Wholesale Transactions Guideline

Title:Wholesale Transactions Guideline
Guideline Topic:Enforcement
Legislation:MVDA
Section/Subsection(s):Various
Date Created:2023-08-28

Introduction and purpose

Wholesalers are a specific class of registrants and are subject to certain rules that differ from those that apply to other classes. For example, they’re not allowed to trade with the public. Wholesalers may only:

  • Trade with other registered motor vehicle dealers registered under the Act;
  • Purchase vehicles from the Crown, or a person who is exempt (i.e. listed in section 2.1 of the regulation); and
  • Sell vehicles at a wholesale auction to a person located in another jurisdiction outside Ontario, where that person is registered with an equivalent status to a registered motor vehicle dealer.

This guideline will review the requirements for wholesalers and reflects input from OMVIC’s key stakeholders.

Terminology

 

Read the Guideline

The Ontario Motor Vehicle Industry Council (OMVIC) administers and enforces the Motor Vehicle Dealers Act, 2002 (MVDA), its regulations and code of ethics, as well as relevant sections of the Consumer Protection Act (CPA), on behalf of Ontario’s Ministry of Public and Business Service Delivery. OMVIC’s mandate is to maintain a fair and informed marketplace by protecting the rights of consumers, enhancing industry professionalism, and ensuring fair, honest, and open competition for registered motor vehicle dealers.

The list of available guidelines can be found here. Once the page opens, you’ll see the guidelines listed on the left-hand side.

Registration

Business owners must apply to become a registered dealer with OMVIC, whether as a wholesaler or in any other class. The registration requirements are clearly spelled out on OMVIC’s website. The Registration Department will assess the application and determine eligibility. The Department’s contact information is available here.

The Regulation and the Code of Ethics both contain essential information that applies to all wholesalers. Relevant excerpts are included in the Appendix at the end of this document. Of particular note is Section 21 of the Regulation, which spells out exactly what wholesale dealers are allowed to do.

Advertising

Wholesalers are one of the classes of dealers exempt from the advertising provisions, under Section 36 of the Regulation. However, all dealers are reminded of their obligations to act responsibly and professionally, as explained in the Code of Ethics. A wholesale dealer who chooses to advertise isn’t allowed to engage with members of the public.

Contracts & disclosures

Section 5 of the Code of Ethics lists 22 items that must be disclosed in every wholesale contract. They’re very similar to the requirements for contracts with retail buyers. OMVIC recently published a separate guideline on disclosures. It provides lots of important detail. Further information is also available on OMVIC’s website.

Dealer Support role in wholesale transactions

In dealer-to-dealer transactions, all parties are expected to use their industry knowledge and expertise to ensure that their transactions meet the requirements of the relevant legislation and regulations. In the event of a dispute between dealers, the Dealer Support Team can only process complaints when a dealer fails to comply with the legislation and/or regulations. OMVIC will make reasonable attempts to address complaints between dealers, but it can’t impose decisions on parties.

Auctions restrictions

Many wholesale transactions are facilitated through auctions. OMVIC’s guideline on auctions makes it clear that auctions that deal strictly in wholesale transactions and do not engage in trade with the public aren’t required to register with OMVIC. Many auctions opt to do so because they see potential benefits to being registered under the Act. Once they do, the law stipulates that they are bound by the same rules as other Registrants. Dealers registered as wholesalers can only participate in wholesale-restricted auctions.

Exports

There are limits on the export activity in which wholesalers can engage. OMVIC published a Dealer Bulletin in 2022 outlining these conditions. It explains that wholesale dealers can:

  • Trade vehicles only with another OMVIC-registered dealer under the Act.
  • Buy from individuals/organizations who are exempt from registration under the regulations. These exemptions can be found here.
  • Export vehicles through wholesale auctions where the sale is made to another dealer outside of Ontario who has equal registration status in their respective jurisdiction.

Q1:     What does the wholesale transactions guideline cover?

A1:      The guideline details the wholesale requirements for:

The Regulation and the Code of Ethics both contain essential information that applies to all wholesalers. Relevant excerpts are included in the Appendix at the end of the guideline. Of particular note is Section 21 of the Regulation, which spells out exactly what wholesale dealers are allowed to do.

Q2:      What do you mean by a wholesale transaction?

A2:      The definition of a wholesaler is found in Section 21. It suggests that wholesalers may only:

  • Trade with other registered motor vehicle dealers registered under the Act;
  • Purchase vehicles from the Crown, or a person who is exempt (i.e. listed in section 2.1 of the regulation); and
  • Sell vehicles at a wholesale auction to a person located in another jurisdiction outside Ontario, where that person is registered with an equivalent status to a registered motor vehicle dealer.

Q3:      How does the Code of Ethics apply to wholesale transactions?

A3:      Section 5 of the Code of Ethics lists 22 items that must be disclosed in every wholesale contract. They’re very similar to the requirements for contracts with retail buyers. OMVIC recently published a separate guideline on disclosures. It provides lots of important detail. Further information is also available on OMVIC’s website.

Q4:      What’s the role of Dealer Support in wholesale transactions?

A4:      In dealer-to-dealer transactions, all parties are expected to use their industry knowledge and expertise to ensure that their transactions meet the requirements of the relevant legislation and regulations. In the event of a dispute between dealers, the Dealer Support Team can only process complaints when a dealer fails to comply with the legislation and/or regulations. OMVIC will make reasonable attempts to address complaints between dealers, but it can’t impose decisions on parties.

Q5:      What are the restrictions on exports?

A5:      There are limits on the export activity in which wholesalers can engage. OMVIC published a Dealer Bulletin in 2022 outlining these conditions. Briefly, it explains that the Act allows wholesale dealers to:

  • Trade vehicles only with another OMVIC-registered dealer under the MVDA.
  • Buy from people/organizations who are exempt from registration under the regulations. These exemptions can be found here.
  • Export vehicles through wholesale auctions where the sale is made to another dealer outside of Ontario who has equal registration status in their respective jurisdiction.

Q6:      Who can dealers contact if they have questions about wholesale transactions?

A6:      The Dealer Support team is available to assist dealers in achieving and maintaining compliance with the MVDA and Code of Ethics. Registrants who wish to contact Dealer Support can reach the team at the phone number below and leave a message. Messages are returned in priority sequence.

Phone: 1-800-943-6002 ext. 4

Email: dealers@omvic.on.ca

Contact

The Dealer Support team is available to assist dealers in achieving and maintaining compliance with the MVDA and Code of Ethics. Registrants who wish to contact Dealer Support can reach the team at the phone number below and leave a message. Messages are returned in priority sequence.

Phone: 1-800-943-6002 ext. 4

Email