I was looking at dealer websites and one showed a new SUV available for around the same price I’ve seen for a three-year-old used model with more than 75,000 kilometres on it. But when I went to the dealership, the salesman told me that there would be two other charges that aren’t shown on the site. There’s a mandatory “assurance package” that includes wheel locks and lifetime oil changes – there’s no way to opt out – and a “market-adjustment fee.” This bumps up that advertised pretax price by more than $5,000. This dealer is part of a big dealership group and the salesperson told me to expect similar charges at other dealerships. Can the dealer just add charges willy-nilly? Are they allowed to make me buy packages I don’t want? – Chris, Edmonton
In Alberta and four other provinces, the price you see on the dealer’s website should be the real deal.
“If a price for a vehicle is advertised on a [dealership] website, it must be the total all-in price of the vehicle,” said Laura Meador, spokeswoman for the Alberta Motor Vehicle Industry Council (AMVIC), which licenses and regulates dealers in Alberta. “No additional fees can be added on top of the all-in advertised price.”
Wherever a dealership advertises a car – whether it’s on TV, radio, a website, a billboard or online – the price must include everything except sales taxes, Meador said.
In Alberta, where there’s no provincial sales tax, that’s just the GST – and, if your car costs more than $100,000, the federal luxury tax.
So, if the dealership website shows that a car costs $32,500, that should include administration and transportation fees. There can’t be an asterisk saying that the dealer may add extra costs. Add the 5 per cent GST – $1,625 – and the total bill should be $34,125.
The rules apply to new and used cars. Penalties under Alberta’s Consumer Protection Act include a fine of up to $100,000.
In the provinces with all-in pricing, the exact rules vary. For instance, in Ontario, HST and the cost of registration and plates don’t have to be included in the advertised price – as long as the advertisement “clearly and prominently” says they’re not included.
However, there is one giant loophole: All-in-pricing rules apply to dealerships, but they generally don’t apply to carmakers.
Carmakers are free to set and advertise a manufacturer-suggested retail price (MSRP) – that’s the price carmakers list in ads and on their websites.
But you probably won’t get that price at the dealership – especially these days.
“There is no provincial prohibition in Canada on [dealerships] selling vehicles for more than MSRP,” said George Iny, president of the Automobile Protection Association, an automotive consumer advocacy group based in Toronto.
So, when you build and price a vehicle on the carmaker’s website, it will give you a price and a financing rate. But there’s usually a disclaimer that says you may end up paying more at the dealership.
Even in provinces with all-in pricing, dealers are generally free to inflate prices above the MSRP – as long as they don’t charge the consumer more than they themselves have advertised, Meador said.
So, for instance, if an Alberta dealer has added $5,000 in their own charges on top of the $32,500 MSRP shown on the automaker’s website, then they have to advertise $37,500 – not $32,500 – on their own separate website. Or, the dealer could just skip advertising the price entirely.
With months-long waits for new cars, mostly empty car lots and high prices for used cars, “many dealers have stopped price advertising,” Iny said.
Carmakers that sell directly to the public, instead of through dealerships, have to follow regulations that apply to dealerships, including the all-in pricing rules.
“For example, Tesla does sell directly to consumers in Ontario, so they have to be registered with [us],” the Ontario Motor Vehicle Industry Council (OMVIC), which licenses and regulates dealers in Ontario, said in an e-mail statement.
Dealers, for the most part, don’t need approval from the manufacturer before raising prices above MSRP.
“Kia dealerships are provided with [our MSRP],” said Jennifer Szmilko, Kia Canada spokeswoman. “However, Kia dealerships are independently owned and operated and, as a result, they may set their own selling price for products and services they offer.”
In the United States, Ford sent a letter to dealers earlier this year warning them against marking up new vehicles too much – especially the in-demand Ford F150 Lightning electric truck.
“I believe some franchise agreements may limit the amount of ‘market-price adjustment’ a dealership can add, but the restriction would apply to a small number of sought-after models,” Iny said.
A few provinces, including Alberta and Quebec, have specific rules against forcing consumers to buy accessories they don’t want. Ontario allows it, as long as the mandatory accessories are included in the advertised price, OMVIC said.
“No consumer should be forced to pay for after-market packages they didn’t ask for and do not want,” AMVIC’s Meador said.
So, if you decide to buy extra services or accessories from the dealer in Alberta – say, a service package, an extended warranty, winter tires or floor mats – they will be added to the bill of sale on top of the all-in advertised price.
But those accessories are optional – the dealer can’t make you buy lifetime oil changes, for instance, as a condition of the sale.
But even in provinces without all-in pricing or bans on mandatory options, you might have grounds for a complaint against a dealer under the federal Competition Act.
It bars drip pricing, in other words, adding extra mandatory charges that make an advertised price unattainable, Competition Bureau spokeswoman Marie-Christine Vézina said in an e-mail.
If you’ve seen an advertised price, get proof before you go to the dealership, OMVIC advises.
“We often encourage buyers to take a picture of the advertisement, wherever they have seen it – in a newspaper ad, online, on the dealer’s lot – and bring it with them to show to the salesperson when they go to buy.”
But the dealer may just tell you to take a hike – and then find another buyer who will pay the price they charge, Iny said.
“Most consumers just pay the [added fees] and take it on the chin,” he said.
In a statement, the Canadian Automobile Dealers Association (CADA), which represents dealerships, said “local franchised dealers are all well-versed on their responsibilities and the serious consequences of violations.”
But even if dealers are aware of the rules, breaking them can bring in a lot of cash, Iny said.
“It’s way too profitable [for dealers] to cheat on price advertising – [potentially adding] an extra $500,000 a year – and your risk is getting a letter or a small fine every few years.”
Have a driving question? Send it to [email protected] and put ‘Driving Concerns’ in your subject line. E-mails without the correct subject line may not be answered. Canada’s a big place, so let us know where you are so we can find the answer for your city and province.