You've got questions? Here are some answers
In this column, I'd like to answer some letters that I've received over the past six months.
For all who have taken the time to write – thank you.
Q. Car insurance rates in Ontario are expected to rise by as much as 14 per cent. Why do they keep going up?
A. Insurance companies say that the increases are due to the cost of settling accident claims.
Treatment, assessment and administrative costs account for the lion's share of the expenses. These claims are wildly disproportionate to other provinces.
In my opinion, the auto insurance industry in Ontario is ripe for reform.
Q. In California, GM launched a trial program that allowed consumers to purchase new vehicles through eBay. Will similar programs come to Canada?
A. This was a short-lived experiment that didn't yield any definitive results for GM. I don't see the program being introduced into Canada any time soon.
Buying a car isn't like buying a book or a CD online; it's an emotional experience that requires face-to-face interactions with dealership staff, and the tactile experiences of test driving vehicles.
Those experiences don't translate well online.
Q. Next July, the Ontario government plans to introduce the harmonized sales tax.
How will this affect vehicle sales and service at franchised auto dealers?
A. Franchised dealerships already charge provincial (8 per cent) and federal (5 per cent) tax on the sale of new and pre-owned vehicles, parts, service and collision repairs. Only a few items – such as Drive Clean emission tests, cleaning supplies and storage services – are currently exempt.
By next July, all purchases will be subject to the HST.
Q. Why is it necessary to put a deposit on a vehicle? Shouldn't a handshake agreement suffice?
A. A deposit demonstrates a customer's commitment to purchase. It tells the dealer that a customer intends to fulfill his part of a legal agreement.
Dealers require deposits so they can hold the vehicle for the customer and prepare it for delivery.
Before handing over a deposit, it's important to understand the terms of the sales agreement.
Q. As a new-car dealer, what trends have you noticed in your industry since the start of the recession?
A. The biggest trend I've noticed is with vehicle maintenance.
Car owners are not servicing their cars as frequently as they once did. I understand the need to economize, but vehicle maintenance should be viewed as an investment, not an expense.
Avoiding a manufacturer's recommended maintenance could even jeopardize warranty coverage.
Q. What role does social networking have at new car dealerships today?
A. Some dealerships have experimented with Facebook in an effort to connect with their customers.
Some salespeople and managers have Twitter accounts to stay in touch with friends and customers.
Dealers are starting to realize that social networking can affect their businesses, both positively and negatively.
I'll address this issue in a future column.
Q. Consumer groups and auto publications regularly rank vehicles for their performance, safety, styling and reliability. Which are the best at ranking vehicles?
A. The Automobile Journalists Association of Canada provides vehicle rankings that are highly respected within the industry.
Their selections carry a substantial influence in the market.
Automotive magazines, newspapers and consumer groups publish rankings as well.
I strongly advise anyone looking to buy a car to review as many rankings as possible.
The more information you have, the better choices you'll make.
This column represents the views
of TADA. Email president@tada.ca
or visit tada.ca.
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