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Recent press coverage of
developments in the auto industry
has understandably caused
consumers to consider what
protection is available for them
in the event of an insolvency of
a manufacturer or dealer. The
following FAQs are intended to
help answer some of those
questions.
- What happens if a vehicle manufacturer goes bankrupt?
- I bought a new car. Will my warranty remain intact if the manufacturer is bankrupt?
- I also paid for an extended warranty which I understand will not be honoured now
- Can OMVIC provide me with information about the financial stability of a dealership?
- What happens if I've put a deposit on a motor vehicle and the dealership closes down before I've received my vehicle?
- Will the Motor Vehicle Dealers Compensation Fund offer financial assistance to businesses who dealt with dealers who are now unable to pay outstanding debts?
- What do I do if a dealer fails to pay out the lien on a vehicle I traded in?
- What if the vehicle I purchased is repossessed because the dealer I bought it from is in debt?
- What if I've left my vehicle on consignment with a dealer? How do I ensure I get paid by the dealer?
- What if I've purchased an extended warranty from a dealer and the dealer has failed to ensure it is activated with the extended warranty company?
- What does OMVIC do?
1) What happens if a
vehicle manufacturer goes
bankrupt?
Some sources suggest that many
new car dealers have already been
working hard to switch their
reliance on revenue from new car
sales to other revenue streams
such as service, warranty work
and used car sales since the
economic crisis and its impact on
their manufacturer became clear a
number of weeks ago. In many
instances dealers were already
not reliant on revenues from new
car sales, even before the
current economic situation.
It’s important to note that most
franchise dealers are highly
motivated to remain viable
businesses in their communities
rather than close their doors as
a result of the failure of the
manufacturer.
It is also important to
distinguish between seeking
bankruptcy protection and closing
down operations. The former
usually means the manufacturer
can continue operations while
working on a restructuring plan
which may ensure the survival of
the company.
2) I bought a new car.
Will my warranty remain intact if
the manufacturer is bankrupt?
If you've purchased a new
vehicle from a Chrysler or GM
dealership during their
restructuring period, your
manufacturer’s warranty may be
backed by the Canadian Warranty
Commitment Program. Call
Industry
Canada at 1-800-328-6189 for
further
information.
Otherwise, you may be able to
make arrangements with your
dealer to have the work done. If
you've purchased an extended or
third party warranty, you can make a claim to the
Motor Vehicle Dealers
Compensation Fund for the cost of
repairs which should have been
covered by the warranty and/or a
refund of the money you paid for
the warranty.
3)
I also paid for an extended
warranty which I understand will
not be honoured now.
If you’ve purchased an
extended warranty (something in
addition to the standard vehicle
warranty), you can
make a claim to the Motor Vehicle
Dealers Compensation Fund for the
cost of repairs which should have
been covered by the extended
warranty and/or a refund of all,
or a portion, of the money you
paid for the extended warranty.
4) Can OMVIC provide me
with information about the
financial stability of a
dealership?
The Motor Vehicle Dealers Act
prohibits anyone employed in the
administration of the Act from
sharing information arising from
an inspection.
Before buying or leasing a
vehicle, check to ensure the
dealer is
registered. If you do
business with a registered dealer
you can make a
claim to the Motor Vehicle
Dealers Compensation Fund for
financial losses you suffer if
the dealer refuses, or is unable
to compensate you.
5) What happens if I've
put a deposit on a motor vehicle
and the dealership closes down
before I've received my vehicle?
Should this occur, please
contact OMVIC at 1-800-943-6002.
It may be possible to arrange
delivery of your vehicle. If not,
and you have purchased your
vehicle from a registered
dealership and you have a bill of
sale and proof of payment, you
can make a claim
to the Motor Vehicle Dealers
Compensation Fund for
reimbursement of your deposit.
6) Will the Motor Vehicle
Dealers Compensation Fund offer
financial assistance to
businesses who dealt with dealers
who are now unable to pay
outstanding debts?
No. The Fund can only be
accessed by consumers.
7) What do I do if a
dealer fails to pay out the lien
on a vehicle I traded in?
If you do trade in a vehicle
with a lien on it and the dealer
agrees to pay it out, it is their
responsibility to ensure the lien
is immediately and fully paid.
Follow up with the lender to
ensure the dealer has paid it
out. If they haven't, contact
your dealer. This is often the
result of an administrative
oversight. If the dealer does not
resolve the lien, or if the
dealer is not available, please
contact OMVIC at 1-800-943-6002.
If your transaction is with a
registered dealer and you have
your bill of sale, you can make a claim to the
Motor Vehicle Dealers
Compensation Fund to have the
lien paid out.
8) What if the vehicle I
purchased is repossessed because
the dealer I bought it from is in
debt?
If you are a bona fide
consumer who has purchased your
vehicle without knowing the
dealer owed money on it and you
are up-to-date with your payment
obligations, then you are legally
protected from having your
vehicle repossessed. Please
contact your dealer to resolve
the matter. If the dealer does
not resolve the debt or is not
available, contact the lender who
ordered the repossession. Often,
they will return your vehicle
after they've received
confirmation you are a bona fide
consumer (e.g. your bill of sale
and proof of payment). If you are
not able to resolve the matter
through the dealer or lender,
please contact OMVIC. Provided
your transaction is with a
registered dealer, you can make a claim to
the Motor Vehicle Dealers
Compensation Fund.
9) What if I've left my
vehicle on consignment with a
dealer? How do I ensure I get
paid by the dealer?
Consumers who leave their
vehicles on consignment with a
registered dealer are entitled to
receive a written agreement which
includes the amount you will
receive for the vehicle, what the
dealer will charge you for
selling the vehicle and any
additional costs you must pay.
The dealer should advise you
immediately when the vehicle is
sold. You are also entitled to
receive the name and address of
the final purchaser. If you have
concerns about a vehicle you've
consigned which you cannot
resolve with the dealer, please
contact OMVIC. For further
details about consignment
agreements, please review OMVIC's
Standards of Business Practice
(Section 2.8). Provided your
transaction is with a registered
dealer, you can make a claim to
the Motor Vehicle Dealers
Compensation Fund.
10) What if I've purchased
an extended warranty from a
dealer and the dealer has failed
to ensure it is activated with
the extended warranty company?
If you've
purchased a third party extended
warranty from a dealer, contact
the warranty company to ensure
your warranty is activated. If
not, contact your dealer to
arrange to have the warranty
activated. If the dealer does not
resolve the matter or is not
available, please contact OMVIC.
Provided your transaction is with
a registered dealer, you can make a claim to the
Motor Vehicle Dealers
Compensation Fund for the cost of
repairs which should have been
covered by the extended warranty
and/or a refund of the money you
paid for the extended warranty or
a portion of same.
11) What does OMVIC do?
OMVIC licences and regulates
motor vehicle dealers in Ontario
and administers and enforces the Motor Vehicle
Dealers Act – a public protection
statute – on behalf of the
Minister of
Consumer Services. OMVIC's
mandate is to maintain a safe and
informed marketplace by ensuring
registration of dealers and
salespeople, regularly inspecting
dealerships, maintaining a
complaint line for consumers and
conducting investigations. OMVIC
is also responsible for
administering the Motor Vehicle
Dealers Compensation Fund on
behalf of a Board of Trustees.
If you have any other questions,
please contact us. We will update
this site periodically as other
questions arise. Please check
back for
updates.
OMVIC also issues a consumer
newsletter, Consumer Line. If
you’d like to view previous
issues, click here. To become a
subscriber, click
here.
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