Edmonton man told to pay $2,400 fee on new car he’d ordered or lose it

Edmonton man told to pay $2,400 fee on new car he’d ordered or lose it

Dealerships in Edmonton and across Canada using loophole to increase up prices, says auto expert.

Kia West Edmonton on Google Maps.

Lowry says the manager at Kia West Edmonton blamed the fee on the current auto shortage and said all dealerships were charging market adjustment fees.

Randy Lowry was eager to drive the new Kia Telluride, but wasn’t excited to learn about the car’s new price listed by the dealership.

When Lowry went to pick his vehicle, the sales manager at Kia West Edmonton told him there was an extra $2,400 “market adjustment” fee — and if he didn’t pay, the sale was off.

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

He said the manager blamed the market’s current auto shortage and said the price increased.

Lowry says he needed a car because his current vehicle is 17-years-old and is breaking down.

He waited months for the car, and the sales rep had given Lowry a “worksheet agreement” spelling out the make, model, colour, and listing the total price of the vehicle at $46,997. Lowry also put down a $1,000 deposit.

But the dealer said that agreement wasn’t a formal bill of sale.

“It’s maddening,” said Lowry.

In an email he sent by Kia Canada to Lowry, a Kia customer service rep apologized for the inconvenience, but said that due to “volatility in the market,” prices couldn’t be guaranteed.

Kia Canada wouldn’t address Go Public’s questions, but in an email a spokesperson said the company “does not have control” over customer transactions as dealerships are independently owned and operated.

Kia West Edmonton did not respond to repeated requests from Go Public. It did return Lowry’s deposit.

One person says such fees are “unprofessional” and should be illegal.

“I think it’s unethical to add a markup like that to a car in order to take advantage of a desperate buyer,” said Shari Prymak, senior consultant at Car Help Canada, a non-profit association that helps people negotiate vehicle purchases.

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

The car shortage —  due to the pandemic — is the worst in the industry’s history, says Prymak. Across the country, dealerships are having difficulty sourcing inventory and meeting customer needs.

“For every 30 cars [dealerships] have coming in, they have 100 customers that want the car.”

It has also put dealerships in the driver’s seat. Prymak says he’s received many complaints in recent months about market adjustment fees and other tactics he says are ethically questionable.

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

Some buyers also said dealerships have jacked up prices and peaked financing interest rates that were previously negotiated.

“They’ll change the price and change the conditions at the last moment before delivery,” said Prymak.

“At that point, the consumer really has no choice … if a customer is not happy with the terms or not happy with the price — even if the circumstances are wrong — the dealership can easily sell that car to someone else.”

Joan and Ron Chambers of Burlington, Ont., saw their final bill included a $5,000 market adjustment fee as they were signing the contract for a new Kia Seltos. They’d walked onto the lot earlier that day looking to buy.

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

“And they’re like, it’s charged now to any vehicle on the lot. Because we’re short on supply.”

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

He provided the Chambers a complete refund but they kept the vehicle — worried about a long wait for another one.

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

It turns out, dealerships can add fees and other markups thanks to a loophole.

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

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

Even if provincial regulators don’t have the jurisdiction to stop market adjustment fees and other shady sales tactics, Prymak says OMVIC could, at least, remind dealerships they are expected to follow a code of ethics. That code, embedded in the Motor Vehicle Dealers Act, says in part that dealers must act with “honesty, integrity and fairness.”

OMVIC “could send out regular bulletins to dealers, reminding them they’re supposed to act with integrity — follow the code of ethics,” he said.

Meanwhile, back in Alberta, Lowry is worried his vehicle won’t make it through the winter months. But after his recent experience, he says he can’t bring himself to go car shopping anymore.

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

He says the manager told him the car he ordered would be sent back to Kia.

Go Public checked the vehicle’s identification number and learned the Kia Telluride was sold shortly after, to someone in Alberta.

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