ALERT: SUPPORT AB 473- CNCDA’s 2023 Franchise Bill
This year, CNCDA has introduced AB 473 to the California State Legislature. It is a comprehensive bill that will strengthen and update California’s franchise laws to create a stronger and more equitable vehicle franchise system for our members.
Assemblymember Cecilia Aguiar-Curry, who represents California’s 4th Assembly district, is the author of AB 473 and is eager to support CNCDA and its members in this effort. AB 473 contains multiple provisions designed to improve California’s franchise laws, with key components including:
Ensuring manufacturers do not devalue the time in which it takes dealership technicians to perform warranty and recall work.
Protecting the underlying intent of the vehicle franchise system by precluding manufacturers from launching a new brand name of vehicles as a way to compete directly with their franchised dealer network.
Limiting manufacturers from imposing unreasonable performance standards on dealers through coercive incentive programs.
Incorporating a level of fairness into manufacturer-imposed DC fast charging programs by – amongst other requirements – prohibiting the manufacturer from shifting the entire cost of installing and maintaining public-facing DC fast chargers on their dealers.
Requiring manufacturers to reimburse dealers for their fees and costs if they prevail in an action at the New Motor Vehicle Board.
While CNCDA is excited to pursue this effort, it will be a heavy lift. Support from each and every dealer across the state is going to be necessary to get this bill across the finish line in 2023.
If you have any questions regarding AB 473 or want to help, please contact Kenton Stanhope, CNCDA’s Director of Government Affairs, at email@example.com.
Let’s Talk Time and How AB 473 Corrects Warranty Reimbursement:
2023 Dealer Day Recap and Photos
SACRAMENTO, CA, April 4, 2023 – The California New Car Dealers Association would like to express our heartfelt appreciation to all who attended 2023 Dealer Day. This event was incredibly successful for not only our association, but the participation from our dedicated members helps us to pass legislation benefitting California’s entire new car dealer industry.
Additionally, we want to thank our sponsor partners who helped make this event possible for our membership. Thank you again for your dedication to our industry and cause. We hope to see you all next year!
CNCDA Comment Letter Re: Motor Vehicle Dealers Trade Regulation Rule
September 7, 2022
Federal Trade Commission Office of the Secretary 600 Pennsylvania Avenue NW, Suite CC–5610 (Annex C) Washington, DC 20580
Re: Motor Vehicle Dealers Trade Regulation Rule—Rulemaking, No. P204800
To the Commissioners:
Thank you for the opportunity to submit written comments on the Motor Vehicle Dealers Trade Regulation Rule (Proposed Rule). The California New Car Dealers Association (CNCDA) is a statewide trade association that represents the interests of over 1,200 franchised new car and truck dealer members. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with parts, service, and automotive repair.
Focus and Organization of Comments CNCDA agrees with the National Automobile of Dealers Association (NADA) and many others that the Proposed Rule will greatly and unnecessarily increase the complexity of consumer motor vehicle sale and lease transactions, which are already regulated by a myriad of federal and state requirements. However, our comments are focused on the unique issues regarding implementation of the Proposed Rule in California, as conflicting state requirements also regulate dealers. As we illustrate in this letter, the Proposed Rule’s preemption clause does not adequately address this problem, as it is unclear whether California law or the Proposed Rule offers greater consumer protection in many circumstances.1
Proposed Rule Section 463.5(b) Conflicts with California’s Precontract Disclosure Requirements Proposed Rule section 463.5(b) prohibits charging for “undisclosed or unselected Add-ons.” California’s Automobile Sales Finance Act (ASFA) contains a similar precontract disclosure requirement. It states that California dealers must “prior to the execution of a conditional sales contract […] provide to a buyer, and obtain the buyer’s signature on, a written disclosure that sets forth” specific information regarding the price and itemization of six enumerated categories of optional products.2 These categories include service contracts, debt cancellations agreements (e.g., GAP), theft deterrent devices, and surface protection products. 3 The ASFA further requires dealers to identify and separately disclose each item within the six enumerated categories in the final conditional sales contract.4 The precontract disclosure must also include the consumer’s installment payments with and without the charges associated with the items in the six enumerated categories.
The Proposed Rule’s add-on requirements are clearly designed to achieve the same goal as California’s precontract disclosure (i.e., to promote transparency in the car buying process by separately disclosing optional products prior to sale). However, in practice it may be difficult (if not impossible) to comply with both the Proposed Rule and California law without providing duplicative and confusing documents to consumers.
When attempting to reconcile California law and the Proposed Rule, a major problem is that the two define optional products (i.e., “add ons”) differently. While California law is more prescriptive (identifying six categories of optional products), the Proposed Rule is potentially broader in scope, as it is not limited to any categories. However, simply applying the Proposed Rule’s broader scope to California’s precontract disclosure requirements is problematic because California requires more detailed itemization and links certain disclosures in the conditional sales contract to the six categories of optional products.5
The potentially irreconcilable differences between California’s pre-contract disclosure requirements and the Proposed Rule could force California dealers to provide to consumers two very similar (yet slightly different) documents disclosing optional products to consumers. This would serve no one’s interest, frustrating both dealers and consumers with an unnecessary and confusing process.
Proposed Rule Section 463.5(a) Conflicts with Pending California Restrictions on the Sale of GAP The Proposed Rule prohibits dealers from selling “add-ons that provide no benefit.” The vagueness of this rule and the breadth of its scope are troubling. With respect to the sale of a guaranteed asset protection waiver (GAP) specifically, the Proposed Rule states that it cannot be sold if the “loan-to-value ratio would result in the consumer not benefiting financially.”6 The application of this rule in practice could result in enormous confusion and potentially conflict with pending California law.
After they are purchased, vehicles depreciate at wildly different rates. For example, luxury sedans historically depreciate much more quickly than mass-market compact SUVs. As such, whether GAP provides a benefit could vary based on each vehicle’s individual depreciation curve and the duration of the loan.
California is seeking to accomplish the FTC’s aims (prevent the sale of GAP when it provides no benefit to consumers) by adopting a rule that provides a bright line on when the sale of GAP is acceptable. In the coming days we expect Governor Newsom to sign Assembly Bill 2311 into law, which would prohibit dealers from selling GAP when a vehicle has less than a 70% loan-to-value ratio.7
It’s unclear how California’s bright-line rule will interact with the Proposed Rule’s prohibition on the sale of products with ‘no benefit’. Absent further FTC guidance, it is conceivable that the FTC could take the position that whether GAP provides a benefit requires an individualized determination based on a vehicle’s unique depreciation curve and/or the duration of the loan. This would be a compliance nightmare for California dealers, as adherence to the strict limits on the sale of GAP in AB 2311 could still subject a dealer to liability.
For the above-mentioned reasons, we ask that the FTC either eliminate the vague and confusing requirement on the sale of products with “no benefit.” At a minimum, the FTC should provide clear practical guidance on how to apply this requirement.
Conclusion CNCDA agrees with the FTC that the interests of consumers and ethical dealers are served by the uniform enforcement of sensible regulations. However, we have substantial concerns about the implementation of the Proposed Rule in California. Without clarification, the Proposed Rule may force ethical dealers to choose between violating California and federal law, and it appears likely that the Proposed Rule will result in a more confusing and lengthy purchasing process for California consumers.
We appreciate the opportunity to comment and look forward to further guidance. Should you have any questions about the issues raised in this letter, do not hesitate to contact me.
Anthony Bento, Director of Legal and Regulatory Affairs California New Car Dealers Association
1 The Proposed Rule preempts conflicting state laws that do not afford consumers protections “greater than the protection provided under the” Proposed Rule. (Proposed Rule § 463.9(b).) 2 Cal. Civil Code section 2982.2. California Vehicle Code section 11713.19 also broadly prohibits dealers from “negotiat[ing] the terms of a vehicle sales or lease contract and then add[ing] charges to the contract for any goods or services without previously disclosing to the customer the goods and services to be added and obtaining the consumer’s consent.”3 Cal. Civil Code section 2982.2. 4 Cal. Civil Code section 2982(a)(1). 5 Cal. Civil Code section 2982(a)(1) (requiring individual itemization of a theft deterrent device, surface protection product, service contract, optional debt cancellation agreement (i.e., GAP)). 6 Proposed Rule section 463.5(a)(2). 7 AB 2311 is sponsored by the California Attorney General and received near-unanimous support in the California legislature. As of the date of this letter, it awaits Governor Newsom’s signature. The bill can be accessed at: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB2311
ALERT: SB 986 (Umberg) – STRONG OPPOSE
CATALYTIC CONVERTER LEGISLATION WILL INCREASE CONSUMER PRICES WITHOUT SOLVING THEFT PROBLEM
The California New Car Dealers Association (CNCDA), the Alliance for Automotive Innovation (AAI) and the National Auto Actions Association (NAAA) strongly oppose SB 986 (Umberg), which seeks to impose an unworkable new obligation on auto dealerships and auto auctions by requiring them to permanently mark the vehicle identification number (VIN) on the catalytic converters of virtually every new and used vehicle sold in the State of California. While we respect the intent of the author, SB 986 is unworkable and will ultimately result in increased costs for consumers while doing nothing to address rampant catalytic converter theft in California.
Massive new costs would increase the cost of new and used vehicles. California’s new car dealers sell approximately 3.5 million new and used vehicles per year. SB 986 would require dealers to etch the vehicle identification number (VIN) on the catalytic converter on each vehicle before selling it. This onerous new mandate would result in over 3.5 million hours of required labor by vehicle technicians annually. Unfortunately, the significant new cost burden on California’s new car dealers, created by SB 986 would be felt directly by consumers across the state as many are already struggling with high costs and inflation.
SB 986 is a patchwork measure that will not solve theft issues. SB 986 is NOT a preventative measure, but rather seeks to address a prosecutorial gap in current law by putting this obligation on the backs of California’s dealerships, vehicle sellers and ultimately consumers. Catalytic converter theft victimizes all Californians. A comprehensive, meaningful deterrent is necessary, but SB 986 is a scattershot approach and does not provide any guarantee there will be a decrease in catalytic converter theft.
CNCDA, AAI and NAAA are committed to playing a critical role in curbing catalytic converter theft. However, SB 986 is not a sound solution. For these reasons, we respectfully ask you to OPPOSE SB 986. Please do not hesitate to contact me if you would like to discuss our position further. #RejectSB986 #CALeg
Alisa Reinhardt, CNCDA Director of Government Affairs Alliance for Automotive Innovation National Auto Auctions Association
Help Us Replace the Private Attorneys General Act (PAGA): Learn about how PAGA can hurt your dealership.