Consumers benefit from all-in pricing on ads
Nearly eight years ago, a new provincial law and its regulations pertaining to contracts, disclosure, warranties and business practices for auto dealers in Ontario came into effect.
This law is the Motor Vehicle Dealers Act 2002 (MVDA), and all registered auto dealers are required to comply with the act.
One of the hallmark changes in the MVDA 2002 was “all-in” price advertising, which stipulated that all dealer advertising must include all fees associated with purchasing or leasing a vehicle.
When a dealer advertises a price for a vehicle (new or used), it must include all fees or charges the dealer intends to collect. Only the HST and licensing fees can be excluded from the advertised price, but this must be indicated clearly and prominently; e.g.: $XX, XXX + HST and licensing.
If a dealer plans to charge for products or services they have pre-installed on a vehicle (such as nitrogen/tire warranty or security products), these costs must also be included in the advertised price of the vehicle.
However, when the updated MVDA came into effect in 2010, the Ontario government deliberately chose to exempt advertisements placed by auto manufacturers from its advertising regulations. In other words, ads placed by manufacturers do not have to comply with all-in pricing rules. Only registered dealers had to comply.
As a result, two sets of rules exist: one for registered dealers who are obligated to include all-in pricing in their ads; and one for manufacturers who are not. Some manufacturers, like Honda, have decided to add the freight/pdi (predelivery inspection) charges in their ads, but some others have not. This has led to confusion on the part of consumers and dealers.
The Ontario Motor Vehicle Industry Council (OMVIC) is the regulatory body that administers the MVDA 2002, and monitors ads placed by car dealers across the province. OMVIC has not been given the authority by the Ontario government to regulate vehicle manufacturers and their advertisements. Therefore, there is the potential for automakers to advertise a price of a vehicle that is much lower than the actual purchase price (if certain mandatory charges are not included in the ads, for example). When consumers view auto manufacturer ads that don’t contain all-in pricing information, they often get confused and frustrated when they visit a dealership, only to be informed that the cost of a vehicle includes items that they didn’t know about. Needless to say, both the consumer and dealer have started their business relationship on the wrong foot. This is not good for either party.
The provincial government recently announced plans to introduce new legislation aimed at strengthening protection for consumers making significant purchases, like buying event tickets or travel services, and purchasing or selling real estate, including newly built homes.
The Trillium Automobile Dealers Association commends the provincial government for focusing its new legislation on these industries. But, there is a missed opportunity here by continuing to exclude auto manufacturers from all-in price advertising. A vehicle is often the second-largest purchase a person makes in their life. Why not increase consumer protection, improve transparency, build trust and create a level playing field when it comes to auto advertising?
Why is all-in pricing not included in this proposed expanded consumer protection legislation, especially given that this double standard has resulted in years of confusion and unfairness for consumers and registered dealers? Including this legislation for manufacturers would have been the perfect opportunity to level the playing field and address an unfair business practice that has persisted for too long.
The TADA will continue to advocate that the Ontario government not exempt any entity from Ontario’s MVDA — so all consumers can benefit from all-in pricing.
This column represents the views and values of the TADA. Write to president@tada.ca or go to tada.ca. Larry Lantz is president of the Trillium Automobile Dealers Association and is a new-car dealer in Hanover, Ont.