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More than two months after a Nova Scotia used car dealership collapsed in a heap of debts and recriminations, people are still trying to figure out what went wrong.
An industry insider says the main problem is a lack of government oversight for used car dealerships. But the province disputes that.
Race Auto Group ceased operations in April amid mounting complaints from customers about unpaid loans and inconsistent paperwork. Dozens of former customers of the dealership have complained to the RCMP, which is now in the midst of a fraud investigation. There’s no word on when or whether that might lead to charges against anyone.
Nova Scotia’s Minister of Public Works, Fred Tilley, won’t talk specifically about the Race Auto case, but he said the government is paying attention.
“I think the fact that there’ve been 44 suspensions [of car dealerships] over the last number of years would show that the government truly does regulate and does have stringent rules,” Tilley said.
Tilley said his department is in the midst of an overhaul of the regulations under Nova Scotia’s Traffic Safety Act.
“We are changing and adapting the regulations for vehicles for dealerships, for all of these things,” Tilley said.
Tilley did commiserate with Race customers.
“I think at the end of the day, when people lose money due to an organization, no matter what that organization is, whether it’s a car dealership or another business, it’s not a good time for Nova Scotians,” he said.
Ryan Hartigan knows the story first-hand. He was a marketing consultant, helping Race Auto Group expand its business. He eventually quit that job and started his own used car dealership in Truro, N.S.
“I’m going to be honest, the industry has a horrible reputation to begin with, right,” Hartigan said in an interview last month.
“So how much worse can it get? No one trusts any dealers at this point.”
Hartigan said a big issue undermining public trust is a lack of transparency. He cites the loan application process, where most customers don’t know which lenders a dealership might be approaching on their behalf, or whether those lenders are really offering the best interest rates.
Hartigan said in his experience, the government isn’t doing enough. He said each province licenses used car dealers differently.
“And to my experience in the industry that happens all the time; people will lose their Alberta licence, they lose their Ontario licence, they come here,” Hartigan said.
“I call it the Wild Wild East, because there’s no regulations and they can just sell willy-nilly and kind of do whatever they want here.”
Ten years ago, the Nova Scotia Automobile Dealers Association — which represents new car dealers — also called for stronger regulations governing used car dealers.
John Sutherland, the group’s executive director, told CBC News last month that his members are still calling for greater oversight of used car sales.
Minister Fred Tilley said he can’t talk specifics about the changes in the works, but he expects the new regulations under the Traffic Safety Act will be rolled out soon, and will address some of these deficiencies.
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