28 - Friday, November 19, 1989 - North Shore News Car brokers: deal or ripoff? I RECENTLY offered a course on Buying A New Car and a number of people asked me if it is possible to get a lower price by buying from a car broker. Most new car brokers offer to sell new vehicles at discounts between $200 and $4,000 per car. They say they can do this because they buy in volume and have lower overhead costs. Some brokers imply that they buy direct from the factory and bypass the dealerships. They then pass the savings on to the con- sumer. All of this sounds like a pretty good deal. However, buying a car from a broker is riskier and more com- plicated than it seems. First of all, brokers can- not buy directly from the Auto Motion Greg Wilson — factory. They have to buy from a dealership, just like everyone else. Ford of Canada Product Information Officer, Pam Kueber, states emphatically that ‘‘Ford of Canada does not sell to anyone except franchised dealers.’’ Fur- ther investigation revealed that the same applies for other car companies. There are very good reasons for this. Each dealer may invest up to $2 million setting up a dealer- ship, and bear ongoing overhead costs. Understandably, a new car dealer will get upset when someone sets up 2 small office just down the street from him and sells the same cars for less money. Mark Holderness, fleet manager for Pacific Honda is particularly conceracd about brokers. ‘They are a scourge in the business,’’ he says. ‘They are not en- couraged simply because of ? service. If one of our cus- } tomers buys a car and the next day he discovers a splotch of paint, or an im- perfection of some kind, he can bring the car back to us, What is he going to do if he buys it from a broker?” In addition, dealers don't like the idea of a cus- tomer coming into a dealership, test-driving a car, spending an hour with a salesman, and then going 10 a broker to buy a similar car, However, this is exactly what is going on, A sanior official of one broker contpany, who preferred not to be named, claims that he can order most brands of cars, both domestic and imports, and that all vars come with full new car warranties and can be serviced at any authorized dealer under warranty. This would appear to contradict what the dealers are saying. So where do brokers get their cars from? From the fleet/leasing departments of certain dealerships. Fleet depart- ments are authorized by the manufacturer to sell cars to bonafide leasing companies, and may offer a discount to the leasing companies if they buy in volume. A few fteasing/sales companies then turn around and resell the cars instead of leasing them. This means that the leas- ing company is the first owner, and Mr. J.Q. Public is the second cwner. Mr. J.Q. Public is buying the car from the broker, not the car dealer. This has some important implications for servicing and warranties. If the new car warranty is fully transferable to the second owner, then the buyer can (theoretically) enjoy full warranty protec- tion. However, some war- ranties are not trans- ferable, or only partly transferable. On top of this, dealers are reluctant to service a vehicle that was bought at a discount from a second party. One broker I talked to gets around this problem by referring the customer directly to the fleet department of the dealer- ship. The customer chooses a car first, contacts the broker who instructs him to go into the fleet department, and the cus- tomer purchases the car di- rectly. At present, neither automobile companies nor dealer associations have firm policies that forbid dealers from selling vehi- cles to leasing companies that are also brokers. But most dealers and car companies are unhappy with this practice, primari- ly because it undercuts their own livelihood. For the consumer, buy- ing from a broker has in- herent risks. If there are problems with the car, the dealer may be reluctant to help. Warranties may not be valid. And in most cases, the car is not actual- ly brand new, it is pur- chased second-hand. In addition, the broker’s price may not represent such a big saving as you have been led to believe. For example, dealers will often sell new cars for much less atc the end of a model year. But as long as brokers advertise prices as low as $150 over factory invoice, there wil always be people who want to take advan- tage of it, If dealers and car com. panies really don’t like the way brokers operate, the onus ty an them te make the gest move, roM OoOoyrTtvVE Ss Win ter means accident time OUR RECENT fall monsoons and the return to Standard Time have marked the beginning of a dangerous driving season in the Lower Mainland. A check of the 1988 fourth quarter statistics at ICBC’s North Vancouver Claim Centre shows just how dangerous this time of the year can be for local motorists. Over 43 per cent of the last year’s total inju- ry-related claims were reported in the October to December period. Fourth quarter damage claims ac- counted for 34 per cent of the year’s total. This story tends to be repeated at other ICBC claims facilities around the Lower Mainland. What can you do to stay out of those statistics? We’il give you the top 10 sugges- tions, based on factors most often mentioned by the police as the cause of acci- dents and injuries. Most of the reasons for the fourth quarter jump in claims are obvious — we simply don’t adjust our driv- ing to suit weather and road conditions. So that’s our first tip. Next, something most drivers find difficult to do and that is to slow down. Changeable weather condi- NEWS phato Terry Peters ‘TIS THE SEASON to be careful...Studies show that over 43 per cent of last year’s total ingjury-related auto insurance claims were reported in the October to December period when drivers often neglect to take into account changing weather and driving conditions. tions and more hours of darkness, particularly during the afternoon rush, can combine to make roads slip- pery and visibility poor. Even driving at the posted speed can be dangerous if you can't react or stop in Auto Topic Ken Hardie INSURANCE CORPORATION OF BRITISH COLUMBIA tifiie. 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