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Online used car sales startup faces legal challenge from Ontario dealerships

Online used car sales startup faces legal challenge from Ontario dealerships
Autos
A fledgling online used vehicle sales company started in Halifax is going up against used car dealerships in Ontario as it tries to break its way into the Toronto market, the Globe and Mail reports.

Clutch is a service that allows people to browse used vehicles online and book test drives without having to step foot in a used car dealership. Operations began in Nova Scotia three years ago, where things have gone smoothly.

However, now the startup’s trying to break into the Toronto market, and things are not proving so simple. A key feature of the Clutch buying process is the booking of test drives — the company offers customers the opportunity to have one of its “auto enthusiasts” drive the prospective buyer’s chosen vehicle from Clutch’s warehouse to their house, to give the customer a chance to take it for a spin before buying.

If the customer likes the car, the paperwork to purchase it can then be dropped off to the buyer’s house as well. It’s a clever idea, but according to the executive director of the Used Car Dealers Association (UCDA) of Ontario, Warren Barnard, it shouldn’t be allowed.

“Quite frankly, their business model doesn’t fit with the law,” Bernard says. Clutch is specifically violating regulations that says transactions must be made at a registered place of business, he argues.

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This is not the case, according to Clutch, as the final sales transaction – a Clutch salesperson counter-signing the sales documents after the customer has jotted down their signature at home – is still made at a registered place of business, Clutch’s offices. Therefore, it says, Clutch isn’t in violation of the rule Barnard says it is.

Nevertheless, the Ontario Motor Vehicle Industry Council was notified, and will apparently take steps to address the issue.

Bernard says Clutch should operate on a level playing field with other dealerships in the province, but as our world becomes increasingly connected to the internet, that just might not be possible. Clutch already has many satisfied customers in Halifax and Toronto, and hopes to expand by hiring some former Uber Eats Canada senior executives onto its payroll.
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