CA 1Q 2023 Auto Market Recap: New Sales Show Positive Numbers; EV, Overall 2023 Registrations Expected to Grow
Click on the image to view the report.
May 15, 2023, SACRAMENTO – The California New Car Dealers Association released its first quarter 2023 California Auto Outlook report today, showing significant improvement in new vehicle registrations compared to 1Q 2022 numbers.
Overall, 2023 projections indicate that registrations are expected to increase roughly 6.9 percent more than last year (just shy of 2021 sales numbers), despite increasing economic uncertainty in the state and nationwide. CNCDA’s quarterly Auto Outlook data is sourced from Experian Automotive.
Report highlights reflect that pent-up demand (due to supply chain and inventory shortages) kept new car sales somewhat insulated from economic dips felt in other sectors. As noted in our previous report, 4Q 2022 was a bright spot last year, and 1Q 2023 is proving to continue this upward sales trend, with a 5.8 percent increase (450,000 registrations) YTD versus 1Q 2022, at 425,216 registrations posted. Much of this increase is directly attributed to the recent large volume of fleet sales in California.
Additionally, as franchised dealers roll out new electric vehicle models from their respective original equipment manufacturers (OEMs), Californians’ appetite for Zero Emission Vehicles (ZEVs) continues to grow. The new electric and hybrid/ electric vehicle market share sales grew staggeringly last quarter, posting the highest percentages California has ever seen at 34.2 percent of the market share in 1Q 2023 (up from 31.1 percent in all of 2022).
The recent increase in ZEV market share is likely due to more 2023 ZEV models available and Californians’ willingness to shift to and adopt electric and hybrid vehicles. Unsurprisingly, CA again places first for ZEV sales at 24.2 percent, while the next closest state is OR, coming in at roughly 17 percent for ZEV retail vehicle registrations last quarter.
However, as franchised dealers continue to offer more electric and hybrid options to CA’s motoring public, their market share is steadily rising. Last quarter franchised new car dealers showed a noteworthy 140 percent increase in ZEV sales YTD, while direct-to-consumer EV sellers (such as Tesla) were up only 15 percent YTD in CA.
“It’s an exciting time for franchised new car dealers in California. We are getting new inventory, and the latest ZEV models are rolling out from the mainstay manufacturers. It’s exciting to offer the types of cars our customers have been asking for,” said CNCDA Chairman Tony Toohey, owner of Auburn Toyota. “Each new car dealership in California has roughly 95 employees, so when a consumer buys from a dealer, they directly support the livelihoods of hard-working people and their families. This is why we value our returning customers tremendously.”
Brand Market Share
Toyota held the top of California’s market share last quarter at 15.3 percent amongst all vehicle brands, followed by Tesla at 11.8 percent, Ford at 8.9 percent, Honda at 8.7 percent, and Chevrolet at 7.7 percent.
Interestingly, Chevrolet had an outstanding first quarter of 2023, with a 47.1 percent increase in registrations. Followed by Genesis at 41.8 percent, Buick at 39.7 percent increase, Audi with a 38 percent increase, and the fifth-place spot was taken by Porsche, posting a 31.6 percent increase.
On the other hand, Californian’s love affair with Tesla may have already reached a plateau. The report reveals that the company posted only a 10.6 percent increase for 1Q 2023 compared to registrations for the same time last year. With more OEMs offering newer ZEVs this year and next, Tesla registrations in CA may continue to stall or even decline.
Fleet and Retail Market Share
Notably, the increase in California’s YTD registrations was primarily due to fleet car sales which were up 47.0 percent. Fleet light trucks were up 35.3 percent, and retail light trucks were up 2.2 percent. The only decline was in retail car sales, down by 1.7 percent compared to 2022 YTD.
Regional Variances
SF Bay Area’s new vehicle market showed very promising signs of growth. For the first time in a year, the region showed positive sales, reporting an impressive 9.8 percent increase from this time last year. The Southern California overall market is nearly identical to last year’s sales, posting a .1 percent increase. Northern California registrations only rose 2.6 percent YTD.
California Auto Outlook Quarterly is produced for CNCDA by Auto Outlook, Inc., an independent research company specializing in the analysis of statewide and regional automotive markets. When reporting these auto industry trends please acknowledge the Data Source: Experian Automotive.
The report provides comprehensive information on the state’s new vehicle market and includes annual trends, a two-year perspective, segment watch, the top five models in each segment, brand scoreboards, regional comparisons, and more. Access the complete report at: www.cncda.org.
About CNCDA
For 99 years, California New Car Dealers Association has represented the interests of California’s franchised new car and truck dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with automotive products, parts, service, and repairs. CA’s franchised new car dealers sold more than 1.6 million new cars and trucks in 2022 and employed more than 136,000 Californians.
In 2022, new car dealers significantly contributed to CA’s economy, paying $8.46 billion in sales tax and giving $62.84 million in donations to charitable and civic organizations. As the nation’s largest state association of franchised new car and truck dealers—with nearly 1,200 members—CNCDA provides legal compliance and legislative, regulatory, and legal advocacy.
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 kstanhope@cncda.org.
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!
California New Car Dealers Association Publishes Annual Economic Impact Report
SACRAMENTO, CA, March 29, 2023 – The California New Car Dealers Association published its 2022 Economic Impact Report today at their annual day of advocacy, 2023 Dealer Day. The report is pulled from data collected from surveying the state’s franchised new car dealers and statewide auto sales data from the previous year. The report highlights new car dealers’ contributions in charitable donations, taxes paid, and employment data, among other data trends as they relate to California’s economy.
California’s franchised new car dealers continue to act as civic and business leaders. Findings include that in 2022, new car dealers employed over 136,000 hard-working Californians, with 97% providing access to health insurance for their employees. An average California new car dealership pays $9.14 million in payroll and employs just over 94 people. Findings also show that dealerships are experiencing a technician shortage, with each of the roughly 1,400 California dealerships needing four additional technicians per rooftop.
California’s new car dealers contributed significantly to the state’s economic health, paying $8.46 billion in state sales tax in 2022, an average of $5.84 million per dealership. The average total taxes paid per California dealership in 2022 is $8.96 million, totaling $12.97 billion statewide.
Concerning electric vehicles and infrastructure, new car dealers anticipate spending an average of $235,000 each on EV charging infrastructure in 2023 to help meet the needs of the ever-increasing EV market share, which topped at 17.1% (285,199 vehicles sold) in 2022 but is anticipated to increase significantly in 2023.
Additionally, California’s new car dealers consistently act as local community stewards year after year, giving $62.84 million to charitable and civic organizations in 2022, a 29% increase since 2019.
About CNCDA For 99 years, California New Car Dealers Association has represented the interests of California’s franchised new car dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with automotive products, parts, service, and repair. Our members sold more than 3 million new cars and trucks in 2022 (including 285,199 electric vehicles), and employed more than 136,000 Californians, significantly contributing to our state’s economy. As the nation’s largest state association of franchised new car and truck dealers—with more than 1,200 members—CNCDA provides legal compliance and legislative, regulatory, and legal advocacy.
California New Car Dealers Association Releases Fourth Quarter 2022 Auto Outlook
CA 2022 Year-End Auto Market Recap: Supply Chain Issues, EV Sales Spike, and More… 2023 Outlook Predicts New Vehicle Registrations to Increase
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SACRAMENTO, CA, February 7, 2023 – The California New Car Dealers Association released its fourth quarter 2022 California Auto Outlook report today. The report outlines 2022 vehicle registration data and estimates projected 2023 sales in California’s auto market.
The major takeaways: Supply chain issues persisted throughout the year resulting in vehicle production cutbacks in numbers higher than anticipated. While vehicle registrations were lower than in 2021, they didn’t drop to 2020 pandemic-year levels. The fourth quarter was a bright spot in 2022, seeing a 13.6 percent increase in new light vehicle registrations versus the same period in 2021.
Predictions for 2023 include increased new vehicle registrations to 5.5 percent, approaching 1.76 million. Additionally, due to pent-up demand and low vehicle inventory availability since the pandemic, an estimated 43 percent of sales have been delayed. This along with transaction prices lowering to match supply levels should result in increased registrations for 2023. However, inflation, lingering supply chain issues, and increasing interest rates are expected to tamper these numbers.
A positive in California’s 2022 new vehicle market: sales of electric vehicles, with an estimated increase in market share of 17.1 percent. While vehicle pricing was a major concern in 2022, sales of pure EVs increased by over 50 percent from 2021. California is clearly doing its part to increase EV sales.
Notably, the hybrid market share also continues to steadily grow, despite overall declining sales.
Finally, while Tesla had the top two selling vehicles last year, Toyota retained its crown as the market share leader for vehicle brands in the Golden State.
Year-to-date, new vehicle sales in California dipped further than nationwide numbers, at 10.2 percent. Comparatively, nationwide sales dropped 7.9 percent in 2022.
Year over year, luxury & sports cars and the luxury car market shares increased by 3 percent, taking these points from the small car market in California. Overall, for 2022, the California hybrid/ EV market share held at 31.1 percent.
“With ZEV product announcements every day, we’re seeing the latest and greatest in technology and innovation in new car makes and models by the major automakers. As dealers, we are eagerly waiting to receive these cars and get them into the hands of our longstanding customers. California drivers want these cars now,” said California New Car Dealers Association Chairman, Tony Toohey, Owner of Auburn Toyota.
“Dealers know the hybrid/ EV demand in California is increasing and we are ready to help our manufacturers roll out these vehicles to meet the consumers’ needs,” said Toohey.
Brand Market Share
Toyota remained at the top of California’s market share in 2022 at 17.3 percent, followed by Tesla at 11.2 percent, Ford at 8.4 percent, Honda at 7.9 percent, and Chevrolet at 6.8 percent.
Interestingly, Californian’s appetite for Tesla vehicles is much larger than the nationwide average, which accounts for only 3.5 percent of the brand market share. Tesla, Genesis, Cadillac, Mercedes, and Kia saw increased new vehicle registrations in California year over year, while all other brands saw declines. Fleet and Retail Market Share
The California fleet market in 2022 fared better than the retail market, with fleet car sales down only 15.1 percent (compared with retail sales down 16.1 percent). While retail light truck sales were down 9.1 percent, fleet light trucks gained 9.3 percentage points.
Primary Segment Leaders and Model Rankings
Leading luxury car and light truck brands in the Golden State included Tesla, Mercedes, and BMW. Non-luxury car brand leaders were Toyota, Honda, and Nissan in 2022. The leading non-luxury light truck brands were Toyota, Ford, and Chevrolet.
The Tesla Model Y was the top-selling light truck in 2022, with 87,257 registrations (7.6 percent of the market share). Second place: the Toyota RAV4, with 59,794 units sold. The Ford F-Series placed third and was the top-selling full-size pickup truck at 40,232 registrations. The top-selling compact/mid-size pickup truck in California was the Toyota Tacoma, holding 46.2 percent of the share.
The top-selling passenger car model in the state is the Tesla Model 3 with 78,934 registrations, the Toyota Camry came in second with 55,967 registrations (capturing 10.2 percent), followed by the Toyota Corolla at 39,865 registrations.
Regional Variances
The Southern California car market fell 17.1 percent as compared to Northern California dipping 13.9 percent. As with previous quarters, the San Francisco Bay regional market was the most insulated from a decline in sales, falling only 7.2 percent in 2022.
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California Auto Outlook Quarterly is produced for CNCDA by Auto Outlook, Inc., an independent research company specializing in the analysis of statewide and regional automotive markets. When reporting these auto industry trends please acknowledge the Data Source: Experian.
The report provides comprehensive information on the state’s new vehicle market. The report includes annual trends, a two-year perspective, segment watch, the top five models in each segment, brand scoreboards, regional comparisons, and more. The complete report can be accessed on CNCDA’s website at: www.cncda.org
About CNCDA
For 99 years, the California New Car Dealers Association has represented the interests of California’s franchised new car dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with automotive products, parts, services, and repairs. Our members sold more than 2 million new cars and trucks in 2019 and employed more than 140,000 Californians, significantly contributing to our state’s economy. As the nation’s largest state association of franchised new car and truck dealers—with more than 1,200 members—CNCDA provides legal compliance and legislative, regulatory, and legal advocacy.
California New Car Dealers Association Releases Third Quarter Auto Outlook
Contact: Autumn Heacox, Communications and Marketing Director: aheacox@cncda.org, (916) 441-2599
Economic Uncertainty Results in Reduced New Car Sales Statewide Toyota Holds California Market Share Lead as EV Sales Continue to Rise
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Nov. 7, 2022 (SACRAMENTO) – Franchised new car dealers in California are trying to catch up with high demand despite a decline in new car sales in the third quarter of 2022. Click here to view the full report.
The weakened economy, supply chain issues, labor availability, and chip shortages all lead us to predict that new vehicle registrations in 2022 will only hit 1.68 million by the end of the year (lower than we anticipated last quarter).
Year-to-date, new vehicle sales in the United States dropped 13 percent as compared with 2021. Comparatively, California’s decline in sales slipped 16.1 percent when compared to the first nine months of 2021. While Q3 posted a statewide double-digit light vehicle registration decline for the fourth quarter in a row, that streak is expected to end as we reach the end of 2022 and anticipate an increase in these registrations.
Year over year, SUVs (both luxury and non-luxury) have increased market share by three percent, increasing from 48 percent in Q3 2021 to 51 percent in Q3 2022. The estimated electric vehicle (EV) market share hit 15.8 percent. Overall, this year the hybrid/ EV market share is at 29.9 percent.
“As California’s economy remains uncertain, statewide franchised new car dealers are encouraged by the continued strong consumer demand for vehicles of all makes and models,” said California New Car Dealers Association Chairman, John Oh, General Manager, Lexus of Westminster.
“Our dealers are anxiously awaiting an inventory influx of both internal combustion engine and electric vehicles from our manufacturers. We have long-standing relationships with our loyal customers and we’re ready and willing to help get them the vehicles they desire today. We simply need our manufacturers to make and send us more cars,” said Oh.
Brand Market Share
Toyota remains a vital mainstay in California, continuing to capture the largest segment of new car sales market share at 17.4 percent, followed by Tesla, then Ford rounding out the top three brands in California. Both Tesla and Genesis increased new vehicle registrations for Q3, while all other brands saw declines. Hybrids excluding plug-in registrations also rose year-to-date up to 11.2 percent; however, plug-in hybrid registrations declined slightly from last year, only reaching 2.9 percent of registrations so far this year. Segment Market Share
Interestingly, midsize vehicles are performing much better than the overall market only down 13.2 percent while the industry average sits at 21.6 percent lower than last year. Two-row SUVs have been gaining market share in their segment, up 3.3 percent from 2019. Light trucks accounted for 68.3 percent of the California new vehicle market compared to 78.9 percent in the Nation.
Model and Brand Rankings
The Tesla Model Y remains the top-selling light truck in the California market with 61,544 registrations this year. In second place: the Toyota RAV4 with 44,738 units sold. The top-selling passenger car model YTD in the state is the Tesla Model 3 with 56,851 registrations and the Toyota Camry came in second with 40,350 registrations capturing 10.2 percent of the market share. As with last quarter, the state’s top-selling mainstays were impacted by inventory shortages.
Regional Variances
Both Northern and Southern California performed similarly in terms of the percentage of change year to date, with percentage declines of 16.2 and 16.8, respectively. As with last quarter, the San Francisco Bay market was least affected by the decline in sales, but only marginally showing a percentage drop of 13.3 while LA and Orange counties declined by 17.9 percent and San Diego dropped by 14.5 percent.
The California Auto Outlook Third Quarter 2022 Market Report provides comprehensive information on the state’s new vehicle market. The report includes annual trends, two-year perspective, segment watch, including the top five models in each segment, brand scoreboards, regional comparisons, and more. The complete report can be accessed here.
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California Auto Outlook Quarterly is produced for CNCDA by Auto Outlook, Inc., an independent research company specializing in the analysis of statewide and regional automotive markets. When reporting these auto industry trends please acknowledge the Data Source: Experian.
About CNCDA
For more than 95 years, California New Car Dealers Association has represented the interests of California’s franchised new car dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with automotive products, parts, service and repair. Our members sold more than 2 million new cars and trucks in 2019 and employed more than 140,000 Californians, significantly contributing to our state’s economy. As the nation’s largest state association of franchised new car and truck dealers—with more than 1,200 members—CNCDA provides legal compliance and legislative, regulatory, and legal advocacy.
TIME AND ALLY FINANCIAL HONOR DOWNEY DEALER
Tim Hutcherson Wins National Recognition for Community Service and Industry Accomplishments
FOR IMMEDIATE RELEASE
2023 TIME Dealer of the Year, Tim Hutcherson, Downey Nissan, Downey, CA
(New York, NY, October 18, 2022) The nomination of Tim Hutcherson, owner and dealer principal at Downey Nissan in Downey, California, for the 2023 TIME Dealer of the Year award was announced today by TIME.
Hutcherson is one of a select group of 48 dealer nominees from across the country who will be honored at the 106th annual National Automobile Dealers Association (NADA) Show in Dallas, Texas, on January 27, 2023.
The TIME Dealer of the Year award is one of the automobile industry’s most prestigious and highly coveted honors. The award recognizes the nation’s most successful auto dealers who also demonstrate a long-standing commitment to community service. Hutcherson was chosen to represent the California New Car Dealers Association in the national competition – one of only 48 auto dealers nominated for the 54th annual award from more than 16,000 nationwide.
“It all started with the dream of becoming a car dealer,” nominee Hutcherson said. “Along the way I established a core philosophy of respecting employees, participating in the community and being a good leader.”
And that dream was forged during a Michigan winter, when Hutcherson started his career as a porter at a Lincoln-Mercury dealership.
“I swept the garage, organized the lot and washed the cars in the freezing snow, sleet and rain,” he said. “This was one of my three jobs during high school, but I went to work every day with the mindset that I would try my best at whatever task was put in front of me. It was far from a glamorous job, but I was proud to be in the business.“
After earning an associate degree at Schoolcraft College in Livonia, Michigan, in 1976, Hutcherson moved to California and landed a position as a parts driver for Bob Curtis Oldsmobile in Torrance.
“The general manager approached me to be a salesperson,” he said. “From that moment, my dream was to become a car dealer, and I made it my goal to learn as much as possible.”
Hutcherson worked at a few different dealerships in Los Angeles in sales management positions before joining forces with Bill Adkins to revive failing dealerships that Adkins was buying. “I would go into his newly acquired stores that were struggling and establish my business model to turn them around,” he said. “After years of service, I acquired equity in numerous stores with Mr. Adkins.”
By 2008, Hutcherson was awarded an open point by Nissan in Downey. Soon after the store was opened, the recession hit, and Hutcherson wasn’t sure Downey Nissan would survive. “I sold my home and rental property to keep the doors open,” he said.
But his hard work and instincts paid off. Hutcherson’s business began to grow, and he built a new state-of-the-art facility from the ground up just down the street from his original location in“It was the first NREDI 2.0 [Nissan Retail Environment Design Initiative] store in the Western United States,” he said. “We have been the number one Nissan dealer in the Western United States for the last five years and have achieved Nissan’s Global Award for customer service during that time as well.”
Today, Hutcherson also owns Nissan of Tustin in Tustin, California, and his two children, Brittany and Connor, are the next generation to join the family enterprise.
“I think a huge part of my success is my employees,” he said. “From day one, I have wanted to create a space where people are proud and happy to come to work. It has been most rewarding to see the dream of the young man working three jobs come true.”
Hutcherson also believes that a strong commitment to his local community has helped fuel the growth of his business. “If you have the ability to lift someone up, do it,” he said. “A successful car dealership is a pillar in the community, and we give back to the people who support us.”
To that end, he has held blood drives, toy drives, car shows, golf tournaments, Christmas tree giveaways, back-to-school supply drives, clothing drives for homeless veterans, pet adoption events and other events that add to the quality of life in his local area. For the last 13 years, Hutcherson has sponsored the Downey Nissan Scholarship, which is awarded to the student with the highest graduating GPA at Downey High School. Additionally, he has donated multiple cars to the Downey High School Auto Technology program so that students can have a true hands-on learning experience.
For his good works, Hutcherson has received the 2018 Shared Values Award from the Downey Unified Board of Education and the Mayor’s Downey DNA Award in 2018, which recognizes individuals and businesses that exhibit extraordinary leadership and exceptional service to the community. This year, Hutcherson was awarded the Mayors Impact award, the highest award for a citizen of Downey.
Dealers are nominated by the executives of state and metro dealer associations around the country. A panel of faculty members from the Tauber Institute for Global Operations at the University of Michigan will select one finalist from each of the four NADA regions and one national Dealer of the Year. Three finalists will receive $5,000 for their favorite charities and the winner will receive $10,000 to give to charity, donated by Ally.
In its 12th year as exclusive sponsor, Ally also will recognize dealer nominees and their community efforts by contributing $1,000 to each nominee’s 501(c)3 charity of choice. Nominees will be recognized on AllyDealerHeroes.com, which highlights the philanthropic contributions and achievements of TIME Dealer of the Year nominees.
“For over 50 years, TIME has been committed to recognizing the impact of automotive dealers on their communities with the TIME Dealer of the Year award,” said Edward Felsenthal, editor in chief and CEO, TIME. “We are proud to continue the legacy of honoring these works of service with our partners at Ally.”
Doug Timmerman, president of dealer financial services, Ally, said, “Auto dealers across the country who are nominated for this award each year are committed to not only doing it right and leading in a rapidly changing automotive industry but to strengthening their communities through giving back. The TIME Dealer of the Year program celebrates dealers who are the role models of the retail auto industry for their continuous efforts to lift up and support their employees, customers and communities.”
Hutcherson was nominated for the TIME Dealer of the Year award by Brian Maas, president of the California New Car Dealers Association. He and his wife, Carol, have four children among them.
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About TIME TIME is the 99-year-old global media brand that reaches a combined audience of more than 100 million around the world through its iconic magazine and digital platforms. With unparalleled access to the world’s most influential people, the trust of consumers and partners globally, and an unrivaled power to convene, TIME’s mission is to tell the essential stories of the people and ideas that shape and improve the world. Today, TIME’s 360° suite of products and platforms for storytelling also includes the Emmy Award®-winning film and television division TIME Studios, a significantly expanded live events business built on the powerful TIME100 and Person of the Year franchises, an industry-leading web3 division, an award-winning branded content studio, the website-building platform TIME Sites and more.
About Ally Financial Ally Financial Inc. (NYSE: ALLY) is a digital financial services company committed to its promise to “Do It Right” for its consumer, commercial and corporate customers. Ally is composed of an industry-leading independent auto finance and insurance operation, an award-winning digital direct bank (Ally Bank, Member FDIC and Equal Housing Lender, which offers mortgage lending, point-of-sale personal lending, and a variety of deposit and other banking products), a corporate finance business for equity sponsors and middle-market companies, and securities brokerage and investment advisory services. Our brand conviction is that we are all better off with an ally, and our focus is on helping our customers achieve their strongest financial well-being, a notion personalized to what is important to them. For more information, please visit www.ally.com and follow @allyfinancial.
About the NADA Show The annual NADA Show brings together more than 20,000 franchised dealers and their employees, industry leaders, manufacturers and exhibitors to learn about the latest auto industry tools, trends, products and technologies.
About CNCDA For more than 95 years, California New Car Dealers Association has represented the interests of California’s franchised new car dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with automotive products, parts, service and repair. Our members sold more than 2 million new cars and trucks in 2019 and employed more than 140,000 Californians, significantly contributing to our state’s economy. As the nation’s largest state association of franchised new car and truck dealers—with more than 1,200 members—CNCDA provides legal compliance and legislative, regulatory, and legal advocacy.
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.
Sincerely,
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
New Car Dealers All-In for EVs, Urges CARB to Approve Formal Midterm Review for Pending ZEV Mandate
For Immediate Release, 8.24.22
SACRAMENTO, CA – With the California Air Resources Board expected to meet tomorrow and approve a ban on the sale of new gasoline-powered vehicles by 2035, the California New Car Dealers Association reaffirms our commitment for being all-in on electric vehicles.
Franchised new car dealers are committed to working with lawmakers and regulators to increase the supply and adoption of ZEVs. New car dealers will be crucial in educating consumers about what this new technology means for their driving habits and transportation needs.
“CNCDA is officially requesting that the California Air Resources Board incorporate a formal midterm review to evaluate progress on regulations to ensure Californians have continued access to affordable and available electric vehicles,” said Brian Maas, CNCDA President.
As stakeholders work to implement CARB’s ruling, there are important considerations that CNCDA would like addressed, including:
Customer choice and vehicle availability: Despite California leading the nation in ZEV market share, ZEVs still only represent a fraction of the two million new passenger and light-duty vehicles sold annually. We need more ZEVs widely available that meet the needs of consumers.
Affordability: ZEVs are considerably more costly up-front than gas-powered vehicles, and often are prohibitively expensive for low-income consumers. We must address affordability and equity challenges, or many customers will not be able to make the switch to ZEVs.
Infrastructure: We need to expand the availability of convenient, fast charging infrastructure, beyond work sites and single-family dwellings, to encourage consumers to make the switch.
California’s new car dealers are essential to consumer transition to ZEVs and we look forward to working with the California Air Resources Board and vehicle manufacturers to meet the state’s electric vehicle mandate in these new regulations.
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About CNCDA
For more than 95 years, California New Car Dealers Association has represented the interests of California’s franchised new car dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with automotive products, parts, service and repair. Our members sold more than 2 million new cars and trucks in 2019 and employed more than 140,000 Californians, significantly contributing to our state’s economy. As the nation’s largest state association of franchised new car and truck dealers—with more than 1,200 members—CNCDA provides legal compliance and legislative, regulatory, and legal advocacy.
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
Sincerely,
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.
