A Congressional committee plans to launch an investigation into a new rule to protect car buyers proposed by the Federal Trade Commission (FTC) on the grounds that it could be harmful to consumers and small businesses.
The rule could actually harm car buyers by “making car purchases more difficult and inhibiting innovation in the industry,” the House Oversight Committee head James Comer alleges, as reported by Reuters.
The FTC proposed the new rule in June to reduce the hidden fees and other possibly dubious add-ons dealerships use to drive the actual selling price of vehicles higher. Among the add-ons the FTC noted are nitrogen-filled tires with the same nitrogen content as Earth’s ordinary atmosphere, as well as fees that are not needed to actually buy a vehicle.
The Federal Trade Commission pointed out many purchases are rife with “tricks and traps” that “leave consumers saddled with thousands of dollars in unwanted junk charges.” The new regulations were supported by 17 Democratic members of Congress claiming “unfair and deceptive practices involving motor vehicle dealers” should be addressed for consumer protection.
The rule would require dealerships to provide details of all add-on fees, including clear indications of which fees are optional, along with an “offering price” showing the bare-bones price minus optional add-ons. The FTC says the rule would also “help ensure a level playing field for honest dealers.”
The rule would be “premature, legally deficient, factually inaccurate, and exceedingly confusing for consumers and dealers” according to the National Automobile Dealers Association. The head of the new investigating House committee, Republican congressman James Comer, asserts the new regulation would make “car purchases more difficult and [inhibit] innovation in the industry.”
Several objections to the rule include an alleged failure by the FTC to provide correct advanced notice of its regulatory plans, along with claims that the agency used inadequate or faulty information as the basis for its regulation.
GM and several other major manufacturers made their opposition known through the Alliance for Automotive Innovation, which called out “micromanagement of the sales experience.”
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Comments
The one game we ran into was dealers ordering dealer installed options like floor liners, and other add on items. One was black lug nuts for $350.
Since they are on the sticker they refuse remove them. They often add $1300 to $1500 to the sticker.
We walked away to another dealer, We used our GM rewards to buy the floor liner less than half the sticker price,
Which is the way the game is supposed to be played. You aren’t obligated to stick to one dealership.
Isn’t this also outside the mandate of the FTC? I know the FCC just got busted for rolling out a complete takeover of the internet, doesn’t surprise me that this administration would try a takeover of other aspects of the economy. This kind of regulation would take a formal act of congress, and would debatably be unconstitutional even then.
GMA needs to get their butts outta politics. They’re laughingly pulling for one side here.
The one I remember is the VIN etched glass that insurance companies seem to not be phased by?
What irks me is charging for the nitrogen in the tires when many if not most cars come that way from the factory.
Equipment add-ons became a big thing when inventories were low, but I don’t see that continuing at most dealerships.
What IS a nuisance are the “processing fees”, which should be banned. And it has to happen at a national level.
The obnoxious salespeople who won’t give you a price & adamant about you leaving the dealership. I do my homework before I shop. I know exactly what options, color, & payment. I shop several dealerships for the best deal.
Leave it to the NADA to cry about it. Like don’t mess with our cash cow.
Write to your congressman and tell him exactly what you post. I will write to mine. The House investigation claims are specious and only protect the companies and the dealers.
The Republicans once again out to protect big business that are stealing from consumers! Pathetic!!!
What a shame that GM let’s their dealers screw over their customers.
I laugh when Mary Blunder say ‘we earn customers for life’ then let’s the dealers refuse to honor the GM discounts. I really know how little the GM employee discount is when I walked away from gm and got a better family discount on my new f-250.
the problem is by law GM and other OEMS cant control their dealers.
GM is no different from any other manufacturer. As “dw” points out, there is no control from the OEMs. There are – to my knowledge – no more factory stores even for commercial vehicles. Factory operated stores would be seen as vertical marketing, and that is a no-no under present laws.
One thing not addressed by anyone is the massive dealer chains that will come into an area and buy up many of the dealerships, and so wherever you go, it is the same games played. In my area (NE Tennessee) it is now at the point that the folks I have talked with say the local dealers act like they are doing you a favor to even talk to you. That is a big error in this day of the internet where you can research what is out there, see the pricing, and even get a trade evaluated. I have purchased my last two cars from dealers 170 and 235 miles away respectively, and each came in between two and four grand less out the door than the local pricing.
Does this mean I dont have to get the paint sealant, interior protection and nitro filled tire package for $2500 again? We all know its a bunch of BS and nothing but a money maker.
Of course it’s a money-maker. And it is also something that you or any other customer has control over. It is with the word, “no”.
“GM and several other major manufacturers made their opposition known” Well GM when you actively support liberals that is what you get. That is why when I was an employee I never contributed a dime to the GM PAC.
As a retired Fleet Manager, Used Car Manager, Truck Manager for over 37 years I will say a few things that may help anybody. If any dealer attempts to force any consumer to purchase ANYTHING over the Factory Window Sticker (also known as the Monroney Sticker) it is 100% ILLEGAL. If the dealer claims they added anything demand they remove it or simply LEAVE! Notify that Manufacturer. The dealer is required by their contract with that manufacturer to obey the LAWS. ALL Dealerships have a “built-in by the Factory profit margin” that based on the competition in the market place. Most states also have a “cap” on what a dealer can charge for title fees etc. ALL states have a pre-set license plate and cost of title fee. Check with your MVD/BMV and ask what those state costs are. If the state says $300 for plates and $25 for a title, then that is the cost; can the dealer add a “fee” for doing the processing ? Yes – BUT NOT A ridiculous amount. That fee is negotiable. The state plate and title costs are not negotiable. Can a dealer add a mark up based on availability, yes but nobody has to make any purchase at any time. Go somewhere else. BTW purchasing services like member clubs, credit unions, auto clubs ADD a fee to do your shopping for you. Do it yourself. Their self proclaimed “buying power” is bunk. Go online, shop around for a new vehicle. Dealers have to pay finance charges to the bank for new car inventory. They want every vehicle gone before 90 days! Paint sealant; do it yourself. Ceramic coating is the exact same thing as paint sealant but with more hype. Floor mats, go to the auto parts store or get them OR from the factory shown only the Factory Window Sticker. Also it is Federal Law that ALL new vehicles display an attached Factory Window Sticker. Dealerships can have their license revoked immediately if this Law is broken. There are set laws in place, the House can get other IMPORTANT things done like stopping wasteful spending, closing the borders and even a REAL impeachment not a fake one.
Current inventory manager here, 100% agree.
The only thing that needs to be fixed (because dealers by law do not have to remove it) is the state-regulated documentary fee. In my state (MI) and some others, it’s capped at a negligible amount, but in many others it is not capped and I’ve heard of them eclipsing the $1k mark. Those states’ legislators need to act, everything else can be set by the marketplace. If one dealer attempts to add items that the market doesn’t support, they’ll lose business, plain and simple.
The list of unsubstantiated charges can be endless. The nitrogen in the tires has always made me laugh. If it is so great, how do you evacuate all the air out? (B.S.) Double undercoat, different insurances, fabric protector, paint treatments, all those are as phony as the service lane things like fluid flushes, and virtually anything not specifically in the vehicle’s maintenance schedule. The folks in the service lane are supposed to be Service Advisors, not Service Salesmen! The best thing to do is research before you buy and question any kind of add on. If you find a dealer that passes all the tests, buy from them and keep buying from them, even if their price for the vehicle is a little higher. If they are honest, they are worth it. If they tout that they donate to the Republican Party, RUN, don’t walk, out of there. A Republican never gave a decent deal to anyone, including their own family.
A huge generalization there about Republicans. But, it’s not unexpected.
That’s from experience.
My favorite dealer add on was a 2007 Corvette at Randy Marion Chevrolet. Touch of Class $700.00, when I asked the salesman what that was he replied ‘ A touch of class, that’s what it is’. Needless to say that killed that sale.
I bought my Corvette from Randy Marion and am completely happy with it. No add-ons, no BS. Just a smooth easy deal.
This add- on crap has been in dealer world for decades and will never change. Put simply, when you negotiate a deal, request an “out the door price” before agreeing to purchasing the vehicle. That way you will know what is actually due from you on delivery. If you don’t like the final price, walk and buy from someone else even if it’s not from the same manufacturer. There are dealers out there who advertise one price selling. Try them even if it’s not a GM vehicle. Save yourself some grief. and probably some money.
I agree. Manufacturer or brand loyalty is an old fashioned concept. I am an old codger from a family that bought a heck of a lot of GM and quite a bit of MoPar over the years. No more. We buy what test-drives well and has a dealer with a good service department and a nonsense-free purchasing experience.
There is not a single Chevrolet or Buick or Ford that bears any resemblance to that first car you bought in high school. Go on. Test drive something else. Ask folks how they like their [whatever make you do NOT own presently]. You might be surprised.
Nada and most dealerships (new and preowned) are run by crooks, talking above the average ‘Joe’s’ head just to make a sale. Sale personnel will tell you whatever it takes to make a sale and i have found most sales people really don’t have a clue about what they are peddling once it gets passed the nitrogen in the tires. I personally use 85% nitrogen in my tires. Wonder why many people hate to car shop.
Welcome to Big Government Principle 101: Micromanagement
This is nothing new. After WWII, new cars were scarce and the pent up demand was high. A new car was worth up to 50% more than the MSRP but the FTC rules prevented dealers from charging above it. So began the process of markups for unwanted fees and accessories and undervalued trade in allowances.
Anything that helps to keep stealerships honest might be good.
Perhaps today’s most serious harm to the customer is caused by the customer him/her self. Ask most any dealer and they will tell you that customers don’t want to know the price, they want to know the monthly payment. that is a foolish and dangerous way to buy a car (or anything else). Of course you need to be able to afford the payment, but first figure out what you are paying for the car. Shop for financing somewhere besides the dealership. Sure, let the dealership tell you what they can do for financing but don’t rely simply on that.
There is a local dealer around here (happens to be authorized GM, but not GM’s fault) who says he can get you the lowest payments around. How does he do it? He offers 10 year financing, which means the customer owes more than the car is worth from the moment he signs the papers for about 9 years thereafter. The customer is paying probably near double for the car when finance charges are added in.