FILE PHOTO: Automobiles are shown for sale at a car dealership in Carlsbad, California, U.S. May 2, 2016. REUTERS/Mike Blake/File PhotoMike Blake/Reuters
My girlfriend ordered a 2022 Honda CR-V Sport on April 18. Two weeks ago, the dealer called and said she’s not getting it, but offered the smaller, less expensive HR-V for more money and almost twice the [interest rate]. No apologies and no increase on her Civic trade in. How do these people get away with this? – Bruce, St. John’s
With low supply, high demand and long waits for new cars, it’s often dealer’s choice whether you’ll get the car you ordered for the price and financing rate you agreed to – or if you’ll get that car at all, experts said.
“The more honest dealers are telling customers up front that they can guarantee only your place in line when they take your deposit,” said George Iny, president of the Automobile Protection Association, an automotive consumer advocacy group based in Toronto. “The price and payments are for illustration purposes only.”
If you can’t get the car you ordered or the price and monthly payments have increased, the dealer should give your deposit - usually between $1,000 and $5,000 - back and let you walk away, but that depends on what the contract said, Iny said. Some allow price increases.
“It’s almost certain that the back of the sales agreement signed by your reader contains language that permits price increases for almost any reason,” Iny said. “[But] if the delivery delay or price increase have changed the terms of the agreement, the deposit is refundable.”
But with long waits for most vehicles because of parts shortages and some carmakers raising prices, many buyers “give in and swallow the increase” just so they can get a car, Iny said. “[Otherwise] the buyer will have no vehicle and moves to the back of the line somewhere else at the new higher price.”
Read what you’re signing
The rules vary on getting a deposit back, but in most provinces, you can complain to the ministry that handles consumer protection laws.
“The provincial consumer ministries are mostly AWOL (absent without official leave) when it comes to auto retailing practices,” Iny said. “Quebec’s has taken the position that the price and payments are binding [and] delays were foreseeable when the deals were signed.”
Newfoundland and Labrador’s consumer ministry, part of the Department of Digital Government and Service NL, said it accepts complaints about unfair practices that violate the province’s Consumer Protection and Business Practices Act. Since January, it has received four complaints about dealerships hiking interest rates between the time the car was ordered and when it was delivered, Krista Dalton, Labrador’s Department of Digital Government and Service NL spokeswoman said in an email.
“In each of these cases, the issue was resolved directly with the dealer,” Dalton said. “If an issue cannot be resolved directly, upon receipt of a written consumer complaint, the Division will attempt to mediate. If an issue cannot be mediated, then the consumer may consider taking legal action.”
It hasn’t received any complaints about deposits not being returned, Dalton said.
British Columbia, Alberta and Ontario also have independent regulators that police car dealers.
Alberta’s regulator, the Alberta Motor Vehicle Industry Council (AMVIC), said it can intervene if the buyer was misled or the dealer was dishonest, but it doesn’t have jurisdiction over deposits.
It said to talk to the dealership’s manager to try to get your deposit back. If that fails, contact a lawyer – but you might be limited by the terms of what you signed, AMVIC spokeswoman Laura Meador.
“If it requires a signature, it’s important,” she said. “Ensure the sales agreement clearly states whether the deposit is refundable or non-refundable and under what terms and conditions.”
Walk away?
While it’s not unusual these days for prices to change on a vehicle you ordered, if the dealership is offering a completely different model, you should be able to walk away from the deal, said the Ontario Motor Vehicle Industry Council, (OMVIC), Ontario’s dealership regulator.
“Since the original contract is not being fulfilled because the dealer cannot meet the terms, they are within their right to cancel and go shop elsewhere,” said Maureen Harquail, OMVIC chief executive officer. “No one can force you into a new deal….However, if the consumer really wants to get a new vehicle right now, options are more limited. Negotiating the new option with this dealer may very well be their best option at the moment.”
There’s been an increase in consumer complaints about changed and cancelled deals, she said.
“We have never seen a seller’s market like this,” Harquail said. “It often goes back to the supply shortages being experienced globally and the manufacturer having to either cancel orders or move on to making next year’s model by a certain point in the year.”
Honda Canada said it couldn’t comment on an individual case without permission from the buyer. When asked how long waits are right now, it said that “significant global issues [including parts shortages and rising interest rates] are still very much a part of the new vehicle availability and delivery process.”
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