A survey of almost 600 dealerships across the country found that the labels were attached to only 63 per cent of the new vehicles on outdoor lots.
And vehicles displayed in dealer showrooms had the labels affixed just 43 per cent of the time. Some high-end models — BMW and Rolls-Royce, for example — had a zero compliance rate.
The poor showing comes as Natural Resources Canada conducts a review of the voluntary label program for new vehicles, under the brand EnerGuide, including a proposal that it be made mandatory.
The survey of 592 new-car dealerships in 33 large cities was carried out earlier this year by Posterity Group Consulting Inc. under a $113,000 government contract.
The EnerGuide label program for vehicles was launched in 1998 to help consumers make informed choices about the fuel efficiency of new passenger cars, vans and light-duty trucks.
The labels are attached by manufacturers, indicating the number of litres of fuel needed to travel 100 kilometres, and showing the difference between city and highway driving.
The program requires manufacturers to test fuel efficiency of various models under government-approved procedures and standards.
Posterity's final report, delivered in late March, was obtained by The Canadian Press under the Access to Information Act.
Posterity found that some dealers removed the manufacturers' EnerGuide labels because they also included the retail price. Others tore them off because of "aesthetics," while some said the labels affixed to the windshield were "impeding" drivers' vision during test drives.
Many others who pulled them off claimed the labels gave inaccurate or misleading information about fuel-efficiency.
"At some dealerships, EnerGuide labels were missing due to the errors discovered in the mileage estimates claimed by these manufacturers," says the report.
"Ten makes had compliance rates of zero per cent, including Aston Martin, Bentley, BMW, Ferrari, Jaguar, Land Rover, Maserati, Mini and Rolls-Royce."
A spokesman for the Canadian Automobile Dealers Association, representing 3,250 dealerships selling 22 brands, said the poor compliance rate across the country was no surprise.
"These things are less and less relevant," chief economist Michael Hatch said in an interview. "The paper label is decreasingly relevant for consumers."
Apart from price, the most important specification for new-vehicle buyers today is fuel efficiency, Hatch said. And most consumers walking into a showroom have done extensive homework online, unlike in 1998 when there were fewer options for obtaining timely data.
"The world has changed," Hatch said.
Natural Resources plans to radically revamp the label program, with a label redesign, new information on carbon dioxide and smog emissions, and special labels for electric vehicles.
The current fuel-consumption label "does not provide Canadians with the information they need to compare the energy, environmental, and financial costs and benefits of different vehicle choices," the department says.
A new fuel-efficiency testing regime would also expand to include air-conditioner usage, cold temperature operation and higher speeds with faster acceleration.
"For most vehicles, consumption will increase by about 15 per cent," spokesman Guillaume Berube said in an email.
The department is also considering making the new EnerGuide label regime mandatory for the 2016 model year.
Hatch says his group is opposed to mandatory labelling, given that consumers have many other ways to acquire relevant information about new vehicles.
"It's kind of an old-school solution to a problem that in our view doesn't exist," he said. "It's just another layer of red tape."
Hatch's group has no objection to retaining an improved paper label, but does not want regulations requiring them.
Berube says the department has received 168 submissions on the proposed changes, including a requirement to colour them blue.
He said he could not provide a timeline for eventual changes, but the department's regulatory notice says a voluntary system would have to be in place by December this year to catch the 2016 model year.
If a mandatory system is chosen, proposed regulations would be published next year, says the notice.