National Bank has been present in the retail financing market for over 20 years. Their continued growth in the automotive segment is a testament to the partnerships they have established with auto dealers across Ontario and the country.

This new agreement between the UCDA and National Bank will allow UCDA Members to benefit from exclusive promotional offers.

If you are not signed up with National Bank as your financing partner and are thinking of doing so, now is the time!

We encourage you to sign up so you can start taking advantage of the National Bank Financing Program. Accreditation criteria apply (see below). As a UCDA Member, you will enjoy:

• exceptional support and strong ground presence from your local National Bank Business Development Manager.
• industry-leading auto-adjudication system allowing you to get around-the-clock credit decisions in minutes, 7 days a week.
• additional support through the Bank’s Operations Centre where Customer Service Agents and Credit Analysts are available to discuss your clients’ financing needs.
• easy paperwork … the simplest loan documents in the industry.
• Quick & Easy Funding allowing you to have access to your funds within hours.

If you already deal with National Bank for your financing needs, you will now gain access to exclusive, promotional offers. To sign up or to find out how this new business relationship between the UCDA and National Bank will benefit your dealership, you can contact UCDA Member Services at 1-800-268-2598 or email: [email protected]. You can also contact your local National Bank representative or reach out to National Bank by submitting your request through Dealertrack. A National Bank representative will get back to you within 24 hours. The complete list of the National Bank’s business development team can be found by clicking on the link below.

https://tinyurl.com/tbyurxm

Program Criteria:

The National Bank program is available for new and used car dealerships. For new car dealerships, the dealership is subject to due diligence that includes, but is not limited to, a satisfactory review of the information provided and referenced on the accreditation application form. Any reliable published information about the dealership is also considered.

For used car dealerships, in addition to the above, the dealership is subject to a satisfactory review of the UCDA Member’s financial situation & operations.

This includes, but is not limited to, a review of the dealership’s most recent financial statements and a review of their client-escalation process. As a guideline, used car dealerships should be in business for a minimum of 5 years and meet a minimum threshold of $1 million in annual sales.

Note:

• National Bank does not offer sub-prime financing.
• National Bank’s program is for retail customers and does
  not provide loans to businesses.

On The Horns Of A Dilemma

“May you live in interesting times.”

Commonly considered an ancient Chinese curse of sorts, can anyone question that the saying certainly applies these days?

It’s not news to dealers that the squeeze is on when it comes to used vehicle inventory. It’s a global problem and not one that will be easily solved in the short term, although there is hope inventories will expand in 2022.

As with any supply/demand pressure, it creates hardships, but also opportunities. In response, dealers are having to look to sources for vehicles they did not traditionally consider.

For example, some dealers are finding leasing companies are not as willing as they once were to wholesale off-lease vehicles, preferring, given current market conditions, to keep the vehicles in their own inventory for re-lease or sale at retail prices.

One way dealers have found to get around this, so to speak, is to have the consumer exercise their lease buyout right (if the lease allows one) and then have the customer sell the vehicle to them. The downside, of course, is that the consumer has to pay HST to buyout the lease, and
there is no way to recover this.

Having stated the obvious, this is an example of an opportunity in the face of a dilemma.

While it’s true the HST has to be paid, the consumer is also getting top dollar for the vehicle when they sell it … so the profit may exceed the HST on the table. In addition, the consumer who has exercised the right to purchase the lease, now has an asset they can trade against a new lease or purchase from you and thereby can reduce the HST payable in that way.

No one denies times are hard right now, but if you look around you will find some dealers are still thriving in this market … maybe they know something about how to navigate “interesting times”?

Sign Of The Times

In another story, developing as the result of the present inventory crunch, we are getting calls from some dealers complaining that other dealers will not sell them vehicles.

Of course, no dealer is obliged to sell anyone a vehicle, but lately, it seems some dealers will not sell to other dealers, for any price. However, some of these same dealers are willing to sell to the dealer owner as an individual.

Why this should be is beyond us, but it poses a problem.

Can a private individual buy a vehicle, then sell it to their own dealership, so it can sell the vehicle retail?

Unfortunately, the answer is “No”.

That would make that person a curbsider. It is illegal to buy and flip cars for business without a dealer licence. That is why you need a licence in the first place. Don’t get on the wrong side of OMVIC and the law here.

The UCDA doesn’t recommend that Members refuse to sell to other dealers. However, if you run into this problem when looking for inventory, it’s best to simply move on and try to find a better source.

Nominees

No, we are not running an election here!

In this context, we are talking about dealers using an ordinary citizen to secretly act for the dealer in the purchase of a motor vehicle.

The role of the nominee is secret because, to the dealer they approach to buy the vehicle, they are just what they seem to be … a normal consumer.

In fact, they are just a straw-man (or straw-woman) for the dealer who wants to obtain the vehicle. They will be paid a small fee and flip the vehicle to that dealer.

If the dealer approached the selling dealer directly to buy the vehicle they likely would refuse to sell to them because they do not sell wholesale. They may also be restricted by their franchise owner not to sell wholesale, or for possible export, or for resale, or just because vehicles are hard to come by these days.

A consumer buying vehicles in this manner is really acting as an unregistered dealer or salesperson for the end dealer, and this activity could get a dealership, and the consumer, charged by OMVIC.

We think the practice is wrong and quite likely illegal. And we don’t think it’s victimless either.

While it’s true the selling dealer gets to sell a vehicle, and the consumer gets a small bird-dog or nominee fee, and of course the end dealer gets what they want, this is still not the end of the story.

Aside from concerns about OMVIC, the consumer buying such a vehicle usually agrees right on the contract that they are not buying the unit for resale or export. Again, the selling dealer has to put this on their contract to satisfy the new vehicle manufacturer who holds their franchise.

The fact the consumer has every intention of flipping the vehicle despite agreeing not to do so leaves a very bad taste. The fact that the end dealer lies in the weeds waiting for their vehicle also smacks of dishonesty.

Aside from the unsavory optics of all of this, what happens if the selling dealer discovers the deception and sues the consumer for breach of contract? Is the end dealer going to indemnify the consumer for the cost of defending themselves, or pay any judgement that might arise?

None of this makes our industry look good and the practice should be avoided. If it continues, we would not be surprised to see swift action to stamp it out.

Lost Or Stolen Dealer Plates

Every dealer knows (or can imagine) the sinking feeling when you lose a dealer plate. It’s a real pain in the neck, especially if you lose it while in transit because the bag fell off the back, or someone stole it, and you need someone to come out with another one so you can drive home!

There are other things you need to think about too and since we have had a couple of calls lately on this subject, let’s run through them here:

1. Report the plate lost or stolen to your local licence office. They can replace the plate (for a fee of course) but the unused portion of your validation can still be used. The lost plate will be placed in “inactive” status.
2. Report the lost plate to your local police.
3. Report, preferably in writing, the fact this plate has been lost to the 407 ETR. You can probably guess why this is prudent.
4. Call your insurer. They will appreciate knowing you no longer have that plate and you can give them the new plate number should you choose to replace it at the same time.

If you are using a bag or pouch, make sure it is in good condition. These take quite a beating, and fabric and plastic can only take so much wear and tear. Where possible, take the plate with you or lock it in the trunk if you are leaving the vehicle for a short while, to dissuade thieves.

Ignoring Complaints

Resist the urge to ‘kill the messenger’ and remember, these are used vehicles and problems can arise despite your best efforts. What separates dealers from curbsiders or private sellers is how you respond to those problems when they come up.

Most people (not all, but most) don’t like to complain. If matters have gotten to the point where the customer feels obliged to talk to you about it, it likely warrants a looksee. Ask them to bring the vehicle in so you can discuss the issue. Even if it turns out to be nothing, the customer will be reassured that they made the right decision buying from you because you showed you cared and provided after sale support.

On the other hand, an ignored complaint can be like a small cut; minor at first, but if left to fester, it can become more serious. And we all know customers have many routes available to them to complain if they don’t feel they are being treated fairly.

Turn a negative into a positive at every opportunity.

And, don’t ignore OMVIC!

No one likes to get a call from OMVIC about a complaint, concern or problem. It is like getting a call from the police, or CRA or your doctor with concerning test results … again, some may feel the best first reaction is to not respond. Do not do that.

OMVIC has a job to do. They are contacting you for a reason, and while you can usually reply and swiftly nip things in the bud, if you ignore them, the problem starts to get bigger for both you and OMVIC.

A recent discipline decision shows how costly it can be for a dealer to stick their head in the sand and remain unresponsive when dealing with the regulator. Don’t make a mountain out of what should be a molehill. Face the concern head-on and if you need advice, contact the UCDA legal department:

https://tinyurl.com/dajsmpec

The Ministry of Government and Consumer Services has released a consultation paper for public comment on proposals to amend the Motor Vehicle Dealers Act, 2002 and its regulations. The Act and regulations, which govern the activities of all dealers in Ontario, have been in place with almost no changes since 2010.

But a lot has changed in the industry since then. The digital world has exploded and dealers are very much a part of that now. There’s no question that amendments are overdue, but there will likely be disagreements on some of what the Ministry is throwing out there for public consultation.

For example, there are proposals to lessen the importance of doing business only from a dealer’s registered premises, such as allowing contracts to be signed and test drives to be taken at locations other than a dealership. There are proposals that could make significant changes to “As Is” selling and that could also increase the power of OMVIC to issue fines through something called Administrative Monetary Penalties (AMPs). We’ve written about our opposition to AMPs when they had been previously proposed in 2013 and in the pre-Covid days at the beginning of 2020.

The proposed changes can be found in the Ministry’s public consultation paper.

A few of the changes being explored in the consultation paper include:

• Allowing registrants to conduct business in locations outside of where they are registered to trade.
• Changing disclosures required in a sales contract under certain situations.
• No longer requiring registration certificates to be returned once a registrant leaves the motor vehicle industry.
• Requiring costs for repair, inspections and getting safety standards certificates to be included in the advertised price of “as-is” vehicles.
• Extending the time limit for dealerships to provide warranty sellers with required warranty documents and payments from 7 days to 30 days.
• No longer requiring registrants to list a phone number in certain advertisements.
• Increasing fines for curbsiding, and increasing the number of disciplinary options for addressing registrant noncompliance.
• Removing requirements for wholesalers, exporters and brokers to post their registration certificates and a sign at each place they are registered to trade. Or, to remove this requirement only for wholesalers, exporters and brokers who don’t sell directly to the public.
• Allowing exporters to trade from a home office or to only allow exporters who don’t sell directly to the public to trade from a home office.
• Refreshing the Code of Ethics to bring it in line with specific regulatory requirements.
• Cleaning up the MVDA by removing outdated sections carried over from an older version of the Act.

The UCDA will be preparing a detailed response to the proposals which we will submit to the Ministry and share with Members. Individual dealers and salespersons may also submit their feedback to the Ministry by emailing [email protected], or by filling in the comment box at the bottom of the consultation paper’s web page.

All submissions must be received by September 17, 2021 at 11:59 pm.

MVIS Changes

Many of our Members have repair facilities, and many perform motor vehicle safety inspections. Many Members who are MVIS stations will have received the notice from MTO announcing a change to “Passenger Transportation Vehicle” (PTV) safety requirements.

The communication was perhaps unfortunate as it has caused some confusion. It refers to vehicles that can carry 10 passengers or less and announces these will need semiannual safety inspections as of July 1, 2021.

What it does not make clear is that it applies ONLY to vehicles transporting people for money i.e. a taxi, or rideshare vehicle.

What is a PTV?

Interestingly, to add to the confusion, many of these vehicles seem to be exempt by the terms explained in the notice. This includes exemptions for taxis, ride-share vehicles (if they are already licensed by their local municipality, as most are). Carpoolers, who only charge for gas, are exempt as well.

Really, when it comes down to it, it’s hard to imagine how many vehicles this will actually apply to. Since the responsibility rests with the vehicle owner, we do not see much exposure for our Members in any event. Vehicle owners should check “vehicle for hire” licensing in their local municipality to be certain they are exempt.

Leases and Safety

Many issues can arise during a lease, but what about at the end of a lease?

The Reluctant Lessee

Members often experience difficulty at the end of a lease, getting the lessee to cooperate in transferring the vehicle out of the dealer’s name and into their name with a safety inspection.

Not to put too fine a point on it … your lessee is avoiding you.

This concerns you because you don’t want them to continue driving around in a vehicle registered in your name.

Your lessee may have other concerns. For example, the vehicle is 3 or 4 years older than when you first leased it out. You have no idea how well it’s been maintained and you sure don’t know what it’s going to take to safety it. Neither does the lessee, but he does know he has a vehicle plated he can drive right now, so why risk it!

What can the lessor do to force the issue? Not much. All the lessor can do is ask the license office to show the status of the vehicle as “SOLD”, but it will remain registered in the dealer’s name.

In most cases the lessor has no permit in the file with the lessee’s signature accepting transfer. Lessors should consider obtaining that at the start of the lease, so they can avoid this problem at the end of the lease. A “true copy” (front and back) of the permits can be given to the lessee while you hold the originals.

A dealer could send a letter by courier or registered mail to the reluctant lessee and advise them that if they do not bring their vehicle back for a safety and accept plate and registration by a certain deadline, the vehicle will be transferred into their name without a safety.

This will cause it to go into their name “UNFIT” and “UNPLATED”. The lessor could then use the signed permit to transfer the registration.

The Frugal Lessee

Dealers have been calling us a good deal lately asking what to do with a consumer who insists that they can use their own safety at lease end. Why? Because they do not want to pay the dealer to do it, and they have probably found a cheaper option at a third party garage.

Understandably, dealers are concerned if they proceed to register and plate the vehicle using someone else’s safety. A dealer might end up liable if safety problems arise on a vehicle they have not inspected.

Believe it or not, many (most?) leases are silent about the nitty gritty of what is supposed to happen at end of lease with respect to safety and who is to pay.

This is what the UCDA Lease Agreement says in the event an option to purchase at lease end is exercised:

  “I will be responsible for the cost of a Safety Standard Certificate … and all repairs needed to obtain it.”

We tell dealers they do not have to agree to accept a third party safety at lease end. Their concerns about liability are real and while it is understandable that consumers will try to save a buck or two, when it comes to safety, you get what you pay for.

Charity

It’s easy to forget, amidst our fight with COVID-19, that other battles are being waged in other health wars.

These battles are quiet, because they involve children, but are no less harrowing.

The UCDA’s Charitable Giving Committee has been making donations, on behalf of UCDA Members, to childhood cancer causes throughout Ontario for several years now.

The organizations tend to be smaller, local, grassroots charities that make a difference to the families and those children who are engaged in life and death struggles with this horrible disease.

We have heard directly from families through the charitable organizations we support about the difference our Member’s contributions have made. Thus far, in 2021, we have made significant donations to 7 such causes including:

• Help a Child Smile in Brantford, serving a wide area
• Childcan in London and area
• Candlelighters in Ottawa and area
• Candlelighters in Simcoe County and area
• Ontario Parents Advocating for Children with Cancer (OPACC), Barrie
• Northern Ontario Families of Children with Cancer (NOFCC)
• Kids Kicking Cancer based in London

The UCDA has, over the years, supported summer camps for kids with cancer; gift baskets in the holiday season that brighten the lives of not just the children fighting cancer, but also their siblings; funded hospital equipment and supplies so a child can be at home when the disease takes an upper hand and the family can be with them, paid for gas cards and hospital parking passes. All of this, all over the Province, because we have UCDA Members all over the Province and cancer knows no borders.

It is hard and emotionally draining work, but so necessary, especially during these hard times, when donations are down across the board.

In the coming issues of Front Line, we’ll share some heartwarming stories about kids with cancer and their families that the UCDA has been able help.

Annual General Meeting

The UCDA Annual General Meeting will take place at 4:00 p.m., Thursday September 23, 2021, at the Hilton Doubletree Hotel, 925 Dixon Road in Toronto. A review of the Association’s performance in 2020 and the election of a slate of Directors will take place.

What You See May Not Be What You Get

The ad said the vehicle had autopilot as an option. However, after buying it, the consumer discovered it did not have the autopilot feature they thought they had paid for.

Tesla has designed a fully-connected vehicle that allows upgrades and options, which can be downloaded directly to the vehicle.

The company wants to control the buying experience and is able to continue to make money long after the original sale.

However, that can create problems in after-market sales, especially if you are buying the used vehicle from a third party.

Apparently, even the dealer felt Tesla had confused matters when they appeared to confirm the feature was included prior to the sale.

In fact, it does not have the option and it will cost $4,000 to obtain it. Naturally, the consumer thinks the dealer should pay that. Also, naturally, the dealer sees things differently and while they did offer to take the vehicle back and give the customer a refund, they will not agree to pay for the option.

Dealers would be well advised to confirm the option actually exists on the vehicle at the time of sale, and advise the consumer, in writing on the contract, that such options are fully within the control of the vehicle maker, not the dealer.

It’s BAAACK – Luxury Vehicle Tax

As we warned about, in Front Line last year, the Federal Government hinted at a Luxury Vehicle Tax to be implemented in an upcoming budget.

Well, the difficult terrain presented by running a minority government, and the even bigger impediment of a pandemic got in the way of all that, but with the unveiling of the latest budget on April 19, the proposed tax is back.

In the first budget Canada has seen in two years, Prime Minister Trudeau and his team plan to introduce a Luxury Tax on new vehicles valued at more than $100,000, and boats worth over $250,000. 

The Luxury Tax is set to come into effect on January 1, 2022.

The tax is calculated at the lesser of:

• 20 per cent of the value above threshold ($100,000 for cars and personal aircraft;  $250,000 for boats) ; or
• 10 per cent of the full value of the luxury car, boat or personal aircraft.

The tax would affect all new passenger vehicles including sports cars, coupes, sedans, station wagons, SUVs, passenger pick-up trucks, and passenger vans and minivans that seat less than 10 people. HST will be calculated on the price of the vehicle including the Luxury Tax. Used vehicles won’t be subject to the tax.

Motorcycles and certain off-road vehicles such as ATVs and snowmobiles, racing cars (used solely for on-track or off-road racing) and RVs are exempt from the Luxury Tax. Also exempt are off-road, construction and farm vehicles; certain commercial vehicles such as some trucks and cargo vans; and public sector vehicles such as buses, police cars, ambulances, and hearses.