New government policies and increased regulator scrutiny to protect consumers are making it harder to sell cars and F&I products
Many Canadian dealerships and their dealer associations are becoming increasingly frustrated with federal and provincial government regulatory agencies putting up roadblocks that can negatively impact their business. It’s become what can best be described as a war on cars. Or at least a war against the people who sell them for a living.
A good example of that happened in Ontario in May when a proposal was put forward to the Ministry Of Public & Business Service Delivery to allow consumers a two-day cooling-off period to back out of a car after purchasing it. The rationale being that consumers need to be protected from themselves.
The Motor Vehicle Retailers of Ontario (MVRO) had many concerns about the proposal, feeling it would create red tape and make it harder to do business for salespeople and others involved in a vehicle sale if enacted. The MVRO and its members collectively expressed their concerns to the Ministry, which soon thereafter withdrew the proposal.
“I thought it was a huge victory (for dealers) because I think it was not a really smart deviation from where we are as an industry,” said Shahin Alizadeh, President/CEO of Downtown Auto Group, in an interview with Canadian auto dealer. “We’re more transparent, we’re open to legislation and regulation, but we are governed from six ways to sunset. We don’t need more bureaucracy. It actually slows the process down both for us and the consumer.”
The cooling-off period was one of 14 proposals put forward to the Ministry from recommendations from the MVRO and an Auditor General’s report. There is no specific timetable when, or if, any of the proposals will be legislated. The proposals are designed to improve the Ontario Motor Vehicle Industry Council (OMVIC) regulatory efficiency and enhance consumer protection.
Alizadeh said dealers are hoping the government will streamline the proposals down to two or three significant items of which everyone can agree.
“I think governments sometimes naively implement laws they believe will help the consumer. Often they don’t realize the legislation they are proposing can have adverse effects. Of course, we want to make sure there is fair, equitable treatment of consumers, but to what extent?” — John White
“But generally I find that some of the governmental agencies are just looking for reasons to exist (and the cooling-off period) was a classic case of it,” said Alizadeh. “I think the Minister realized that (from the industry feedback).”
John White, First Canadian Financial Group National Director Business Development and former President & CEO of the Canadian Automobile Dealers Association, said there is too much government regulation and interference applied to the Canadian automotive industry.
“In certain jurisdictions, it’s gotten out of control,” said White. “I think governments sometimes naively implement laws they believe will help the consumer. Often they don’t realize the legislation they are proposing can have adverse effects. Of course, we want to make sure there is fair, equitable treatment of consumers, but to what extent?”
“The problem is not that we don’t talk to them or they don’t listen to us; the fact is they don’t consider what we’re telling them in their decisions. We fight pretty strongly, we’re a well-organized association, so it’s a daily operation to this government.”
— Ian P. Sam Yue Chi
OMVIC CEO/Registrar Maureen Harquail told Canadian auto dealer she can’t speak for other government agencies and whether they are overregulating. She said OMVIC has existed for 27 years and she believes it is doing a good job.
“One of the things to be mindful of is we’re operating with the same regulation, the same legislation, from 2010, so in terms of our authorities, they have not changed,” said Harquail. “Some of our practices, perhaps some of our procedures, have changed, but ultimately we have the legislation that we are required to administer and enforce and we do so with the tools that we have.
“I think what’s important for many dealers to remember is that while our primary mandate is to protect consumers, we are also there to protect dealers. We often get complaints from dealers about other dealers.
“If the experience that a consumer has with a dealer is clear and open and transparent and everybody knows what the expectations are of one another, isn’t that a better way to operate?”
Alizadeh opined there are some Canadian provinces and territories that are operating under “the wild, wild west concept,” but in Ontario there’s just “constant continuous” regulations that require dealer principals to spend more time educating their staff.
“I don’t think we need any further regulations, quite frankly,” said Alizadeh. “In our case, we have a huge number of covenants that are applied to our business. Some of them cost us money if we don’t comply. So there’s enough protection. God only knows how many times we have overcome these types of issues over the last 40-odd years that I’ve been in the business.”
In Quebec, the automotive industry has been adapting and adjusting to decisions made by the Provincial Government. In the March 2024 budget, for example, the government announced plans to end electric vehicle rebate incentives for consumers by the end of 2027.
The rebate program was introduced in 2012 to stimulate EV sales, but the government decided it’s not needed anymore because there is already sufficient interest among consumers, combined with costing them about $400 million between April 2023 and January 2024 to fund it.
Starting in January, 2025, the current $7,000 incentive offered to consumers buying full battery electric vehicles will drop to $4,000. In 2026 it will shrink to $2,000. Plug-in hybrids are currently eligible for a $5,000 subsidy, which will drop to $2,000 next year, $1,000 in 2026 and then nothing.
Ian P. Sam Yue Chi, President/Director General of the Corporation des concessionnaires automobiles du Québec (the Quebec Motor Dealers Association), told Canadian auto dealer his group has lobbied the Quebec government to change its decision, feeling it will “absolutely” impact EV sales and ambitious zero-emission vehicle targets.
“We don’t have parity between ICE and EVs as of today, the difference is more than $20,000 per vehicle,” said Sam Yue Chi. “If they go forward with their decision to put an end to it by 2027, it’s going to be the wrong message to send to the Quebecers in regards to the transition (to EVs). In my opinion, the rebates have never been as relevant as of today and the next couple of years because people today are not convinced about the benefits of EVs.”
Three months after taking office in Ontario in 2018, Premier Doug Ford cancelled the Liberals’ rebate EV incentive program that offered EV buyers up to $14,000. Cancelling the program immediately led to a huge dropoff in annual EV sales in the province. His government has chosen instead to invest billions of dollars into companies manufacturing EVs and infrastructure.
Sam Yue Chi said while his association remains close to the provincial government’s environment and natural resources departments, it might not matter.
“The problem is not that we don’t talk to them or they don’t listen to us; the fact is they don’t consider what we’re telling them in their decisions,” said Sam Yue Chi. “We fight pretty strongly, we’re a well-organized association, so it’s a daily operation to this government.”
White offered a similar opinion.
“Legislators need to step back and ensure they consider feedback from the relevant stakeholders and take their recommendations seriously prior to making their judgement,” said White. “Unfortunately, judgements are often made in advance.”
In Quebec, the automotive industry has been adapting and adjusting to decisions made by the Provincial Government. In the March 2024 budget, for example, the government announced plans to end electric vehicle rebate incentives for consumers by the end of 2027.
Several Quebec bills passed in the last two years have also impacted the association and its members. Bill 29 – the Right To Repair – is an act meant to protect consumers from planned obsolescence and to promote the durability, repairability and maintenance of goods. It is not strictly aimed at cars, but it’s been described as the Lemon Law because a vehicle would be deemed obsolete if the parts needed to repair it are on indefinite hold or are no longer produced.
Sam Yue Chi said there are already elements of the Bill in existence and said it is “more political than practical.” He said it adds a lot of “complexity and red tape” to respond to consumers’ requests in due time and manage the delay provided by the law.
“We have to be more rigorous in our documentation in regards to what we do on the cars, more rigorous in our communication with the manufacturer to make sure we don’t artificially create lemon cars that are not lemon cars,” said Sam Yue Chi.
Quebec is the first Canadian province to enact the right to repair legislation. It is currently only legislated in Australia, South Africa and in the U.S., though the specifics of it vary by country and state.
Bill 30 applies to the distribution of financial products and services sold by new and used car and recreational vehicle dealers. It specifically applies to replacement insurance, which as of July 1, 2026 will only be allowed to be sold by registered brokers or insurance salespeople. Current dealership Finance and Insurance Managers are not considered certified representatives.
Another aspect of Bill 30 is policies for life, health and loss of employment insurance — creditor insurance — will be limited to a period of one year.
After that, the consumer will have to be notified by the dealer whether or not they wish to continue with their coverage. The replacement insurance and creditor insurance are currently blended in now as part of the monthly payments. It’s been estimated replacement insurance and creditor insurance collectively amount to $400 million a year in Quebec for all new and used car dealerships, plus RV, powersports and motorsports.
“We’ll see how we can design the product to make sure we maintain a good business,” said Sam Yue Chi. “The insurer will tell us, but as of today it might get tougher to distribute these products.”
The reason Bill 30 is not going into immediate effect is because the Corporation des concessionnaires automobiles du Québec lobbied to allow more time.
“I think dealers will have to make sure they sell the right product to make sure it is totally relevant going forward so the customer will have (what is needed) to maintain the car for the whole loan,” said Sam Yue Chi. “It might change the time we spend with the customer to present the products.”
Norman Hebert Jr., President of Groupe Park Avenue, hired a full-time compliance individual 18 months ago specifically to ensure the company is correctly executing on the various government changes that have arisen in the last few years. His father, who founded the company, had a legal background, so Hebert Jr. said there wasn’t a need to hire a compliance officer to deal with all the government initiatives.
“I don’t have any complaints about the initiatives, but when you do all at the same time the risk of missing something is a risk we don’t want to take,” said Hebert Jr.
When Sam Yue Chi was asked if there is too much legislation in Quebec, he said “absolutely” and added that it extends to the federal level, too.
“We don’t need more, we need less,” said Sam Yue Chi.
White said dealers should be aware about what’s happening on the legislative front and work closely with their associations and all other industry stakeholders.
“With everything going on, dealers need to be on top of everything and try to affect change before change is forced upon them,” said White.