OMVIC investigation results in curbsiding conviction

TORONTO - 

The Ontario Motor Vehicle Industry Council reported recently it has caught another curbsider, or business acting as a motor vehicle dealer without registration.
This is a violation of the Motor Vehicle Dealers Act, and Zhijun Wang of Toronto was recently fined $11,000 after pleading guilty to curbsiding charges.

He also plead guilty to breaching the Consumer Protection Act by committing an unfair business practice.
The charges were the result of an undercover investigation conducted by OMVIC.
Taking an undercover approach, OMVIC investigators posed as consumers and responded to advertisements places in online marketplaces by Wang, according to Terry O'Keefe, OMVIC director of communications.
What they found included dramatic rolled back odometers.
-For example, one advertised vehicle was a 2007 Camry with an odometer reading of 95,860 kilometers, when in fact the OMVIC investigation showed the actual distance the vehicle had traveled was approximately 201,283 kilometers.
But that's not all.
-A second OMVIC investigator responses to an ad for a 2009 Infiniti sedan with an odometer reading 67,000 kilometers, but the true reading turned out to b approximately 179,615 kilometers.
When the investigators inquired about the vehicles, there were invited to view the units at a plaza on Sheppard Avenue East in Toronto.
Further incriminating himself, Wang provided a false name to the undercover shoppers and also provided a false ID in one instance. Furthermore, neither of the cars was actually registered in his name.
"Often the vehicles they (curbsiders) sell are not registered in their name or have only been registered in their name for a short period of time. And commonly the vehicles sold are rebuilt wrecks with undisclosed accident repairs or rolled-back odometers," O'Keefe said.
"Only when vehicles are purchased from registered dealers are the buyers protected by OMVIC, Ontario's consumer protection laws and the Motor Vehicle Dealers Compensation Fund. When consumers purchase vehicles privately and encounter problems, they are, unfortunately, on their own with little recourse other than the courts," he continued.
To date this year, 29 individuals/businesses have been convicted for curbsiding. And 70 additional cases are currently before the courts.

By Auto Remarketing Canada Staff

OMVIC Investigation Results in Curbsiding Conviction............................ www.redlineautosales.ca/omvic-investigation-results-in-curbsiding-conviction.htm

Dealers, law firm to appeal ruling in GM Class Action

Auto Remarketing Canada learned this week that the dealers who lost a class-action suit against General Motors of Canada Ltd. - the results of which were announced earlier this month - will appeal the ruling that GM did not did not breach any common law or statutory obligations toward the dealers related to the wind-down agreements sent in 2009. When asked to confirm whether an appeal for the dealers was on the table, David Sterns - a partner with the Sotos LLP firm representing the dealers - told Auto Remarketing Canada, "Yes, we will absolutely be appealing."
And the almost 200 former GM Canada dealers participating in the class action aren't the only ones unhappy with the rulings Justice Thomas McEwen announced in early July.
Law firm Cassels Brock, which has close ties to all parties involved, is appealing the penalty doled out by Justice McEwan in the form of a payout of $45 million for damages to the dealers involved in the closings related to a breach of contractual and fiduciary duties.
Canadian Lawyer reported after the penalty was announced that Cassels Brock general counsel John Birch said it's business as usual, and the firm is actively pursuing an appeal. Birch was quoted by Canadian Lawyer as saying the judgment "creates potentially indeterminate liability for lawyers."
Appeals were expected by many in the industry in regards to this case, and now a final ending to the class-action saga launched in 2011 may still be a ways off.
Auto Remarketing Canada reported earlier this month that the ruling had been made in the class-action lawsuit filed against General Motors of Canada in regards to actions taken to close dealerships amid the economic downturn, and the claims against GMCL were dismissed.
Justice McEwen came down hard on the law firm Cassels Brock, but said in the 160-page report covering the case that GMCL did not breach any common law or statutory obligations toward the dealers and did not breach the Arthur Wishart Act (franchise disclosure) back in 2009.
The dealers' appeal may address that very issue, though the court may still need some convincing.  Did GMCL, in fact, breach their duty of fair dealing by giving dealers only six days to accept or decline wind-down agreements?
The appeals courts will most likely once again address this issue, as Cassels Brock also looks to dispute a penalty company management thinks the firm did not deserve.

By Sarah Rubenoff
Auto Remarketing Canada Editor

Dealers, Law Firm to Appeal Ruling in GM Class Action....................... www.redlineautosales.ca/dealers--law-firm-to-appeal-ruling-in-gm-class-action.htm

Safety Is Key To Vehicle Appeal In J.D. Power Study

Safety matters. And safety technology is a clear leader in qualities that boost consumer satisfaction with the cars and trucks they've purchased.
Overall, people are happier with their vehicles, according to J.D. Power's 2015 U.S. Automotive Performance, Execution and Layout (APEAL) Study, which looks at how gratifying a new vehicle is to own and drive, expressed as an index score on a 1,000 point scale. The industry is up four points versus last year per the firm, which says safety technology is the driver; and blind-spot alert technology, in particular.
The overall score among owners of vehicles with blind-spot monitoring and warning systems is 38 points higher than among those without them. One reason safety features have more influence on how consumers feel about their vehicles is that they are generally intuitive, and don't require interaction, said Renee Stephens, VP of U.S. auto quality at J.D. Power. "Unlike other technologies, such as voice recognition, that can be challenging to operate, most safety features provide information in a more intuitive way, giving owners a greater sense of security."
The take rate on blind-spot monitoring technology is also way up, per J.D. Power. The study found that 36% of owners have the feature, a seven percentage-point increase versus last year. But the adoption of other safety technologies by buyers is also up. Twenty-one percent have lane-departure warning systems, a five point increase; and 46% have park assist/backup warning, a four percentage-point increase. A quarter of consumers have collision avoidance/alert systems.
The APEAL is is fundamentally different from the firm's Initial Quality Study  (IQS) and durability study, which rank vehicles and brands by reported problems. The APEAL looks at things gone right, things people enjoy about their new car. The data is based on responses from over 84,000 purchasers or lessees after 90 days of ownership. The poll was done early this year.
During a conference call on Tuesday detailing the results, Stephens noted that while premium brands typically have higher appeal scores than non-luxury brands, things have tightened up with the latter having improved five percentage points. That, she said, makes the gap in APEAL scores between non-luxury and luxury the narrowest it has been since 2006. Also, there is a big difference this time between carry-over models and new models, whose scores were 27 points higher, on average, than carry-over, per Stephens. "We are starting to see all-new models set a new bar for the industry."
In the APEAL study, in its 20th year, Porsche ranks highest overall for the 11th consecutive year. After Porsche are Jaguar, BMW, Mercedes-Benz, and Audi. Mini is the highest-ranking non-premium brand in the study.
Stephens said Jaguar is in second place for a second year, and BMW moved up from sixth place to third. "Mercedes has moved well," she said, noting that the luxury brand moved up three ranks with an 11 point increase, while Lexus moved down from six to to ten, "The largest decline of any premium brand." She added that Volvo improved the most of any premium brand, up 13 points.
Mini improved over 30 index points, the most of any brand in the industry, largely because of the launch of the new Mini Cooper, per Stephens. Volkswagen also did very well, up ten points thanks to its Golf. And both GMC and Ford both moved up. For Ford, the improvements were driven by the F-150 pickup and Mustang, 49 and 59-point improvements, respectively.
"[At J.D. Power] we spend a lot of time talking about what goes wrong; things consumers find as issues. But it is just as important to show what makes them satisfied; what they like, whether styling, features, usability," she said. "How emotionally do they connect with their vehicles." Those numbers, she said, are critical because they correlate to key behaviors, including an owners propensity to recommend their vehicle, and to stick with the brand. "What we have found is that appeal index has significant impact on loyalty to the brand over time."

Safety is The Key to Vehicle Appeal in JD Power Study......................... www.redlineautosales.ca/safety-is-key-to-vehicle-appeal-in-j-d--power-study.htm

Cassels Brock to dole out $45M in damages to GM class-action dealers

By Auto Remarketing Canada A final ruling has been made in the class-action lawsuit filed against General Motors of Canada in regards to actions taken to close dealerships amid the economic downturn. With that, the claims against GMCL have been dismissed.
That said, Justice Thomas McEwen has come down hard on the law firm Cassels Brock, which has close ties to all parties involved, for breach of contractual and fiduciary duties, calling for a payout of $45 million for damages to the dealers involved in the closings.

Back in 2009, when General Motors Co. was in the throes of the recession and a federal auto bailout from the U.S., the company's Canadian arm was forced to close over 200 GMCL dealerships to satisfy the demands of the Canadian government.
A class-action lawsuit was then filed in 2011. It aimed to secure $750 million in damages for the dealers who lost their businesses, with the potential to alter the industry concept of franchise protection and dealer rights.
The case finally came to a head after a 41-day trial that took place in December, as Justice McEwen said in the 160-page report covering the case released last week that GMCL did not breach any common law or statutory obligations toward the dealers.
And the claim from plaintiff Trillium Motor World Ltd. - representing 181 dealers who accepted the non-renewal and wind-down agreements (WDA) from the automaker - was dismissed as McEwen ruled that GMCL did not breach the Arthur Wishart Act (franchise disclosure) back in 2009.
At the time, the dealers were given six days to accept or decline the offers. Out of the 240 dealers, 202 of them accepted the offers, executing and returning the WDAs to the automaker.
The ruling announced GMCL's counterclaim against Trillium and each of the class members was also dismissed by McEwen.
Interestingly, it was a different story for one party: the law firm Cassels Brock, which was retained by the Class Members, including Trillium, to protect their interests in any complex restructuring of the dealer network and to represent them in any GMCL CCAA (Companies' Creditors Arrangement Act) proceedings.
Justice McEwen found that Cassels breaches its contractual and fiduciary duties by accepting the retainer by Class Members and Trillium, even though the firm had already agreed to act for the Federal Government in regards to any GMCL CCAA proceedings.
McEwen said, "Cassels knew about this conflict from the outset; yet, rather than declining to act for GMCL dealers and referring the dealers to an unconflicted law firm, or even telling the dealers about the retained with the Federal Government, Cassels continues to act for both the Federal Government and the dealers."
Furthermore, McEwen said the firm also breached its contractual duties by working for both the GMCL dealers that has signed WDAs, as well as those who were continuing with GMCL, citing, "it knew or ought to have known that the two groups of dealers had divergent and adverse interests."
McEwen also asserted Cassels maintained a "'Wait-and-See Approach,' long past its appropriateness," which resulted in lost negotiation opportunities for Class Members for increased wind-down payments from GMCL.
The justice allowed Tillium's claim against Cassel and ruled the firm award the Class Members aggregate damages of $45 million for the lost opportunity.
The trial, held in December, took 41 days to complete, and the parties involved called 25 witnesses to the stand, including eight experts.


Cassels Brock to Dole Out 45 million in Damages to GM Class Action Dealers......... www.redlineautosales.ca/cassels-brock-to-dole-out--45m-in-damages-to-gm-class-action-dealers.htm

In June depreciation for cars was significantly higher than for trucks and larger vehicles.
But during the first week of July, some of the larger models began to experience more downward pressure on auction prices.
According to the latest Black Book Market Insights report, the Fourth of July holiday week brought with it large declines in the crossover segments as well as a few other truck categories.
"Cars experienced marginal depreciation, similar to the Fourth of July holiday week trend last year, while Truck values showed the highest weekly decline for the year," said Anil Goyal, the Black Book vice president of automotive valuation and analytics.
Last week, car prices at auction fell by an average of 0.19 percent, or $23, while trucks experienced a decrease of 0.36 percent, or $58.
This was the first time since May 1 that trucks have seen a higher rate of depreciation than the car segments.
The most significant drop among the truck segments was seen in the full-size CUV segment, which saw a drop of 0.69 percent, or $118, last week.
Compact CUVs also saw significant price declines, dropping by 0.66 percent, or $81, while midsize CUVs experienced a decline of 0.68 percent, or $43.
And though pickups have experienced stronger price retention this spring, the compact pickups (down 0.05 percent, or $7), midsize pickups (down 0.43 percent, or $68) and the full-size pickups (down 0.29 percent, or $56) all saw rates drop last week.
The only segment to see increases over the past four weeks has been the compact SUVs, which saw rates spike by 0.36 percent, or $73, last week.
And though all car segments saw prices drop for the fourth consecutive week, last week's results marked the smallest decline since May 1.
The largest drops were seen among the full-size cars, which saw prices decrease by 0.35 percent, or $35, and the luxury level cars, which dropped by 0.41 percent, or $84.
On the other hand, Black Book analysts pointed out the premium sport cars "continued to defy" almost all other car segments by outperforming the average depreciation for the past nine weeks.
Last week, the premium sporty cars only saw rates drop by $51, or 0.13 percent.
Black Book personnel also overheard comments in the lanes that reflect last week's data in regards to slowing depreciation for the car segments.

By Auto Remarketing Staff

Trucks See Higher Depreciation Than Cars for 1st Time in Month.......... www.redlineautosales.ca/trucks-see-higher-depreciation-than-cars-for-1st-time-in-months.htm

Number of segments to see auction price drops by end of year

By Auto Remarketing Canada Staff

Though used prices were still on the way up in May as summer neared, according to RVI data, analysts are still predicting a slow downturn in auction prices - potentially causing some relief for dealers and buyers in the lanes - to begin shortly.
According to RVI's Q2 Risk Outlook, after adjusting for MSRP, used vehicle prices in May rose by 1.2 percent from April. This represents a 2.1 percent increase year-over-year.
"Real used vehicles prices increased in May, but we expect a softening in residual values over the next several years," RVI analysts reported.
According to the report, most all segments RVI tracks saw auction prices increase in May, with midsize sedans leading the spikes for the higher volume segments.
Midsize sedan prices rose by 10.6 percent in May when compared to April and 7.8 percent year-over-year.
That said, according to RVI's price index forecasting, this same segment is predicted to see rates drop by 2.2 percent by the end of the year from current levels.
Another segment touting an impressive increase in rates were the luxury full-size sedans, which saw prices rise by a whopping 22.4 percent from April and 24.5 percent year-over-year.
And the same goes for this segment - rates are not expected to stay elevated. By the end of the year, RVI predicts the luxury full-size sedan segment to see a 1.5 percent decline in price from current levels.
And though most all segments saw prices rise by at least 1 percent, there were a few outliers.
For example, the full-size van segment saw prices fall the most with a 16.5-percent decline from April and a 3.5 percent drop year-over-year.
RVI predicts prices for this segment will drop by 0.2 percent from current levels and end the year 10.6 percent lower than December 2014.
The luxury coupe segment also performed poorly with rates dropping by 10.5 percent when compared to April and 2.3 percent year-over-year. This segment is predicted to see prices rise by 2 percent from current levels by the end of the year, but rates are expected to finish 2015 1.9 percent lower than the year before.
And though prices remain high today, over the next five years, RVI expects a "softening" in used-vehicles prices throughout Canada.
This is expected to be spurred as the currently tight supply of used vehicles is expected to ramp up by 2019.
RVI predicts that by 2018, the industry can expect prices by have fallen by 2.8 percent from current levels.
"The major factor in this decrease in prices is the increase in the supply of used vehicles in Canada. The RVI Used Vehicle Stock Index is expected to rise on a yearly basis through 2019," RVI analysts said.

Number of Segments to See Auction Prices Drop by End of Year.......... www.redlineautosales.ca/number-of-segments-to-see-auction-price-drops-by-end-of-year.htm

Diesel models good sell for cost-conscious shoppers

By Auto Remarketing Canada Editor

Though diesel vehicles might not be the easiest sell these days, the latest results from Vincentric's first Canadian Diesel Analysis might give dealers some talking points when trying to convince shoppers of the benefits of these units. According to the results of the analysis released today, the company found that 12 out of 34 diesel vehicles, or 35 percent, had lower total cost-of-ownership than their closest gasoline counterparts.
The study also found that number goes up for luxury diesel vehicles. In this segment, 11 of 13, or 85 percent, were more cost-effective. The reports assume 25,000 kilometers are driven annually, and the vehicle is owned five years.
"Over the past several months we've seen the price advantage that gasoline has had over diesel fuel diminish, enhancing the fuel economy advantages of diesel vehicles," stated Vincentric president David Wurster. "However, fuel economy is only part of the story. With total cost-of-ownership savings from only one third of the diesel models analyzed, consumers need to be informed when shopping for diesels to find the models that offer savings."
Out of the 12 diesel vehicles with lower ownership costs, 11 were luxury models. These includes four vehicles each from Audi and Mercedes-Benz and three vehicles from BMW.
The Chevrolet Cruze Diesel was the only non-luxury diesel make to have lower ownership costs than its gasoline counterpart.
Breaking down the numbers, customers may have to shell out a bit more at point-of-sale as well as for maintenance costs - but the fuel cost savings make up for most of it.
According to Vincentric, the average price premium for a diesel vehicle was $5,650 with average maintenance costs $476 higher for the diesel models.
That said, diesel fuel cost savings averaged $4,005. Although fuel cost savings can add up and the luxury models stand out from the pack, when the costs to own and operate all 34 vehicles were taken into account, the average cost-of-ownership was $2,030 more for a diesel vehicle compared to its gasoline counterpart.
"There has been a lack of understanding of the benefits of clean diesel technology," Vincentric analysts said. "This report demonstrates that in addition to improved environmental benefits of diesels, a strong financial case can be made for the adoption of some of these vehicles."
In this analysis, there were 12 diesels that can be financially justified purely based on the total cost of ownership numbers, according to Vincentric:   

• 2015 Mercedes-Benz GLK250 BlueTEC  (-$9,201)
• 2015 Mercedes-Benz ML350 BlueTEC  (-$8,050)
• 2015 Mercedes-Benz E250 BlueTEC  (-$7,655)
• 2015 Mercedes-Benz GL350 BlueTEC  (-$6,991)
• 2015 BMW 535d xDrive  (-$4,650)
• 2015 BMW X5 xDrive35d  (-$4,501)
• 2015 BMW 328d xDrive  (-$4,060)
• 2015 Audi A6 TDI  (-$3,804)
• 2015 Audi Q5 TDI  (-$3,759)
• 2015 Chevrolet Cruze Diesel  (-$3,484)
• 2015 Audi A7 TDI  (-$3,139)
• 2015 Audi Q7 TDI  (-$1,783)

When looking at fuel economy, these models provide the greatest benefit over their gas only counterparts:

• ·2015 Audi A7 TDI  (-$6,826
• 2015 Audi Q7 TDI  (-$6,659)
• ·2015 Mercedes-Benz GLK250 BlueTEC  (-$6,654)
• · 2015 Audi A6 TDI  (-$6,615)
• ·2015 Mercedes-Benz E250 BlueTEC  (-$6,494)

Lastly, the diesel vehicles with the lowest overall fuel costs are:

• 2015 Volkswagen Jetta 2.0 TDI  ($10,104)
• 2015 Volkswagen Golf 2.0 TDI  ($10,313)
• 2015 BMW 328d xDrive  ($10,329)
• 2015 Volkswagen Beetle 2.0 TDI  ($10,623)
• 2015 Volkswagen Passat TDI  ($10,655)

Diesel Models Good Sell for Cost Conscious Shoppers........................ www.redlineautosales.ca/diesel-models-good-sell-for-cost-conscious-shoppers.htm