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NADA: Appropriations bill delays vehicle shopping rule

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Announcements | Legal
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The National Automobile Dealers Association (NADA) released a statement Friday supporting the passage of the Fiscal Year 2025 Financial Services and General Government (FSGG) appropriations bill as approved by the U.S. House Appropriations Committee

A provision in the bill will stop the Federal Trade Commission (FTC) from implementing the Vehicle Shopping Rule (VSR) or Combating Auto Retail Scams Trade Regulation Rule (CARS) until Sept. 30, 2025, the release says. 

“America’s franchised new car dealerships strongly support the committee’s advancement of this legislation, which will stop the FTC’s disastrous Vehicle Shopping Rule from taking effect,” said NADA President and CEO Mike Stanton, in the release. “This extremely flawed, unnecessary — and we believe illegal — rule will greatly harm consumers by adding more cost, time, and paperwork to buying a car.”

Earlier this month, the Center for Automotive Research, released an updated study assessing the costs and impacts associated with the final rule published on Jan. 4. The release says the rule has “unintended consequences” for consumers and franchised light-duty vehicle dealerships. 

This includes an additional hour added to the vehicle purchasing process that would be divided across the sales process and the review of financial disclosures and documentation required to comply with the rule, the release says. 

A consumer also will be impacted by additional costs, the release says. This includes costs passed down from the dealership’s investment in ongoing training, IT systems, planning, preparation, and compliance review. 

Each dealership location would face a median upfront compliance cost of $31,450, the report says. An average recurring annual cost for dealerships would be $39,862 per location. Dealerships nationally could spend between $14.39 to $17.24 million over a 10-year period. The net cost over 10 years would be $24.1 billion. 

The original CAR study was completed at the request of NADA.

NADA and the Texas Automobile Dealers Association (TADA) filed a legal challenge to the rule in the U.S. Court of Appeals for the 5th Circuit, NADA’s release says. It says it asked to stay the rule’s July 30 effective date. 

“In response to the stay motion, the FTC issued an order delaying the effective date of the rule pending judicial review of the NADA/TADA petition,” the release says. “However, despite the FTC’s postponement, the Vehicle Shopping Rule remains the law, which is why the advancement of this amendment is necessary.” 

A recent survey from KPA found that American consumers’ distrust of car dealerships isn’t necessarily influenced by their own experiences. 

The study found only one-third of consumers experienced negative behavior, such as deceptive selling, hidden fees, or dishonest salespeople. Over three-quarters of consumers surveyed don’t trust the dealership to be honest about pricing. 

The survey questioned 2,098 adults over 18 from January 16-18. 

Respondents’ experience with dealerships included: 

    • Pressure to purchase “add-ons” — 34% 
    • Hidden fees discovered when signing paperwork after a price had been agreed on — 30% 
    • Feeling like the salesperson was trying to” trick” them into a deal — 28%
    • Leaving one dealership and going to another due to suspicion of dishonest pricing — 29%

Their perceptions of dealerships included: 

    • Concerns about hidden fees when buying/leasing a vehicle — 86%
    • Distrusting car dealerships to be honest about pricing — 76%
    • Lacking in price transparency — 84%

The results could be interpreted to say consumers’ overall trust in an industry can be altered by the actions of bad actors and even by a perceived lack of transparency, even if the bad actors or communication tactics don’t represent the entirety of the industry.


Photo courtesy of Fahroni/iStock

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