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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

DOWNLOAD YOUR #REJECTSB986 TOOLKIT HERE.

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.

  1. 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. 
  2. 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

California New Car Dealers Association Releases Second Quarter Auto Outlook

Contact: Autumn Heacox, Communications and Marketing Director: aheacox@cncda.org

Economic Turmoil Allows Car Dealers to Replenish Supply, Fulfill Needs
Californian’s Desire for Electric Vehicles Drives Demand

SACRAMENTO, CA – As expected the high pent-up demand for both new and used vehicles is holding strong and will provide a boost in California’s vehicle market despite a weakening economy.   

While the current economic impact of low unemployment and high inflation is felt across nearly every industry in the nation, the demand for both new and used vehicles remains strong in the State. While lower economic growth and weakening consumer affordability is hitting most industries hard, new vehicles registrations in California are expected to only soften a bit in the coming months as we expect about 1.8 million new vehicles to be sold in the state during 2022, down slightly from 2021 but better than the 1.64 million in 2020.

Although vehicle sales in the United States dropped 18.3 percent, California’s decline in sales only fell 17.9 percent for 2022. Interestingly, in California, domestic car registrations only fell 6.3 percent as compared to an 11 percent decline nationwide. Similarly, California’s light truck registrations also fell by less than U.S. numbers (14.6 percent vs 15.9 percent) while increasing in market share by 2.7 points year-to- date.

“As the vehicle market continues to navigate high demand, chip shortages, supply chain issues and production problems, the current economy could allow dealerships to help replenish their inventories as manufacturing of new vehicles is able to catch-up with demand, California New Car Dealers Association Chairman, John Oh, General Manager of Lexus of Westminster. “We are thankful California isn’t being hit as deeply as other regions in the nation across all vehicle registration sectors. Additionally, we are seeing some increased interest in the electric vehicle market that are very promising.”

Brand Market Share

While most brand registrations saw declines, both Tesla and Genesis were able to capture the windfall, indicating that California consumers are increasingly interested in purchasing alternative powered vehicles. Electric vehicle sales reached the highest numbers reported in the last five years, hitting 15.1 percent year-to-date—a sharp increase from last year’s 9.5% total.  Tesla registrations increased by 82.2 percent and Genesis saw an increase of 53 percent. Kia, Mercedes, BMW, Ford, and Subaru saw less than 15 percent declines. Toyota continues to lead both the non-luxury car and light truck brand market share by 34.5% and 21.1%, respectively.

Segment Market Share

Larger, family-friendly vehicles continue their reign as those most sought by consumers, bringing their market share to 35 percent, down one percent from last year. Small cars saw a larger decline, hitting 11 percent, down from 16 percent last year. Luxury SUVs saw a two percent increase from last year, making up 17 percent of sales, with non-luxury mid and large sized cars remaining relatively stagnant at 9 percent, and the luxury and sports car segment increasing to 11 percent.  

Model and Brand Rankings

The Tesla Model Y reigns as the top selling car in the California market with 42,320 registrations so far this year. In second place: the Tesla Model 3 with 38,993 units sold, further indicating the statewide demand for EVs. New registrations of the Honda Civic, Toyota Camry and Corolla, the state’s top-selling mainstays, were impacted by inventory shortages but still remained at the top of their segment categories.

Regional Variances

The San Francisco Bay market seems to be the least affected by the decline in sales, posing the smallest statewide percentage drop at 12.9 percent. Overall statewide sales in the first two quarters of 2022 dropped 16.4 percent lower than in 2021. Northern California was slightly more insulated with a 15.9 percent drop to Southern California’s 16.6 percent.

The California Auto Outlook Second 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 Q2 2022 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. 

California New Car Dealers Association Releases First Quarter Auto Outlook

California New Car Dealers Assn. releases “California Auto Outlook” for first quarter of 2022, findings include that total new vehicle registrations dropped 13.8% compared to first quarter of 2021 — 493,160 total registrations in 2021 compared to 425,216 in 2022; also reports “electric vehicles, hybrids and plug-in hybrids have captured a record-high 28.3% market share in California – up 5% from last year” with the Tesla Model Y being the top seller with 21,812 registrations.
Contact: Emma Manoukian, emanoukian@bcfpublicaffairs.com.

The full Q1 California Auto Outlook, containing a detailed breakdown of auto sales, including brand comparisons, segment totals, and more, can be found by clicking here.

NEW REPORT: California New Car Dealers Generated $200 Billion In Economic Activity and More Than 137,000 Jobs In 2021

The California New Car Dealers Association Releases 2021 Economic Impact Report

Sacramento, CA – The California New Car Dealers Association (CNCDA) released it’s 2021 Economic Impact Report, highlighting the vitality of dealers to California’s economy. In total, the report finds that new car dealers supported more than 137,000 jobs and generated nearly $200 billion in economic activity.

In a year marred by a lingering global pandemic and widespread supply chain issues, California’s new car dealers played an important role in stimulating economic growth, providing good-paying careers, generating tax revenue, supporting charitable organizations, and investing in electric vehicle charging infrastructure.

“The economic impact of new car dealers cannot be overstated,” said CNCDA President Brian Maas. “New car dealers are local businesses that participate actively in their communities. Not only do they provide a wide array of career opportunities and funding for local programs through crucial local tax revenue, but they are also the businesses sponsoring Little League teams, school fundraisers, and contributing to local charities.”

Employment and Payroll

Last year, California new car dealers employed 137,616 employees with a total payroll of $10.23 billion. Of those employed, over 95% were full-time, career positions. On top of that, more than 97% of dealers provide health insurance benefits for their employees. Beyond their own doors, new car dealers support other California businesses spending a total of $2.97 billion on products and services.

Taxes

New car dealers have been longstanding tax generators for the state and local economies. Last year, new car dealers paid a total of $8.36 billion in state sales tax alone – $5.8 million per dealership on average – making up an estimated 16% of total state sales tax collected in California. In all, dealers contributed $11.9 billion into California communities throughout state and local tax revenue, an average of $8.26 million per dealership.

Charitable Giving

In 2021, California new car dealers contributed over $54 million in donations to charitable and civic organizations. Contributions supported breakthrough medical research at Shriners Hospitals, youth organizations like the Boys & Girls Clubs, and even funded the scoreboards for local children’s sports leagues.

Electric Vehicle Charging Infrastructure

California’s new car dealers are all-in on electric vehicles, and they are committed to supporting electrification efforts across the state. Dealers doubled down on their commitment by investing over $35 million in EV charging in 2021, with that number estimated to quadruple in 2022.

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California New Car Dealers Association Releases Fourth Quarter Auto Outlook

Supply Restrictions Stall Automotive Market Recovery

Electric Vehicles and Hybrids Continue to Capture Market Share Despite Slowed Sales

SACRAMENTO, CA – After a year of slowed sales as a direct result of economic crisis brought on by the COVID-19 pandemic, 2021 showed extremely positive signs of improvement with automotive sales rebounding over the first three quarters of the year. By the end of last year, pre-pandemic levels of demand had returned; supply had not.

Supply bottlenecks attributed to logistics challenges and a global microchip shortage prevented auto sales from reaching the 2-million-unit mark, with a final year-end total of 1.86 units sold. While still a strong improvement over 2020 numbers, sales were still more than a quarter-of-a-million units fewer than 2019 numbers. In a market normally limited by consumer demand, supply limitations have placed an unprecedented squeeze on both dealers and consumers.

“The ongoing microchip shortage has created an entirely new set of challenges for car dealerships and our customers. The struggle to provide the vehicles our customers want has brought fierce competition between dealers,” said California New Car Dealers Association Chairman, John Oh, of Lexus of Westminster. “Despite this challenge, consumers can take advantage of these competitive times. California’s network of 1,400 new car dealers allows for customers willing to wait a little longer, open to expanding their model selection, or looking beyond their closest dealerships to still find the vehicles they desire.”

Major Trends at a Glance

Despite trends across the industry, electric vehicles continued a strong year, reaching a nearly 10% market share, up 3.3% over 2020. Moreover, as automakers continue to offer new, alternative drivetrains to their lineups, sales of hybrid and plug-in hybrids have similarly increased their market shares, with combined alternative drive trains making up 23.4% of all auto sales in 2021.

In addition to EVs and hybrids, SUVs and trucks also continued their market dominance, increasing a collective 4% in market share, making up 64% of retail sales.

Regardless of current inventory issues, consumer demand for new vehicles remains high and automakers have expressed their intent to close the gap in the market as quickly as possible. With a restoration of supply expected some time this year, and demand trends remaining high, 2022 estimates are still on track to near 2 million units.

The full Q4 California Auto Outlook, containing a detailed breakdown of auto sales, including brand comparisons, segment totals, and more, can be found by clicking here.

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California Auto Outlook, 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, CNCDA 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 nearly 1,300 members—CNCDA serves its members by providing legal compliance and legislative, regulatory, and legal advocacy. 

California dealer association awards more than $100K in scholarships

The California New Car Dealers Association Scholarship Foundation is providing more than $100,000 to students seeking out automotive technology careers through its annual CAR CAREERS Scholarship Program; the winners of which it announced this week.

The dealer association’s scholarship program selected honorees after evaluating applicants’ academic performances, career interests and industry experience.

Read full article

California New Car Dealers Association Releases Second Quarter Auto Outlook

Improvements Continue in California’s New Vehicle Market, Expected to Approach 1.9 Million in 2021

Sacramento, CA – This year continues to show hopeful signs of recovery in California’s vehicle market. While still not reaching pre-pandemic sales levels, significant signs of improvement over last year persist. The demand for vehicles is making a comeback and we expect California’s new and used vehicle market to continue to rebound this year.

COVID’s impact was felt across nearly every industry in the nation and vehicle sales were no different. While 2020 vehicle sales dropped 14.4 percent in the United States, California was hit especially hard, with sales falling 21.7 percent last year. Despite this drastic decline, the market was still 58 percent higher than the lowest point in 2009 during the Great Recession. According to the California Auto Outlook for the Second Quarter of 2021, sales are expected to increase 15 percent from 2020, approaching 1.9 million units. Absent the ongoing global microchip shortage, units likely would have exceeded 2 million, this year.

“Although current trends are a promising sign for California’s vehicle market, there remain a number of uncertainties for future economic trends. While consumers continue to engage more confidently with dealers, ongoing unemployment, inventory, and looming potential restrictions require businesses to approach these optimistic signs with a sustained sense of pragmatism,” said California New Car Dealers Association Chairperson, Mark Normandin, owner of Normandin Chrysler Jeep Dodge Ram FIAT. “With continued increases in demand, we remain confident in our abilities to continue to provide the same high level of quality goods and services Californians have come to expect from our industry. The safety, health, and wellbeing of our customers and employees will continue to be the top priority for California’s new car dealers.”

Alternative Powertrains

The electric and hybrid vehicle market continued its growth in California through the first half of the year. New hybrid vehicle sales saw a three percent increase to their share, making up 10 percent of the market, with new electric vehicle sales increasing one and a half percent to 7.8 percent. Plug-in hybrids doubled their share to 3.2 percent. In the first six months of the year, the market share for these vehicles increased significantly from 15 percent in 2020 to 21 percent through June of 2021.

New and Used Sales

Breaking a trend seen since early last year, in the first six months of 2021, gains in the new vehicle market outpaced the used market by more than double. Although used vehicle registrations increased by 16 percent in the first half of the year, new vehicle registrations increased by 32.2 percent. While the ongoing semiconductor shortage has provided a boost to used vehicle sales, there is a limit on how high used vehicle prices can go. Consumers are incentivized to sell their vehicles due to high resale values, but equally as high replacement costs act as a counterbalance to potential trade-ins.

Model and Brand Rankings

In the first half of 2021, the Toyota Camry overtook the Honda Civic as the top-selling car in California. The Civic remains a close second, with the Toyota RAV4 an equally as close third, retaining its spot as the best-selling compact SUV with nearly 23 percent of the market segment.

Regional Variances

Markets throughout the state marked significant increases in the first two quarters of 2021, with a 35.1 percent increase, statewide. Southern California led very slightly with 35.3 percent to Northern California’s 34.9 percent. More specifically for selected markets, San Diego County saw a raise in 35.2 percent, LA and Orange Counties an increase of 32.9 percent, and the Bay Area an increase of 29.7 percent.

The California Auto Outlook Second Quarter 2021 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 by clicking here, or by visiting CNCDA’s website at: www.cncda.org.

California Auto Outlook, 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

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About CNCDA

For more than 95 years, CNCDA 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 1,100 members—CNCDA serves its members by providing legal compliance and legislative, regulatory, and legal advocacy.

Improvements Continue in California’s New Vehicle Market, Expected to Approach 1.8 Million in 2021

SACRAMENTO, CA – 2021 is already showing signs of improvement for California’s vehicle market. Despite indications that recovery has begun, consumers are still facing financial challenges and uncertainties during the global pandemic. However, the demand for vehicles is making a comeback and we expect California’s new and used vehicle market to continue to rebound this year. 

As a result of the Coronavirus, vehicle sales, both new and used, took a tremendous hit during the early months of 2020. Even with promising days ahead for the industry, California vehicle sales fell 21.7 percent in 2020, compared to U.S. vehicle sales which saw a 14.4 percent decline overall. Despite this drastic decline, the market was still 58 percent higher than the lowest point in 2009 during the Great Recession. According to the California Auto Outlook Fourth Quarter 2020, anticipated new vehicle sales are projected to increase by about 8 percent and approach 1.8 million in 2021.  

“The welcome trend of increased consumer demand is a great sign of recovery for the vehicle market. 2020 was a tough year for everyone but we remain optimistic that better days are ahead. However, there are still many uncertainties with the future of the pandemic, consumer confidence, unemployment, and available inventory so with that optimism also comes a healthy dose of realism,” said California New Car Dealers Association Chairperson, Mark Normandin, owner of Normandin Chrysler Jeep Dodge Ram FIAT. “As the demand increases and the trend holds steady for larger, family friendly vehicles, despite the pandemic, I remain confident in the great products and valuable services we continue to offer consumers to fit their unique requirements. We will weather this storm and come out of this stronger, and more ready and eager to serve the transportation needs of nearly 40 million Californians, while keeping our customers and employees safe and healthy.”

New and Used Sales

Regardless of COVID-19 and its impacts on the economy, used vehicle sales continue to perform better than new vehicles sales. Used vehicle sales experienced an 8.5 percent decline from 2019 to 2020 compared to a 21.7 percent decline for new vehicle sales in the same timeframe. For a national comparison, U.S. new vehicle sales dropped 14.4 percent. With the used vehicle market expected to remain strong for a majority of 2021, we can expect the outperformance trend to continue.  

Segment Market Share

Larger, more family-friendly vehicles continue to be in high demand by consumers, with non-luxury SUV’s leading the 2020 segment market share in California, making up 33 percent of sales, an increase of 3 percent from 2019. Pickups and vans made up 18 percent of the market, an increase of 1 percent from the previous year and small cars falling 2 percent from 2019, from 18 percent to 16 percent.  

Alternative Powertrains

The electric and hybrid vehicle market continued to show growth in 2020, with new hybrid vehicle sales making up 6.9 percent of the market, new electric vehicle sales ended the year at 6.2 percent, and plug-in hybrid vehicles making up 1.9 percent of the market. The market share for these vehicles increased nearly 2 percentage points from 2019, from 13.2 percent to 15 percent through the fourth quarter of 2020.

Model and Brand Rankings

During the fourth quarter of 2020, the Honda Civic held on to its top spot as California’s best-selling model in the new vehicle market. The Toyota RAV4 came in as a close second to the Civic and held on to the number one spot for the best-selling compact SUV with nearly 24 percent of the market segment, and the best-selling brand in six-year-old or newer used vehicle market, with more than 13 percent market share.

Regional Variances

While regional variances between Northern California and Southern California continue to show similarities, Southern California declines remain less severe, particularly in the San Diego region where sales were down less than 14 percent overall in 2020. The San Francisco Bay Area saw an overall decline of nearly 24 percent and LA and Orange Counties nearly 20 percent. Northern California year over year sales were down 17.8 percent and Southern California sales were down 16.3 percent.

The California Auto Outlook Fourth Quarter 2020 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 on CNCDA’s website at: www.cncda.org

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California Auto Outlook, 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, CNCDA 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 1,100 members—CNCDA serves its members by providing legal compliance and legislative, regulatory and legal advocacy. 

Members: Support CNCDA’s IE PAC and help us raise funds to DIRECTLY support dealer-friendly candidates today!

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