A survey conducted by Car Help Canada, a non-profit aiming to assist car buyers, suggests that dealerships in Ontario are engaging in ‘price gouging’ by pressuring customers into purchasing costly add-ons when buying a new vehicle.
The Canadian Car Buyers Survey, polling 1,500 Canadians who bought cars in the last two years, reveals that 37% of new car buyers experienced a mark-up above the Manufacturer’s Suggested Retail Price (MSRP), with 85% noting the mark-up ranged from $1,000 to more than $10,000.
Forced options reported by customers included items like extended warranties, paint and window protection, and various insurances, with some dealers allegedly making the purchase of these add-ons a precondition for the sale of the vehicle.
Shari Prymak, executive director of Car Help Canada, criticized the approach taken by some dealerships, stating they often conceal these charges until presenting the final contract, adopting a “take it or leave it” stance.
The practice has been exacerbated by vehicle shortages caused by the pandemic, with manufacturing delays and supply chain disruptions leading to increased demand and higher prices for vehicles. Despite expectations for improved wait times, most buyers still faced delays of one to six months for new car deliveries.
A case from the previous year highlighted the issue when Erez Van Ham recounted being asked to pay thousands extra for unwanted options to secure a new car. “Tied selling,” as it is known, may not be illegal, but is considered unethical by Car Help Canada.
A spokesperson for the Ontario Motor Vehicle Industry Council (OMVIC) acknowledged the prevalence of this practice due to vehicle shortages, noting that it puts undue pressure on buyers and risks contravening professional conduct codes, which could lead to enforcement action.
Under the Consumer Protection Act (CPA), OMVIC points out that if a dealer increases the price after a contract is signed, the buyer is entitled to cancel the purchase without penalty and receive a full deposit refund.
Car Help Canada advises potential buyers to shop around to avoid dealerships that impose such conditions and suggests that, while negotiation may be challenging in the current market, efforts to negotiate are still worthwhile.
The survey, carried out by Decision Point Research Inc. between September 26 and October 18, involved participants who had purchased a new car within the previous two years. No margin of error was stated for the survey.