Home » Read The New Mandatory Car Dealership Rules That Could Save Shoppers ‘$3.4 Billion A Year’

Read The New Mandatory Car Dealership Rules That Could Save Shoppers ‘$3.4 Billion A Year’

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The Federal Trade Commission has released its final rules for the Combating Auto Retail Scams (CARS) Rule and it’s a strong set of requirements that should save consumers billions of dollars by helping make them aware of unnecessary extra charges. It should also, according to the FTC, save consumers 72 million hours of wasted time each year.

Welcome to The Morning Dump, our daily roundup of the most important news in the automotive world. I’m consumer-focused today, and I’ll kick off with a discussion of the CARS Rule and how it could impact consumers.

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Speaking of Ford and dealers, I’m also planning to look at a Ford dealership with a Michelin Star chef in Florida. Finally, why don’t I end the morning with a look at wholesale used car values and a change at the top at NHTSA? That seems like a great way to start a Monday.

How The Cars Act Could Save You Time And Money

Ftccarsruleinfographic Hi Res

I talk to people all the time who are worried about buying a new or used car because there are so many complex factors and it’s unreasonable to expect the average consumer to have enough education to cut through it all. This is one reason why direct-to-consumer has worked so well for Tesla.

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In an attempt to protect consumers, the FTC has been working for more than a year to set a series of rules that it says would “add truth and transparency to the car buying and leasing process by making it clear that certain deceptive or unfair practices are illegal.”

These rules apply to dealers and will go into effect on July 31st, in order to give dealers time to adjust their paperwork and practices to meet the requirements of these rules. If you’re a dealer, or curious, you can read the full guidelines here.

This new rule is expected to save more than $3.4 billion and an estimated 72 million hours of wasted consumer time annually. If you want to see the math on it, there are 372 pages of background showing how the regulators came to those numbers and it should take about 72 million hours to read it (I skimmed).

From the FTC:

The CARS Rule prohibits dealers from using bait-and-switch claims to lure vehicle buyers to the lot, including about the cost of a car or the terms of financing, the availability of any discounts or rebates, and the actual availability of the vehicles being advertised. It also tackles hidden junk fees – charges buried in lengthy contracts that consumers never agreed to pay. In some cases, these fees are for services or products that provide no benefit to consumers.

As you can see in the graphic above, this means: No misrepresenting cost/price, no bogus add-ons like oil change contracts on electric cars, and consent for all charges.

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How is the dealer industry taking this change? About as well as you might expect according to Automotive News.

“It’s just not workable,” National Automobile Dealers Association CEO Mike Stanton said Friday of the regulations. “It’s bad for consumers on a number of accounts. … We’re very disappointed and frustrated.”

Rhett Ricart, CEO of Ricart Automotive Group in Columbus, Ohio, said he is concerned the rule will lead to more customer anxiety if it results in vehicle transaction times becoming lengthier.

“We will be ready for it when it happens, but hopefully the FTC takes a harder look at this thing and understands this overreach they have is … going to be damning customers,” Ricart said. “There’s so much redundancy in it.”

Not all dealers interviewed were so negative, though, with one noting that it’ll level the playing field for dealers who do follow “good consumer practice.”

Ford Dealerships Have The Best Restaurants

Le Mans Kitchen
Image: Sarasota Ford

Well, if you’re going to get stuck at a dealer, make sure it’s one with a great restaurant. The place where I sometimes take my Subaru to get warranty work done is nice enough, but you’re lucky enough to get a green banana.

Head on down to Sarasota Ford in Sarasota, Florida and you might find yourself a little better off at the “Le Mans Restaurant” inside the dealership. This joins the dealership’s 11-room movie theater and relaxation room.

This story came to me via Automotive News, which includes some interesting tidbits on the background of the crew here:

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A Ford dealership in Florida says it’s the only place that sells both Michelin tires and food from a Michelin-starred chef.

Sarasota Ford last week opened Le Mans Kitchen, an upscale restaurant that’s open only to its customers. Matt Buchanan, president of Buchanan Automotive Group, which owns Sarasota Ford, proposed the idea to chef Jose Martinez as a way to build loyalty to the dealership, which also has an 11-seat movie theater and a relaxation room with massaging chairs.

Martinez owns Maison Blanche, a renowned restaurant on Longboat Key, and previously had an award-winning restaurant in Paris.

Dammit Nick Bunkley, that’s a good opening to a story. You get me, Nick, you get me.

Of course, our partner in The Autopian, Galpin Ford, also has a restaurant and I’d put Chef Geovanni at The Horseless Carriage up against any and all dealership-based dining establishment chefs. In particular, Jason’s a big fan of the tuna melt and I’m a sucker for a Geovanni Salad with a cup of buffalo chili on the side. Order it now, thank me later.

NHTSA Continues To Not Have A Full-Time Administrator

Nhtsa Annn
Image: NHTSA

Here’s a weird fact: Over the last nine years there have only been two Senate-confirmed leaders (called Administrators) of the National Highway Traffic Safety Administration. In 2017, Mark Rosekind (appointed by President Obama) was replaced by President Trump-appointee Heidi King, who was nominated but never could get past the Senate.

She stepped down and James C. Owens worked as the acting administrator until President Biden appointed Steven Cliff, who was approved by the Senate, but quickly took a job heading up the California Air Resources Board. His replacement, Acting NHTSA Administrator Ann Carlson, has been in charge since then, but she’s got to leave on December 26th as she reaches the legal limit for non-appointed officials.

Why couldn’t she just be appointed? Per Reuters:

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In May, President Joe Biden withdrew his nomination of Carlson to serve in the top job on a permanent basis after she faced Republican opposition, and Biden has not made a new pick. Attempts in Congress to reduce her salary to $1 over Republican ire about electric vehicles were voted down.

The Senate is hard on NHTSA Administrators and four-star generals for some reason.

Used Car Inventory Is Up, But Not Pacing Demand

Used Car Volumes

The lack of used cars has been a real bummer for price-strapped consumers, but there’s some mid news from Cox Automotive. According to their analysis of vAuto Available inventory data the total inventory rose to 2.36 million units this month, up 2.4% from November.

Why doesn’t that mean we can expect prices to lower all of a sudden? First of all, the increase in inventory still means the market is below where it should be. Also, this:

Using estimates of used retail days’ supply based on vAuto data, an initial assessment indicates December began with 52 days’ supply, little changed from the revised start-of-November number of 53 days’ supply. One year ago, days’ supply was 56 days, suggesting inventory levels now are slightly tighter than they were one year ago.

Eventually, people have to come off the sidelines and buy a car and that’s starting to happen. And to the surprise of none but the consternation of many, cheaper cars are harder to come by:

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As with new cars, and as has been the case for months, the lower the price segment, the tighter the inventory. Used vehicles priced under $10,000 had a days’ supply of 37, with days’ supply increasing with every higher price segment to the over $35,000 category with the highest days’ supply of 63.

Now’s the perfect time to get that used Range Rover, I guess.

What I’m Listening To While Writing This:

Wilco’s timeless and perfect “Yankee Hotel Foxtrot.”

The Big Question

What do you think of these dealership rules? Too harsh? Not enough? Just right?

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Box Rocket
Box Rocket
4 months ago

So they’re making dealerships act more like… CarMax? Awesome!

I welcome this change. Especially if it means an end to those ridiculous and dangerous strobing CHMSLs. Also ugly pinstripes that don’t at all work with the vehicle’s design.

Canyonero
Canyonero
3 months ago
Reply to  Box Rocket

I never feel more motivated to rear-end a car than when the CHMSL is flashing at me every 5 seconds in rush hour traffic.

Box Rocket
Box Rocket
3 months ago
Reply to  Canyonero

Right?! If I weren’t concerned about my safety and my car getting stolen, I’d be likely to hop out ofy car and knock on their window to tell them their CHMSL is malfunctioning, since I can’t get their attention through waving at them.

Morgan van Humbeck
Morgan van Humbeck
4 months ago

I recently started to work at a dealership and there is no length they could go to that would be too far in controlling dealership shenanigans. And I work at a pretty good one

Carbon Fiber Sasquatch
Carbon Fiber Sasquatch
4 months ago

So, I used to work for the Ricart Group and them being upset is a good thing for everyone else. They tried to get us to do some under handed things when they heard about this bill, underhanded enough that I immediately resigned and found a another dealership group to work for.

Justin Earl
Justin Earl
4 months ago

So… market adjustments provide no benefit to the consumer. Are they addressed in this?

The F--kshambolic Cretinoid Harvey Park
The F--kshambolic Cretinoid Harvey Park
4 months ago

> These rules apply to dealers and will go into effect on July 31st, in order to give dealers time to adjust their paperwork and practices

Funny, if they weren’t scumbags, they wouldn’t have to adjust anything!

Case in point:

> It’s just not workable […] It’s bad for consumers on a number of accounts.

Scumbag.

Last edited 4 months ago by The F--kshambolic Cretinoid Harvey Park
Carbon Fiber Sasquatch
Carbon Fiber Sasquatch
4 months ago

Ricart is as bad as you think it is. They did everything they could to stop this change.

Ron888
Ron888
4 months ago

It’s good that they’re cracking down on dealers.Now we just have to somehow magically make young men not make bad buying choices, lol

Space
Space
4 months ago

The nearest Ford dealer to me also has its own restraunt, it was good. Which brand has the most restraunts nationwide?

The F--kshambolic Cretinoid Harvey Park
The F--kshambolic Cretinoid Harvey Park
4 months ago
Reply to  Space

Wtf is a restraunt

VanGuy
VanGuy
4 months ago

…I mean, that’s not how it’s spelled, but that’s more or less how I pronounce it

Ranwhenparked
Ranwhenparked
4 months ago

I’m surprised Ford is allowing a dealer to do that – the local Mercedes-Benz dealership in my old hometown tried something similar, moved into a neoclassical building with a coffee shop and also a restaurant, but after a relatively short period, were forced to move to a smaller, plainer building when MBUSA started demanding dealers all have identical, cookie-cutter stores with uniform amenities.

Shooting Brake
Shooting Brake
4 months ago

Probably not harsh enough

Myk El
Myk El
4 months ago

Based on the summaries I’ve seen, I’m good with the dealer regs proposed. I expect them to get watered down.

AlterId
AlterId
4 months ago

I hope that the name of The Horseless Carriage is derived from the one-time name for automobiles and not from the presence of prosciutto di cavallo on the menu.

Gary Lynch
Gary Lynch
4 months ago

I hate that seemingly ever piece of federal legislation must have some sortof a corny acronym name.

VanGuy
VanGuy
4 months ago
Reply to  Gary Lynch

They’re called “backronyms”, and you should see what NASA has done with some:
https://lweb.cfa.harvard.edu/~gpetitpas/Links/Astroacro.html

Wuffles Cookie
Wuffles Cookie
4 months ago

RE: NHTSA appointee-

I know the the news loves to focus on the “bash the environmentalist” part of the story, but it buries the lede entirely: Carlson is an Environmental Law professor (with an admittedly very distinguished career in that field!) who prior to her interim gig had zero experience in engineering or transportation safety, or enforcement thereof.

The NHTSA mission is “save lives, prevent injuries and reduce economic costs due to road traffic crashes, through education, research, safety standards, and enforcement activity.”

It seems like she would make quite a good appointee for the EPA, but she is entirely unqualified to head the NHTSA.

It’s a similar situation to the FAA- the previous nominee’s sole aerospace qualifications was being CEO of the Denver airport for a couple of years, and whom was unable to answer a number of quite basic questions about aviation during his confirmation hearing, as he was not a pilot nor had any background in aviation safety (also being a retired Army vet, technically he was ineligible for the post). The only treatment any news story would give to this glaring hole was to portray it as the whining of certain senators, rather than examining the actual duties of the post and what qualifications would be needed. Worth noting that the next nominee and current FAA administrator who is a pilot with decades of experience in aerospace and a former Deputy Administrator, was unanimously confirmed.

Leadership in safety related agencies matters, it’s literally a matter of life and death. People who have zero experience or qualifications in the relevant fields should not be nominated to lead them.

Space
Space
4 months ago
Reply to  Wuffles Cookie

Thank you for a well reasoned and informative take.

Thomas Metcalf
Thomas Metcalf
4 months ago

Man, I keep thinking about getting a 20 year old Range Rover. It seems like such a good idea and such a bad idea at the same time.

05LGT
05LGT
4 months ago
Reply to  Thomas Metcalf

Man, I keep thinking about getting a 20 year old. It seems like such a good idea and such a bad idea at the same time.
FIFY

Thomas Metcalf
Thomas Metcalf
4 months ago
Reply to  05LGT

I don’t have that kind of energy any more.

Ultradrive
Ultradrive
3 months ago
Reply to  Thomas Metcalf

I bought a 2001 P38 a couple years ago. Your instincts are spot on. That said, I love the damn thing and I’ll probably never sell it.

Chronometric
Chronometric
4 months ago

Just have all dealer agreements run past Chevy’s consumer-friendly AI Chatbot. Problem solved.

Last edited 4 months ago by Chronometric
Scoutdude
Scoutdude
4 months ago

So much for dropping used and new car prices. Dealers are not going to want to take a lower profit per vehicle and if they can’t make money they way they have done in the past, they will just fatten up the margin in the listed price.

Dan1101
Dan1101
4 months ago
Reply to  Scoutdude

Yeah, but the hope is that instead of seeing the vehicle advertised for $30,000 and leaving the dealership owing something like $35,000 + tax/title/tags, you will instead see the vehicles advertised for $35,000 actually pay $35,000 + tax/title/tags. So higher price but less surprise.

But the quote from the dealer association saying “We will be ready for it when it happens” reads to me that they will just find new loopholes and technicalities to upcharge the buyers.

Boulevard_Yachtsman
Boulevard_Yachtsman
4 months ago

Government: “We are Combating Auto Retail Scams”
Dealers: “This is some Crazy Ass Regulatory Shit”

Dogisbadob
Dogisbadob
4 months ago

Here are some good nominees for the NHTSA:
Jason Torchinsky
David Tracy
Mercedes Srteeter
Stef Schrader
Mike Spinelli
Larry Hodge

The F--kshambolic Cretinoid Harvey Park
The F--kshambolic Cretinoid Harvey Park
4 months ago
Reply to  Dogisbadob

DT is more than qualified but he won’t pass the background check when the feds talk to the city of Troy, MI.

Sklooner
Sklooner
4 months ago

Look that Trucoat is installed at the factory, these new rules do not apply

Needles Balloon
Needles Balloon
4 months ago
Reply to  Sklooner

Is there a way this could actually happen, where the dealer still gets the money from this and not the OEM?

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