As of January 1, 2010, the Motor Vehicle Dealers Act, 2002 (the “Act”) will become law in the province, driving home changes to the motor vehicle sales and dealership industry in the province by impacting the business and practice of motor vehicle dealers, automobile salespersons, the equipment finance community and sellers of extended warranties in Ontario.

Introduced by the Ministry of Small Business and Consumer Services, the aim of the Act is to improve consumer protection and strengthen consumer confidence in the motor vehicle sales and dealership industry.

Those who have been keeping an eye on the progress of the Act will know that it was originally intended to come into force on April 1, 2009. However, the implementation date was recently extended until January 1, 2010 in response to concerns expressed by industry participants and other related stakeholders regarding implementation timelines and certain other regulations under the Act.

The Act, which is to be administered by the Ontario Motor Vehicle Industry Council (the “OMVIC”), differs significantly from the current legislation and the Act's soon-to-be predecessor, the Motor Vehicles Dealers Act. Among the most notable changes are enhanced disclosure obligations for dealers; increased publicity for the Canadian Motor Vehicle Arbitration Plan; stronger remedies for aggrieved consumers; increased penalties for convictions under the Act; updated licensing requirements for motor vehicle dealers; and, more regulatory powers for OMVIC.

Regulations to the Act define seven designations of auto dealers, including General Dealers, Fleet Dealers, Brokers, Wholesalers, Exporters, Outside Ontario Dealers, Lease Finance Dealers and Fleet Lessors. The Act differs in its application depending on the designation of the subject party.

The Act will also feature a Code of Ethics which will be applicable to all registered dealers in Ontario, the principal objective of which is to facilitate newly enhanced disclosure obligations for dealers which will require them to provide consumers with prescribed information before the sale or lease of a new or used vehicle.

Parties subject to the Act were previously advised by OMVIC of the requirement that they file for an appropriate designation with the Ontario Ministry of Transportation by no later than February 27, 2009. As the implementation date for the Act has now been extended, these new designations will not take effect until the new implementation date.