available than in years past, creating more pressure on dealers to report collision damage accurately. APA does not count failure to disclose cosmetic damage on up to three panels as a reason for failure. For four or more panels, or structural damage not disclosed, APA awards a Fail. In most cases, damage that was not reported by the dealer was listed at least partially in CarProof's information, which means the dealer was taking a chance on the APA shoppers not looking this information up.

Publicly available collision records were incomplete on vehicles from Quebec, and some Toronto dealers selling cars from Quebec failed to disclose collision information that would normally be available on an Ontario vehicle. APA saw a high proportion of Mazda3s from Quebec for sale in the Toronto market, and their collision records were generally incomplete.

S&S Auto Clinic, 3360 Kinsgton Road in Scarborough, was the worst dealer visit of the investigation. The seller declared that a 2004 Toyota Corolla had sustained a prior collision to the rear fender. The APA determined the Corolla actually consisted of two half cars, badly cut and welded together, and reported to have passed a Ministry of Transportation inspection.

At AAA Auto Sales, 1425 Kennedy Road, in Scarborough the salesman added the words "structural damage" to an offer of sale AFTER the APA shoppers had signed the agreement! Until that point, over the course of three visits and more than two hours, he represented the car as having had only a rear bumper replaced. The reported value of the claims: about $14,000 total in two collisions. Unlike a regular retail customer, APA captured this trick on camera.

Some finance offers fail, some warranties come with holes

Three dealers promised 100% credit approval and $0 down or O% in the bold print of their ads. In the fine print or at the lot, a down payment of up to 50% could be required.

Almost worthless warranties are common in the Toronto market. Used car dealers will offer a one-year or two-year powertrain warranty, but fail to mention the $800 claim limit and $100 deductible. This sort of coverage is misleading, since no "powertrain" costs as little as $800 to replace or rebuild.

Inspection

Can I take the vehicle for an off-site inspection? Only two dealers prohibited the pre-purchase inspection at the buyer’s garage. They were Haishang Auto Sales in Scarborough and Auto Rover in Toronto. In Quebec, the inspection is a consumer right. Requiring a non-binding offer to purchase and a refundable deposit are deemed acceptable pre-conditions to the inspection.

Curbsiders

Curbsiders are unlicensed dealers posing as private parties who are selling their personal-use vehicles. They can also be licensed dealers representing themselves as private parties in classified advertising. They are lurking in over 20% of classified advertising. The APA shopped five Toronto area curbsiders this year. In other markets visited by the APA, curbers appear to work from residential addresses. The curbers in Toronto appear to be more professionalized. Some are not easy to spot, as they can appear to be legitimate businesses selling from a commercial location. In fact, figuring out you are dealing with a curber can be very difficult in Toronto.

Slava was a private seller in the classifieds. At his location, the APA mystery shoppers learned that he was offering for sale his father's car, his mother's car, and a second car belonging to his father. Slava failed to disclose that his dad's car was previously owned by First Choice Salvage Limited, though he did say it had been purchased from an insurance company after a vandalism incident. He offered to have the buyers declare a lower purchase price than he was asking, to save on sales tax. This is a common curber tactic which will cost you if you ever try to claim your money back.

Roberto looked like the owner or manager of a legitimate retail location at 15 Elrose Avenue in Toronto. Roberto had a well-priced 2005 Sentra which he purchased from Impact Auto (this is a salvage auction that sells mainly wrecked vehicles). According to Roberto, only the front light box had been replaced, but the APA determined the car was a front hit with moderate structural damage. Roberto offered to charge only one tax if the buyers handled the transaction at the M.O.T. alone.

Aniba at 2949 Weston Road in Toronto claimed to be the second owner of a 2005 Pontiac Montana for sale on his driveway. APA’s history search confirmed that Aniba never appeared as the owner, and that the van had been a write-off that was subsequently repaired. Oddly enough, a second vehicle on Aniba’s driveway sported a garage licence plate. He too offered to declare a reduced price -- roughly half the real price -- to save sales tax.

 

Vancouver

View the full results for Vancouver

In Vancouver, 6 of 18 dealers visited passed. This year’s investigation included a high proportion of recent vehicles belonging to the 2007-2009 model years. In Vancouver, the APA learned that buying a more expensive late-model used vehicle may actually increase the likelihood of ending up with someone else’s problem. According to APA President George Iny, several Vancouver-area dealers visited specialize in retailing wrecks that have been rebuilt to low standards; they under-report the extent of the repairs and gloss over serious deficiencies. Many of these vehicles appear to come from ICBC salvage auctions.

By far the most serious reasons for dealership failures in the Vancouver market were misrepresentations and deceptive practices related to the sale of these severely damaged and repaired vehicles. Five of 18 used car lots visited by APA specialized in remarketing ICBC write-offs. Sellers rely on the ICBC brand and reputation to lull shoppers into believing the vehicles have been rebuilt and inspected to consistent standards. The APA found that was not the case.

At Brillyan Auto, 4310 East Hastings in Burnaby, the seller readily disclosed the salvage status of a 2007 Matrix, and produced paperwork that showed the repairs had been passed by Cales Collision Rebuilders. The APA discovered the Matrix was riddled with defects that should have never passed inspection. It had a front bumper from a 2003 model, which was loose. The left tail light socket was missing, the transmission was leaking badly, a sway bar link was bent and there was a hole in the floor from a missing plug. Body filler was liberally applied to the left side of the vehicle, and the rocker rail was sagging.

Chan’s Auto at 7469 Edmonds Street in Burnaby specializes in selling late model rebuilt ICBC write-offs, at significantly discounted prices. According to the seller, the 2008 Nissan Versa offered for sale had “no frame damage” and still had the original radiator, which proved it was in a “small accident”. The APA inspection revealed that the front fenders and hood had been replaced and the inner fenders and upper frame rails had sustained damage that did not appear to have been fully repaired. A 2008 Yaris represented as having only cosmetic damage also had sustained a moderate structural impact. The APA observed some collision damaged vehicles being reassembled at the dealer’s location using simple tools. The dealer said complicated repairs were sent out to a body shop.

Most shops that perform mechanical repairs and mobile inspection services are not adequately trained to determine whether a salvage vehicle has been properly repaired. In those cases, shoppers are relying on the ICBC and Ministry of Transportation approved branding and rebuilding process – a risky proposition.

Daily rentals not disclosed

Three dealers visited by the APA mystery shoppers offered used daily rentals for sale. The seller at Legacy Cars, 12473 King George Highway in Surrey represented a 2008 former Budget Rental Car as a trade from a “business person”. Hare Motors at 12375 had a good selection of well-priced vehicles in nice condition, but the seller misrepresented a Toyota Corolla, Camry and Matrix as one-year-old lease returns, when they were in fact former daily rentals. A third dealer, Gold Seal Motors in Burnaby correctly disclosed that a 2009 Matrix was a former daily rental from Alberta.

Vehicle inspection and advertised price representations

All but three dealers permit an off-site inspection at a repair shop chosen by the buyer. South Surrey Repo at 3601 King George Highway, restricts the offsite inspection to a garage next door that owns their lot. Technique Auto Sales in Vancouver and S&S Auto Sales in Burnaby do not permit an offsite inspection – all three were awarded a failing grade.

Price representations in ads placed by retailers selling in Greater Vancouver were much more likely to be all-in except taxes than in Toronto. Lucky 8 Auto Sales, 715 Kingsway, in Vancouver had the highest extra fees of $475, contributing to a Fail rating, but that was half the amount several Toronto-area dealers were charging in late 2009. At $395, Trinity Auto Centre in Burnaby also had a high Dealer Overhead Charge (or DOC fee) tacked onto the prices of its vehicles, which marred an otherwise superior performance.

Best shopping experience

APA’s best shopping experience in Vancouver occurred at First Rate Motors, 16225 Fraser Highway in Surrey. The dealer reviewed the ICBC and CarProof reports in his file with the mystery shoppers, without making pages “disappear” from the reports or glossing over records. Only one car on the lot, a 2002 Mercedes, had sustained a collision, which was correctly disclosed by the seller. An offsite inspection is permitted.

Curbsiders

APA shopped three private individuals who were in the business of selling vehicles. Ken the curbsider showed the APA shoppers a 2008 Mazda 3 which he said had been involved in a moderate rear impact valued at $2,000 to $3,000. Ken said the Mazda was his personal vehicle, used to drive around his three children, and that he needed something larger. Investigation by W5 confirmed that Ken was peddling cars obtained from salvage auctions by a company called Ace Auto in Burnaby. An inspection of the Mazda revealed that the rear impact had been anything but minor; the rear suspension and floor had been twisted, and W5 discovered that the occupant of the car had made an injury claim subsequent to the impact.

Victor the curber at 8638 Hudson Street in Vancouver advertised a 2008 Yaris that he claimed was his personal vehicle. Victor also claimed to have been the original owner of the Yaris until ICBC “took it from me” after a minor collision. According to Victor, damage was minor and only a plastic cover had been replaced, so he bought the car back with the help of a friendly dealer. APA put Victor’s car on a lift and discovered clamp marks front and rear, from a frame machine used to straighten structural damage. APA took alignment readings on the Yaris, which were more or less within specification, and the car appeared to have been adequately repaired, which is unusual for a curber vehicle.

Georghi (George) was helping some friends in Surrey who are in the business of rebuilding and selling vehicles using a network of brokers who work for a flat fee of $300. Damage to their rebuilt 2008 Mazda3 appeared to have been moderate and the repairs adequate.

What you can do to protect yourself

HAVE THE VEHICLE INSPECTED before you buy it. Some dealers 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.

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

Vancouver

In Vancouver the first step is a history search. Record keeping in BC for collision and mileage for cars registered in the province is the most complete in Canada. Use CarFax to do a first screen on the vehicles of interest, because it’s less expensive, and will quickly reveal if the vehicle is from out of province. When you’ve found a vehicle you like, the ICBC CarProof report is expensive, but the way to go.

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

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

Hemrich Brothers Garage, 8506 Ash Street, (Marpole) Vancouver, B.C. (604) 325-8511

If you’re buying a rebuilt vehicle in Vancouver, this is a shop to consider. A competent mechanical repair facility with good alignment equipment and the knowledge required to use it, derived from setting up vehicles for competition.

 Toronto

Use CarFax to narrow down your selection and the more expensive CarProof as a final check on the history. At this time, collision reporting on Quebec vehicles that have made their way into the Ontario market is incomplete, although a “rebuilt” brand should show up.

A private seller should have in their possession the Used Vehicle Information Package from the Ministry of Transportation of Ontario, which costs $20. You can also obtain one yourself for any vehicle registered in Ontario. The UVIP can provide valuable information on previous owners in Ontario.

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.

Montreal

Andrew Bleakley at 514-890-5000

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.