The Federal Trade Commission has been forced to put its Combating Auto Retail Scams, or CARS, rule relating to dealer fees on indefinite hold by the Fifth Circuit Court of Appeals following an appeal by two major auto dealers’ associations.
The CARS rule, which was designed to cut down on allegedly unnecessary and excessive dealer fees added to the price of vehicles, was originally scheduled to go into effect on July 30th, 2024 but is now paused until the legal challenge has been resolved, Motor 1 reports.
The rule would crack down on last-minute fees, hidden fees, and other “junk” dealer fees that often add substantially and, the FTC argues, unethically to the cost of purchasing a car in the U.S. Violating the rule, which the FTC says “does not impose substantial costs, if any” on honest dealerships who are above-board with fees and follow the law, could potentially cost car lots $50,120 for each violation.
The National Automobile Dealers Association or NADA opposes the CARS rule and wants the current situation of largely unregulated auto dealer fees to continue. NADA petitioned the Fifth Circuit Court of Appeals to block the rule based on the argument that the FTC simply lacks the authority to impose the CARS rule’s limitations on junk fees. The Texas Automobile Dealers Association joined in the petition.
The petition was submitted under “expedited consideration,” meaning the Firth Circuit will probably provide a decision before the end of 2024. The FTC plans to fight the challenge and says it may still be able to begin applying the CARS rule this year if the Court reaches a decision in the Commission’s favor quickly.
The FTC initially proposed the rule in June 2022, when it published a Notice of Proposed Rulemaking requesting comments from the public. Among the provisions is one stating all fees and costs must be clearly disclosed to a customer up front. The FTC’s initial statement said the CARS rule seeks “to eliminate the tricks and traps that make it hard or impossible to comparison shop or leave consumers saddled with thousands of dollars in unwanted junk charges.”
The current Fifth Circuit petition is not the first opposition to the Combating Auto Retail Scams rule. The House Oversight Committee headed by James Comer announced in November 2023 it would start an investigation, with Comer alleging, among other arguments, that limiting add-on dealer fees could have the result of “inhibiting innovation in the industry.”
Subscribe to GM Authority for more GM-related politics news and around-the-clock General Motors news coverage.
Comments
Why do they have to worry about an idiotic legal challenge?
The Dealers associations want to be able to continue to charge junk fees? Didn’t see that one coming.
just like banks
I just bought a 2024 Stingray at a few dollars over MSRP. The dealer, however, required that I take the special “Dealer-Installed Package” as part of the deal. “Shocked” to learn that the $999 car cover was the cheapest, flimsiest, unlined cover imaginable, and it was dirty and wet to boot; dealer cost couldn’t have exceeded $100. The other items included in the #3,000 were wildly overpriced, but not to the same extent. Upon delivery, when I was first shown the actual cover and other items, I indicated I would not close, or the price of the “Package” would have to be appropriate. After moving this to the dealership General Manager, they agreed to make an adjustment. The salesman and sales manager no longer view me as their friend. Sad outcome, and they lost a customer forever.
This is why many “dealerships” are referred to as “Stealerships”. An honest dealer who cares for his/her customers and treats them right will get repeat business. The others, not so much. I never go a dealer except for free warranty work or if they are running a low price special for service work.
Applying the “Stealership” term with a broad brush, can also be used, when considering paying excessive costs for repairs in the After Market (AM) or being “AMbushed©”.
While you alluded that some dealerships do play fair, the remark still stings for all who are honest, no matter where they work.
BTW, be very careful what you wish for in any service facility. Build a good working relationship with any AM or dealership that you trust.
If prices seem out of touch, question them. If not comfortable, move on or get a second opinion before committing. Not all businesses are equal in sales, parts or service, when it comes to ethics, business practices, honesty and integrity.
It’s even not the type of entity, it’s 99% down to the individual business owner, or franchisee business practices applied by managers. It’s people who do this, byt the forces of human nature and for some, extreme greed.
If you think you trust the shop you use, next time check out the price that you pay for “OE” parts. Many will purchase OE parts from Worldpac, Rockauto, or other entities “flogging” OE parts at notable discounts to them.
Hourly rates may also initially appear, or believe to be lower in some AM shops, but many simply enter typically “units of time” on an R.O. to “disguise” the actual hourly rates.
FWIW, a “unit” on a repair order can be anything someone desires, while “units of time” are in 1/10ths of an hour, with 1/10th being 6 minutes. Depending on the entity, crossing the line into the next 1/10th may be rounded up or down.
BTW, if you visit a shop and on every repair there’s an extra hour added to remove a broken fastener or some added unforeseen labour operation, question it.
Require that if encountering any difficulties during a scheduled repair, that the service writer contact you before going ahead and provide photographic evidence of the condition pre- and post repair.
The facility must retain the broken part for your inspection, until you approve of disposal, or take it with you if retail. (warranty excepted, since it is retained for manufacturer representative inspection). It’s the law.
The MSRP on parts for vehicles at GM dealerships is pretty stable and fair, unlike the distasteful practice that some manufacturer sales departments use when selling niche, first year or exclusive models for close to double the MSRP. Only fools subscribe to “I must have the first one, at any cost”.
FWIW, the next time you purchase parts during a repair at an AM facility, you might want to review the price that you pay there, versus how much you would pay as a retail customer at a GM dealership. Of course, that is if the proper part number is listed!
Let’s use a fictious example. Real labour hours are higher by a significant margin today.
Scenario 1. A dealership charges $150 hr x 5 hours as per the Labour Time Guide for a repair and $220 for parts etc, taxes included, for $750 labour plus $220 = $970 total.
Scenario 2. An AM facility charges $120 hr, but estimates 7 hours to do the same repair. $120 x 7 = $840. Parts that cost $220 retail at the dealership, were marked up 1.5X using matrix pricing = $330. Total repair cost = $1170!
The AM shop service writer sympathizes and agrees when the customer complains about the expensive price of the part and raises their hands in the air, “We used the OE part, that’s all I can say, as we’re at their mercy”. This is total BS.
Maybe ask your favourite shop what their markup matrix is on parts. Good luck on finding out the truth!
What he/she conveniently doesn’t mention, is the in-house price gouging that is the norm and included in their Cost Of Doing Business (CODB) model.
The customer often pays significantly more for the same repair than they might have at a “stealership”.
It is typical for AM shops to discuss internally and also air with pride on professional web sites that consumers can’t access, “matrix” pricing of parts used on customer vehicles that results in prices unheard of at a dealership.
Just as manufacturers provide marketing training, AM entities can attend marketing seminars and learn how to maximize profit while minimizing CODB outlay.
OE parts purchased at wholesale from a dealer, typically can have a mark-up above MSRP of 1.5X to 2.5X the retail cost. Be careful out there!
Oh, by the way if caught in the act and “looked into”, it will be blamed on a clerical error at the supplier end. All the angles are well-covered with excuses.
The business owner, just like the dealership staff might smile and call you by your first name, ask how family is etc while “smiling all the way to the bank”.
Typically, paying the AM technician a significantly lower hourly rate is the norm, except for higher end speciality repair facilities, or those who actually invest in and treat employees fairly and provide training.
Realizing that good employees anywhere are an asset and not a CODB, is something that is become more rare daily.
This the REAL world. It happens every single day.
I’ve worked in the trade for 55 years, with the first 12 being in the AM. There’s “the good, the bad and the ugly” all over in any realm of the trade, whether in sales, parts or service.
It’s pretty much the same out there everywhere in every any consumer retail and trade service-based establishment, for anything that we purchase. Buyer beware.
FWIW, grocery chains made their biggest profits ever on the backs of consumers who were often temporarily laid off, during COVID. Price gouging was proven.
Apple just got fined $14M CAD for de-rating iPhone batteries to encourage phone replacement! Where does it all end?
Gas prices jumping at “event” times, stat holidays, pay day etc. We are all at the mercy of the fuel company and retailer.
The reality is that lying, cheating and overpricing extends to most every aspect of our daily dealings with purchases and services of any kind in any place.
With vehicle service, it is often perceived to be the same, but the fact is that frequently technician ignorance and incompetence through a lack of training, can often lead to the customer perceptions of dishonesty.
FWIW, manufacturer level service information and tooling is readily available for purchase and has been for years, despite the claims of some shops, shouting Right to Repair, blah, blah that is false.
On the other hand, automotive repair facilities have also been forced to become wise to the dishonest tactics of some owners. Vehicle “walk arounds”, photographic external evidence and logging of discovered faults has become the necessary norm.
Years ago, I was handed the keys to a GM truck parked way across the lot very close to a wall, closer than normal and rather unexpected since there were many close spots.
Looking down the side close to the wall revealed damage from the front fender down the entire right side. A photo was taken by the service manager and call made to the customer, who claimed that we must have damaged the truck. Since the lot has video surveillance and a damaged truck was viewed arriving, that argument went no where.
Another. A tech related to me on Thursday, that he’d been handed an air bag recall on a 2010 ‘ish truck. The dash is known to crack locally in the area at around the 10 year timeline from the aging effects, UV etc.
This one was no exception. A photo was taken and the customer notified, who of course denied any knowledge. This was before any repair was performed.
Technicians are now tuned in to taking pre- and post repair photographic evidence, along with capturing and documenting pre- and post scan data.
Many technicians have also resorted to unplugging dash cameras, not for the fear of being recorded, but because it is illegal to do so, without information and consent.
Every issue that we face and have to deal with in life that has a negative or positive impact on our lives, is basically down to human nature, work ethic, honesty and integrity. Sadly, it’s fast becoming in short supply!
wow, that was a long comment. I had to pee 2 times during this.
LOL, yeah, but thems the fact of life we deal with!
Most customers today aren’t smart enough to turn off their Bluetooth. My service department has heard everything in the world. While you’re strutting around the parking lot on the phone, you’re broadcasting your conversation in your vehicle. Couples cheating, couples planning how they will pull one over on us to get a freebie, people trashing us because we’re running behind, etc. You name it and they’ve heard it.
Nitrogen in tires, $500 tented windows, 3m strips along the edge of doors and door handles to prevent dings. This package added an extra $1000 to the cost of my 2023 Silverado. When I ordered the truck and they told me that the package would be added I told them that I didn’t want it. When I went to the dealership to take delivery they had the items on my truck. After expressing my anger to the manager I got some all weather mats thrown in at no extra charge.
Had salesman mention their dealer package, when I questioned over the phone about it’s cost. He told me it was their standard policy, & that all vehicles had it applied when arrived at dealership. I explained flat out not interested, but he had to go to manager to get it approved. Had they installed when I arrived for delivery, I’d have just walked out as I told them to mail my deposit back. Even on the fees when going through the paperwork, we the customers have an option to walk away & take our business elsewhere.
I think the biggest rip-off on an individual item is the cost of a Factory Extended warranty.
Upon delivery of my 2020 C8 the Finance Manager started out asking $9000. for a 5 year
extended warranty. Finally, the condescended to reduce the charge to $4800. then $4000.
Having spent 50 years in the auto business, I told them to stuff it.
Shopping around I found a dealership in Ohio that was selling the EXACT same Genuine gm
5 year extended warrant for $1800.00. I told my selling dealership of this fact and magnanamously
agreed to pay them $1900.—- they took it!!!