Interest fee

Edmonton man must pay $2,400 ‘market adjustment’ fee on new car he ordered – or lose it

Randy Lowry was excited to drive the new Kia Telluride he ordered from a dealership, but wasn’t thrilled to hear the car’s new price.

When he picked it up, the Kia West Edmonton sales manager told him there was an additional $2,400 ‘market adjustment’ fee – and if he didn’t pay, the sale was void. .

“I said, ‘No, we have a deal,'” Lowry said. “He didn’t seem to care.”

He said the manager blamed the current shortage of automobiles and said the price had gone up, period.

Lowry says he needed a car because his current vehicle is 17 years old and starting to have trouble.

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He had waited four months for the car to arrive and figured he had a contract. The sales representative had given Lowry a “worksheet agreement” detailing the make, model, color of the vehicle and listing the total price of $46,997. Lowry had also put down a $1,000 deposit.

But the dealership said that deal was not a formal bill of sale – which would have been binding – so it didn’t hold water.

“It’s infuriating,” Lowry said.

He complained to Kia Canada.

In an email, a Kia customer service representative apologized for the inconvenience, but said that due to “market volatility” prices could not be guaranteed “for an extended period”. .

Kia Canada did not respond to questions from Go Public, but in an email a spokesperson said the company “has no control” over customer transactions as dealerships are independently owned and operated. , and that dealers are “encouraged to maintain prices” where possible.

Kia West Edmonton did not respond to repeated interview requests from Go Public.

Lowry says the Kia West Edmonton manager blamed the fee on the current auto shortage and said all dealerships charge a market adjustment fee. (Google Maps)

A consumer advocate says such charges are unprofessional and should not be allowed.

“I think it’s unethical to put such a markup on a car in order to take advantage of a desperate buyer,” said Shari Prymak, senior consultant at Car Help Canada, a nonprofit that helps people negotiate the purchase of a vehicle.

“I don’t know what you can call it other than extortion,” he said.

The car shortage — caused by a lack of microchips, among other things, due to the pandemic — is the worst in industry history, says Prymak. Across the country, dealers are struggling to source inventory and meet customer demands.

“For 30 cars [dealerships] arrive, they have 100 customers who want the car.”

That’s putting dealers in the driver’s seat. Prymak says it has received a flood of complaints in recent months about market adjustment fees and other sales tactics that it says are ethically questionable.

Joan and Ron Chambers of Burlington, Ontario were surprised when this dealership added a $5,000 market adjustment fee to the price of a new Kia Seltos. (Google Maps)

Add-ons that were once optional — such as extended warranties, theft protection features, undercoating — have become mandatory without warning, according to other disgruntled car buyers who contacted Go Public.

Some buyers also said dealers raised prices and increased financing interest rates that had previously been negotiated.

“They will change the price and change the terms at the last moment before delivery,” Prymak said.

“At this point the consumer really has no choice…if a customer is unhappy with the terms or the price – even if the circumstances are not good – the dealership can easily sell that car to someone.” another.”

“You’re Robbing Us”

Joan and Ron Chambers of Burlington, Ontario discovered their final bill included a $5,000 market adjustment fee when they were about to sign the contract for a new Kia Seltos. They had entered the field earlier in the day, looking to buy.

“My husband is like, ‘Isn’t this stealing…you’re stealing from us,'” Joan said.

“And they’re like, it’s billed now to any vehicle in the field. Because we’re running out of supply.”

Leggat Kia Burlington general manager Joe Capriotti wrote in an email to Go Public that it’s “difficult at best” for customers to accept market volatility.

He offered Chambers a full refund, but they kept the vehicle – worried about a long wait for another.

But they complained to the Ontario Motor Vehicle Industry Council (OMVIC), which oversees auto sales — sort of.

It turns out that dealers can add fees and other surcharges through a loophole.

Like many regulators, OMVIC, under the province’s Motor Vehicle Dealers Act, has jurisdiction only over total advertised prices; which must include any additional charges, products or services.

WATCH | Consider this before buying a car:

Advice from an automotive expert

Shari Prymak of Car Help Canada offers advice for consumers looking to buy a car in the face of vehicle shortages and inflated prices.

Adding fees to vehicles that catch a customer’s eye at the dealership is allowed, as long as they’re clearly stated in the contract, according to an OMVIC spokesperson.

Lowry also complained to his provincial regulator. But the Alberta Motor Vehicle Industry Council (AMVIC) also doesn’t have the legislative authority to compel a company to take specific action. Not even if he had violated the Consumer Protection Act.

AMVIC agreed that Lowry’s signed agreement and filing were non-binding, saying the sale was “still in negotiations.”

At least one law firm disagrees — and told Lowry the paperwork was a binding contract — but it hasn’t pursued the case because it would be costly and likely drag on for months. He walked away from the sale.

“Honesty, Integrity and Fairness”

Even though provincial regulators don’t have the power to stop market adjustment fees and similar selling tactics, Prymak says the OMVIC could, at least, remind dealers that they must follow a code of conduct. ‘ethics. This code, incorporated into the Motor Vehicle Dealers Act, stipulates in part that dealers must act with “honesty, integrity and fairness”.

OMVIC “could send regular newsletters to dealers, reminding them that they are expected to act with integrity – follow the code of ethics,” he said.

He says Ontario’s regulator is far too biased in favor of industry. “It’s largely consumer funded, but the board is mostly made up of dealers,” Prymak said.

After the Auditor General of Ontario raised concerns about the composition of OMVIC in an audit last yearthe regulator said it was “reassessing the proportion of industry representatives” on its board.

WATCH | Automotive customers required to pay additional fees:

Edmonton man must pay extra $2,400 on new car he ordered – or lose it

Randy Lowry was thrilled to sit in the new Kia Telluride he ordered from a dealership, but wasn’t thrilled to hear the car’s new price. Kia West Edmonton’s sales manager told him there was an additional “market adjustment” fee of $2,400 – and that other dealerships are now charging it as well.

But OMVIC CEO and Registrar Maureen Harquail bristles at the suggestion that the regulator isn’t working hard to protect the public.

“With all due respect, I would disagree,” she said. “We are reaching out to our…dealers and salespeople and reminding them that they continue to uphold the strict and high standards that we have.”

She pointed to an education team that is available to answer dealer questions and said OMVIC regularly hosts webinars to ensure dealers are complying with applicable legislation.

Go Public has verified all OMVIC bulletins issued since the start of the pandemic. None specifically discouraged dealers from adding market adjustment fees or other unexpected charges – nor specifically mentioned that requiring add-ons is unethical or stated that dealers should not not suddenly change the interest rates that had been previously negotiated.

In the United States, the Federal Trade Commission proposed new rules in Junecurrently under review, to level the playing field.

Among other things, the rules would allow the agency to recover money when consumers are misled or charged without their consent.

Meanwhile, back in Alberta, Lowry fears his vehicle won’t survive the province’s harsh winter months. But after his recent experience, he says he can’t bring himself to go shopping anytime soon.

“It’s so disheartening,” he said. “Literally such a disappointment that I don’t even want to care.

He says the sales manager told him the car he ordered would be returned to Kia Canada.

Go Public checked the vehicle identification number and learned that the Kia Telluride had been sold shortly after, to someone in Alberta.

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