Pothole menace angers motorists, creates business for repair shops

By Ross Marowits


MONTREAL _ An annoying sign of spring the dreaded pothole is testing the patience of Canadian drivers this year while also creating a financial bonanza for auto repair shops.

Extreme fluctuations in early spring temperatures along with lots of rain have unearthed a high number of potholes that are exposing motorists to hefty repair bills.

“It’s probably the worst year I’ve seen in the last 10 to 15 years,” Ben Lalonde, president of My AutoPro service centres in Ottawa, said in a recent interview.

Business is up as customers are showing up with bent wheels, punctured tires, misalignments and wrecked suspensions. Repair bills can range between $200 and $500 depending on the force of impact and the type of damage, Lalonde said.

Spring is a lucrative period for repair shops, says Jack Bayramian, owner of Montreal’s Decarie Garage, who adds that repairs stemming from pothole damage makes up about 30 per cent of his year’s revenues.

There’s no tally for the cost of dealing with the aftermath of potholes in Canada, but a poll of U.S. motorists by the American Automobile Association suggests they spend an average of US$3 billion a year dealing with pothole repairs. The Canadian Automobile Association is in the process of conducting its own poll.

While repair shops welcome the extra business, they also say it can cause customers to pare back spending on preventative maintenance.

“I know having bad roads is good for business but I think it’s (temporary) … because a lot of people end up neglecting their cars, and at the end it could be a safety concern,” James Bastien, manager of an OK Tire in the nation’s capital.

Most motorists tend to pay for repairs out-of-pocket unless damage is well above insurance claim deductibles, or they can beat the odds and win a claim from a municipality.

Several large Canadian municipalities are struggling this year to keep up with the menace that is consistently among the top sources of angry complaints from residents.

“This year has been fairly bad,” says Bryden Denyes, area manager of core roads for the City of Ottawa.

The city has filled 51,000 potholes so far this year, up substantially from 20,200 at the same time in 2015, but down slightly from two years ago. Compared to last year’s almost relentless bone-chilling cold, Ottawa has faced 28 freeze-and-thaw cycles versus just 11 a year ago.

The capital spends $5.4 million a year filling potholes and repairing roads, compared to the nearly $7 million to fix major and arterial roads in Montreal. Toronto spent $6 million in 2014 to fix 360,000 potholes.

Lionel Perez, a councillor responsible for Montreal’s infrastructure, said it’s a constant struggle to plug the holes, especially because of decades of under-investment.

The challenge is even bigger in Edmonton, which over the last nine years has faced an average of 455,000 new potholes a year. A warmer winter and less snow has given the Alberta capital somewhat of a reprieve this year.

In addition to filling potholes, municipalities have to contend with damage claims submitted by residents.

Very strict rules limit compensation in Quebec. Payouts are also low in other provinces.

Ottawa paid out only 10 per cent of claims last year, while Edmonton’s annual payout ratio is about 16 per cent. Toronto, meantime, paid out about half the 2,376 claims filed in 2014, the city said in its latest report.


We have the tools to reduce drunk driving

Read more

CAA SCO’s spring car care checklist:

Read more

Volkswagen U.S. Unit Destroyed Evidence, Ex-Worker Suit Says


Personnel at Volkswagen AG’s U.S. unit in Michigan destroyed evidence after the U.S. announced last year that the company had installed illegal devices on hundreds of thousands of vehicles to cheat emissions tests, a former employee said in a lawsuit.

Daniel Donovan, who worked as a technical project manager in Auburn Hills, Michigan, said he was fired in December after telling superiors, including the company’s in-house lawyers, that data was being deleted. Donovan, who had worked for VW since 2008, sued in state court last week, alleging wrongful termination and violation of Michigan’s whistle-blower law.

The deletion of data conflicted with an order Donovan received to preserve such information after the Sept. 18 announcement by the Environmental Protection Agency that VW had violated federal law by rigging vehicles sold in the U.S., he said in the complaint.

The company admitted installing cheating software in 11 million vehicles worldwide, including 482,000 sold in the U.S. VW later disclosed it had installed questionable emissions software in about 85,000 VW, Audi and Porsche cars with 3.0-liter diesel engines in the U.S.

‘Stop Deleting’

Donovan’s immediate supervisor, Robert Arturi, told him on Sept. 18 the company had to “stop deleting data effective immediately pursuant to a Department of Justice hold,’’ connected to the U.S. investigation, he said in his complaint. When he relayed that message to the information technology manager, he was brushed off, Donovan said.

Data deletion continued for three more days, in violation of the order, and additional backup disks were destroyed afterward, Donovan said. An independent investigation by an accounting firm was thwarted, as evidence wasn’t provided, Donovan claimed in the suit. Sam Morgan, Donovan’s lawyer, declined to comment on the lawsuit.

“The circumstances of Mr. Donovan’s departure were unrelated to the diesel emissions issue,” Jeannine Ginivan, a VW spokeswoman, said by e-mail. “We believe his claim of wrongful termination is without merit.”

Michigan law permits legal action if an employee is fired in retaliation for refusing to break the law, according to the complaint. It also cites a state law protecting workers reporting or about to report a legal violation.

The lawsuit is Donovan v. Volkswagen Group of America Inc., 2016-151877-CD, Circuit Court, Oakland County, Michigan (Pontiac).

ICBC to appeal $400k ruling for malicious prosecution of refugee

CBC News

ICBC has filed notice of its intention to appeal a judge’s decision awarding $400k to a newly arrived refugee.

Earlier this month, a B.C. Supreme Court judge ordered the insurance corporation to compensate Danica Arsenovski for malicious prosecution. 

Arsenovski and her husband had recently come to Canada as refugees from the former Yugoslavia when they were struck by a car and injured while crossing an intersection in Burnaby in January 2000.

After the crash, Arsenovski gave a statement to ICBC through a translator because she did not speak much English.

The statement detailed the injuries she received and what she remembered about the crash, but did not specifically say whether Arsenovski herself had been struck by the car or whether she had fallen when her husband was struck and fell into her.

ICBC’s report later alleged Arsenovski had made a false statement, and she was later charged, though the charge was eventually stayed.

Strong words for ICBC

In her written decision Justice Susan Griffin said ICBC’s conduct was high handed and reprehensible.

She wrote in her decision that John Gould, the ICBC investigator in the case, wrote a misleading report to Crown, intending to dissuade civil claims against the insurance agency.

Griffin said the effects of the case have stayed with Arsenovski, to a point where she hasn’t even told anyone about the charge, even after it was lifted.

Griffin had harsh words for the Crown corporation and noted that one of the agency’s key purposes is to provide compensation to people who are involved in accidents.

“The corporation does not serve the residents of this province when it uses tactics of intimidation to discourage civil claims,” she wrote.

ICBC declined comment as the matter is before the courts.

The federal consumer agency is sounding warning bells about the growing debt Canadians are taking on through auto loans

The federal consumer agency is sounding warning bells about the growing debt Canadians are taking on through auto loans


The federal consumer agency is sounding warning bells about the growing debt Canadians are taking on through auto loans.

Consumers have been taking advantage of stretched amortization periods in recent years to take on more debt without increasing their monthly payments, the Financial Consumer Agency of Canada revealed Tuesday in a research report tracking market trends.

But they are often buying more car than they can afford, paying much more interest, and, in some cases, going on to buy new cars before the original loans are fully repaid.

“In these circumstances, consumers put themselves in the position of having to roll the debt owing on the long-term loan into the loan for the purchase of the new vehicle, thereby potentially stepping onto an ‘auto-debt treadmill’,” the agency warned.

The FCAC conducted research in the summer and fall of last year in a targeted review that tapped the country’s biggest banks for information, as well as smaller lenders focused on the auto sector.

Particular attention was paid to the information consumers receive about the terms of their auto loans, and to issues with potential impact on consumers, such as “negative equity” and non-prime lending, the report said.

“Recent trends in extended-term car loans have raised several concerns,” said Lucie Tedesco, commissioner of the FCAC. “Consumers must carefully examine their needs and their financial situation to ensure they can repay their car loans without undue strain, and with a full appreciation of the total interest charges and value of the car throughout the loan period.”

The FCAC called the growth in long-term car loans “worrisome,” noting that the average new car loan last year had a term longer than 72 months, up from about 65 months in 2010.

In the same five years, the share of consumers trading vehicles with “negative equity” has risen by 50 per cent – up to 30 per cent of consumers in 2015 from 20 per cent in 2010.

“Although significantly more consumers are carrying negative equity when they break their existing auto loans, the average amount of negative equity carried by consumers who are underwater … has hovered around $6,700,” the report says.

Vehicles depreciate quickly, which means the negative equity peaks in the early years of a loan when the portion of each payment dedicated to interest tends to be larger. Holding the loan longer eventually moves the borrower into a “positive equity” position. That typically happens by the fourth year in a standard 60-month auto loan, but the longer loans leave many borrowers in negative equity positions into the fifth year and even well beyond it, the report says.

The FCAC is not the first to zero in on auto lending as an area of concern. Debt-ratings agency Moody’s Investors Service raised similar red flags in 2014.

In a report that fall, Moody’s noted that auto lending by banks had grown at a compounded annual rate of 20 per cent since 2007, “significantly outpacing” the growth of even red-hot mortgages, credit cards, and lines of credit. In seven years, vehicle loans had jumped to $64 billion from $16.2 billion.

The authors of the Moody’s report warned that with household debt already at record levels, the concerted push into auto lending – buoyed by low interest rates and longer amortization periods that reduced a buyer’s monthly payments — had exposed Canadian banks to the risks of soured loans and lower recovery rates in the event of a downturn.

“Since our report, both consumer debt levels and auto loans at Canadian banks have increased,” Jason Mercer, one of the authors of the Moody’s report, said Tuesday. “Today, Canadian consumers face increased uncertainty due to persistent low oil prices and potential housing overvaluations, so these risk remain as relevant as ever.”

The Financial Consumer Agency of Canada says consumer groups have also expressed concern, and it is responding by focusing oversight and education efforts on the auto loan market.

One step will be to ensure the indirect lending activities of federally regulated financial institutions, including auto loans, comply with federal legislative and regulatory requirements.

According to the FCAC report, long-term car loans – those of six years or more — constitute about 60 per cent of the car loan portfolios of Canada’s largest financial institutions.

The Agency is also collaborating with provincial and territorial governments to ensure that consumers receive the information they need when entering into a car loan.

Financial Post

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest