Ontario dealership rescinds sale $ offer after salesman says other dealer complained | GTAMotorcycle.com

Ontario dealership rescinds sale $ offer after salesman says other dealer complained

nfq

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Who hasn't compared prices between dealers? This just seems silly on their part. Lost a sale, but worse, bad press.


An Ontario man found it didn't pay to shop around after he had a sale price on an ATV rescinded when he tried to get his hometown dealer to match the offer, a situation an expert in Canadian competition law says almost certainly contravenes the Competition Act.
Last month, John Watts was looking to replace his 12-year-old Honda ATV with a new Honda TRX500 Rubicon.
He got a quote from Napa Auto Sports, his local dealer in Elliot Lake, Ont., for a 2018 model for $15,825.70, a figure that included several accessories and taxes.
But Watts feels prices are generally a bit higher in Elliot Lake than elsewhere, so he wanted to check out another Honda dealership.
"I went to Sudbury to see if I could get a better price."

He was quoted a similar price at the Sudbury dealer, Northstar Recreation, but the sales associate there offered to waive the freight and pre-delivery inspection (PDI) fees, which would have lowered the overall cost to $14,654.85, a savings of $1,170.85.
"I got my quote from Sudbury. I went to the fella that owns the Napa Honda dealer [in Elliot Lake] and [said]: 'I can get this cheaper in Sudbury, what can you do for me?' " said Watts.
"Next thing I know, three days later I get an email from Sudbury [saying] the deal is cancelled, you are better off to purchase locally."
The email came from Brydon Deforge, the sales associate at Northstar Recreation.
"The dealer there called us very upset that we are sort of cutting their throat," Deforge said in an interview with CBC News.

"So I sent [Watts] an email saying, 'You know, I suggest you shop in your own town and support locally and this way we avoid hardship between dealers.'
"I offered him a price. I would have honoured it," said Deforge. "But when he started going back and forth and it was causing dealer problems, we said, 'OK, you know what, I would rather have one unhappy customer than have an unhappy dealer.'
"And Honda Canada would have backed us up on that," said Deforge.
[h=2]Who can you trust?[/h]In a statement to CBC News, Honda Canada said: "Every Honda dealership in Canada is independently owned and operated.
"As a result, dealers are free to negotiate directly with customers based on a variety of factors, including inventory levels, value of trade-ins, manufacturer incentives and overall market conditions. Honda Canada promotes good business practices among our vast dealer network and supports a fair and competitive market for our customers."
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Honda Canada says it 'promotes good business practices' in its dealer network and 'supports a fair and competitive market for our customers.' (Shutterstock/FotograFFF)

Watts said he was told by a salesman at the Elliot Lake dealership that the owner there knows the owner of the dealership in Sudbury and called him to complain and that led to Deforge cancelling the sale offer.
CBC News was unable to reach the owner of the Elliot Lake dealership this week. An employee there said he was away from work for a few days.
[h=2]Just comparing prices[/h]Watts said he was just comparing prices and went back to his hometown dealer because he wanted to support the local business.
"Even if they would have taken $500 off, I want to shop locally," he said. "We're all flabbergasted. It's unbelievable."
Joseph Wilson, a research fellow at McGill University who is an expert on competition matters, believes this arrangement may be against the law, and says it should be reported to the Competition Bureau.

"This certainly attracts the Competition Act," said Wilson.
"Apparently there is some sort of agreement ... to not undercut each other and ... to not entertain customers of other localities.
"So there is an allocation agreement, direct or real allocation. And there's also an agreement to not compete with each other, it seems to me. In most probability, the bureau would find that this is violating section 45 [of the Competition Act]."
Section 45 (1) b of the Competition Act states:

  • Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges (b) to allocate sales, territories, customers or markets for the production or supply of the product.
The maximum penalty is 14 years in prison and/or a fine of up to $25 million, although Wilson said that is a much harsher penalty than might be levied in a case such as this, should it prove to contravene the act.
[h=2]Protecting consumers[/h]Wilson said the Competition Act plays an important role in the protection of consumers.
"When competitors agree not to compete, it has a direct effect on the price or some other quality of service.
"Consumers benefit by competition in terms of lower prices, higher quality of goods, more choices, innovation and so on and so forth."
Canadians already pay higher prices for vehicles than Americans, according to an investigation by CBC's Marketplace.
In an email, a spokesperson for the Competition Bureau told CBC News it "has an obligation to do a thorough and complete examination of the facts available before reaching any conclusion about whether or not the Competition Act has been contravened."

The spokesperson wrote: "The Competition Act prohibits agreements between competitors [with respect to] a product to allocate sales, territories, customers or markets for the production or supply of the product.
"This includes all forms of market allocation agreements between competitors to not compete ‎with respect to specific customers or products."
Watts said he no longer feels comfortable with the idea of buying his ATV at either Napa Power Sports in Elliot Lake or Northstar Recreation in Sudbury.
Given the lack of Honda dealerships near him, that means he will probably buy another make of ATV.
"We are either looking at Polaris or Yamaha," he said.
 
don't know how people expect the local dealer to provide quality service
if people in the community don't let them make a bit of money?

good story
 
don't know how people expect the local dealer to provide quality service
if people in the community don't let them make a bit of money?

good story
To not even counter offer?
They both get the same atv from the same supplier, for the same price.

To me it sounded like the one dealer wanted to make the most on a customer, while the other dealer wanted a sale.
 
To not even counter offer?
They both get the same atv from the same supplier, for the same price.

To me it sounded like the one dealer wanted to make the most on a customer, while the other dealer wanted a sale.

Yeah, it sounds like the local one thought the monopoly should be enforced and now they are dealing with social media blowback. I am sure Honda Canada appreciates the spotlight. :/
 
I'm doing exactly the same thing with cars starting this week. At Honda dealerships too. Preliminary talks with dealers seem to make the case with cars a bit different as some have come right out and said "tell us what the offer is at x and we'll match or beat it"....also one dealer got back to me and straight up said "we don't have any bogus admin or mandatory etching fees".
 
To not even counter offer?
They both get the same atv from the same supplier, for the same price.

To me it sounded like the one dealer wanted to make the most on a customer, while the other dealer wanted a sale.

this is not necessarily, and I'm thinking not likely, the case

dealers with higher volumes get certain discounts

one with higher volume is also able to sell at lower margin per unit and still turn the lights on

guy in Elliot Lake, with a pop 1/16th the size of Sudbury, cannot do too many low margin deals and survive
 
dealers with higher volumes get certain discounts

This is a manufacturer problem. If Honda wants a presence in Elliott Lake, they should be providing vehicles at a price that allows them to be competitive with other local(ish) dealers. If they charge the small guy more, they will quickly be in a situation where the small guy disappears and more Elliott Lake residents buy competitors products as they have local service. I'm not saying it doesn't happen, it just makes no sense if you are looking long-term. It's not like the higher volume dealer can buy product somewhere else if they get ****** that Honda isn't giving them a better price than the small guy.
 
I think the dealer net on a bike is likely the same
but higher volume dealers are going to discounts on other things
parts and accessories
so a guy that sells 300 bikes and has those buyers coming back for other things
can afford to make only a few hundred per machine
a guy that sells 30 has to make decent margin or there's no point letting it out of his inventory
only gets so many in a year, he will keep it for the next guy who pays list

but yes, this is a distribution problem
does a town with a pop of 10,000 have a realistic chance of supporting a Honda dealer?
 
Yeah, it sounds like the local one thought the monopoly should be enforced and now they are dealing with social media blowback. I am sure Honda Canada appreciates the spotlight. :/
Exactly - I am all for shopping local, but this is bluntly a back door ****** move by the local dealer, I don't blame the second one for trying to keep the peace even if against the law.
 
This is a manufacturer problem. If Honda wants a presence in Elliott Lake, they should be providing vehicles at a price that allows them to be competitive with other local(ish) dealers. If they charge the small guy more, they will quickly be in a situation where the small guy disappears and more Elliott Lake residents buy competitors products as they have local service. I'm not saying it doesn't happen, it just makes no sense if you are looking long-term. It's not like the higher volume dealer can buy product somewhere else if they get ****** that Honda isn't giving them a better price than the small guy.

I’m sure the rent factor for Elliot lake is the same as the GTA...
 
Do you think a dealership would let you out of a contract if you changed your mind? They should be bound to it as well. Though in this case it was a quote, but that should be binding in some way.

Meh, just go back to the Sudbury dealer and buy it from another sales guy for the original price.


All/most dealerships are independent. Had an issue with a Toyota dealership, Toyota Canada washed their hands, stating they were independent.
 
I’m sure the rent factor for Elliot lake is the same as the GTA...

That should be easily dealt with through volume (assuming that Honda doesn't allow an unreasonable number of dealers). By my count, Honda had nine dealers in Toronto (~320,000 people per dealer), Elliott Lake has one (~11,000 people per dealer). Theoretically this should be ~30 times the volume for Toronto dealerships.
 
That should be easily dealt with through volume (assuming that Honda doesn't allow an unreasonable number of dealers). By my count, Honda had nine dealers in Toronto (~320,000 people per dealer), Elliott Lake has one (~11,000 people per dealer). Theoretically this should be ~30 times the volume for Toronto dealerships.

Don't forget, almost everyone in Elliot Lake drives, vs Toronto where I would think most take transit.

That being said, who's fault is it for opening up a large(ish) dealership in a small town? Was a gamble in hoping it would capture everyone in the area to begin with and now resorting to "cheating" the system having other dealerships to take pity on them by barring their locals.
 
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We ended up buying our Honda in Toronto, because the local dealer had some "issues".

There's enough volume that, it would be difficult to centre someone out for poor service.
 
Don't forget, almost everyone in Elliot Lake drives, vs Toronto where I would think most take transit.

That being said, who's fault is it for opening up a large(ish) dealership in a small town? Was a gamble in hoping it would capture everyone in the area to begin with and now resorting to "cheating" the system having other dealerships to take pity on them by barring their locals.

Just looked up the dealer. It is not a conventional dealership.

"Welcome to NAPA Power Sports, your one stop shop along the Trans Canada Highway. We began with Napa Auto Parts in 1991 and added on with the power sports line up in 2005. "

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Well, regardless of what's right, regardless of what thy are or aren't allowed to do... A free market will dictate what is and isn't good business practice. If this guy punctuated the entire experience by saying "...so I went to Yamaha", then Honda would have likely reprimanded the dealers for colluding. Infact Honda may have actually done this already behind the scenes, because they know that the loss of a sale, and permanent loss of a lifelong customer would be the logical outcome. Wouldn't be surprised if Honda contacted the guy to offer him a coupon t try and keep the sale and hold on to a future customer. Remember, this guy was replacing a Honda with a Honda, he's a repeat, don't want to lose him. He might already, or eventually own other Honda products, maybe cages, maybe a goldwing. Maybe he never buys any Honda product again after that sour taste has been put in his mouth.
 
This is why I like the Tesla model better. This is the price... no negotiations no back and forth no middleman taking a cut.
 
it would be ironic if the purchaser ran a Home Hardware
and it went out of business because everyone in Elliot Lake
started driving to HD in Sudbury instead to save a few bucks
 
This is why I like the Tesla model better. This is the price... no negotiations no back and forth no middleman taking a cut.

Theoretically no negotiations. Saturn tried that too. Probably more than 50% of the people buying a car are trading one in and I have never heard of a dealership pulling book value and calling it a day. They all dance around to try to pick the lowest number you won't find insulting.

You are right about the extra layer of margin not being helpful (especially when in the conventional car lines, vehicles are forced onto the dealerships in order to make head office bonuses happen). This is a wasteful model and only survived because there was no more efficient alternative (which is why they are fighting against Tesla's model instead of working to improve their own system).
 
This is why I like the Tesla model better. This is the price... no negotiations no back and forth no middleman taking a cut.

Sure, but that is not really applicable to the legacy OEM's which distribution channels are riddled with agreements, regulations or laws. Only a completely new company can choose to either go direct or play by the old rule book. First of, it's hard to role dice and go to non-dealership model all of a sudden. Surely your revenue will take hit, your production will take hit etc. .... it's a domino effect nobody will take a chance on. They are stuck with what they have had for eons.
 
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