BILL ANALYSIS Ó
AB 1215
Page 1
Date of Hearing: April 11, 2011
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 1215 (Blumenfield) - As Introduced: February 18, 2011
SUBJECT : Electronic vehicle registration
SUMMARY : Requires dealers of new motor vehicle to participate
in the electronic vehicle registration program of the Department
of Motor Vehicles (DMV). Requires license plates to be attached
upon receipt by the vehicle owner. Increases the maximum dealer
document preparation charge to $75. Specifically, this bill :
1)Requires a new motor vehicle dealer to use electronic programs
provided by the dealer's first-line service provider to
register a vehicle it sells or leases, other than an
off-highway vehicle or a recreational vehicle, if DMV permits
the transaction to be processed electronically.
2)Prohibits a dealer from charging consumers an electronic
filing fee in excess of the amount the dealer is charged by a
first-line provider for providing license plate processing,
postage, fees and services and prohibits the consumer charge
from being represented as a governmental fee.
3)Limits the charge a dealer may seek from a vehicle purchaser
for document preparation and associated costs to a maximum of
$75 if the dealer is by contract a business partner of DMV and
$65 if the dealer is not a DMV business partner.
4)Allows a vehicle displaying a copy of the sales report to be
operated without license plates until the plates are received
by the purchaser or upon the expiration of a 90-day period
commencing from the date of sale, whichever occurs first.
5)Requires a license plate issued by California or by any other
state or jurisdiction to be attached to the vehicle upon
receipt.
6)Makes it unlawful, effective October 1, 2012, for a dealer to
sell a new motor vehicle, other than a motorcycle or
off-highway vehicle, unless that dealer is a private industry
partner of DMV.
AB 1215
Page 2
7)Establishes an effective date of July 1, 2012, for all the
other provisions of this bill noted above.
EXISTING LAW :
1)Allows a maximum document preparation charge of $55 for the
sale of a new vehicle, and $45 for the lease of a new vehicle,
by a vehicle dealer.
2)Allows newly sold vehicles to be operated without license
plates until the plates are received or until the end of a
six-month period after the date of sale, whichever occurs
first.
FISCAL EFFECT : Unknown
COMMENTS : In 2001, DMV established an Electronic Vehicle
Registration (EVR) program in which dealers who enter into
contracts as DMV "business partners" may participate at their
option. At this time it is estimated about half of new car
dealers participate in the program and no more than 40% of new
cars are registered electronically. This bill would require all
new vehicle dealerships to register the cars that they sell
through the EVR program, beginning July 1, 2012. This would
have the effect of allowing vehicle license plates to reach
consumers within weeks rather than months while potentially
saving DMV millions of dollars for the cost of processing
registration materials received in a paper format. (Proponents
cite estimates of $14 for DMV to process a paper registration
application as opposed to $7 for an electronic one.) Quicker
distribution of license plates coupled with this bill's
requirement for license plates to be installed by vehicle owners
upon receipt might also result in a reduction in the number of
vehicles riding through toll facilities without being billed for
a toll, since the primary means of toll evasion enforcement is
through photographs taken of the license plates of offending
vehicles.
DMV regulations currently allow participating dealers to levy an
optional consumer charge of up to $29 per registration to recoup
their costs. This bill eliminates that optional charge while at
the same time allowing dealers to pass on to consumers their
actual cost for processing transactions and mailing license
plates, which currently ranges from $18-$20.
AB 1215
Page 3
Finally, this bill also updates the maximum charge a dealer may
assess on the sale of a new vehicle for the processing of
documents from the current limit of $55 for vehicle sales and
$45 for vehicle leases, to $75 for either a sale or a lease.
Supporters of this bill note that current delays in the delivery
of license plates as well as delays in their being installed by
vehicle owners have "led to many drivers circumventing toll
payment. In 2010, 734,000 vehicles did not pay a toll to the
Bay Area Toll Authority, resulting in lost toll revenue of $3.7
million and lost toll fines totaling $22 million. In 2010, the
lost toll revenue for the (Orange County) Transportation
Corridor Agencies (TCAs) was $2 million." On this point,
however, the TCAs contend the bill "will not solve this problem
nor change scofflaw behavior." While the TCAs do not oppose the
bill, they feel the toll evasion problem is more a question of
willful behavior, rather than a delay in receiving new plates.
Toll agencies would prefer that the bill establish a penalty for
failure to install plates when they are received (it is
currently a "fix-it" ticket). While such a provision is not
included in AB 1215, the bill nevertheless moves in a positive
direction by having plates delivered earlier and at least
requiring their immediate installation.
As to the bill's increase in allowable document processing
charges, supporters claim that it will help offset the new EVR
requirement as well as accounting for the dozens of documentary
burdens already imposed on dealers. Even with this increase,
they say, "the document processing charge will still be tied for
the lowest in the country even though dealer costs to comply
with government requirements to sell or lease a vehicle already
range from $75 for a simple transaction (involving the purchase
of a new car negotiated in English by a buyer and co-buyer with
good credit and no trade-in) to $180 for a complex transaction
(involving the purchased of a used vehicle by a foreign language
buyer and co-buyer with poor credit and a trade-in)."
The cap on document preparation fees has been raised a number of
times over the last 25 years. In 1987, it was raised from $20
to $25. Four years later it was increased to $35. In 1996, a
limit of $45 was established. Most recently, in 2006, the fee
for new car sales was increased to $55, although for vehicle
leases, it remained at $45.
There have been a number of statutes enacted in the last several
AB 1215
Page 4
years that have increased or altered dealer document
requirements, including new insurance disclosures, foreign
language contract translation requirements, consumer
identification verification requirements, and changes to
documents required by changes to the Smog Check program, among
others. Significantly, the Car Buyers Bill of Rights, AB 68
(Montanez), Chapter 128, Statutes of 2005, imposed substantial
new document requirements on motor vehicle dealers resulting in
increased costs. AB 68 requires a car dealer selling a used
vehicle for less than $40,000 to offer the buyer a two-day
contract cancellation option agreement; requires car dealers who
finance a sale to disclose the price of additional products,
services, or other items included in the contract; and requires
dealers who finance a sale to disclose the buyer's credit score.
As noted above, dealers maintain that complying with all these
requirements costs them $75 for a simple transaction and up to
$180 for a complicated transaction.
Examined in a historical context, it is probably fair to say
that document preparation fees have not kept pace with the
increasing cost that dealers face in meeting mandated paperwork
requirements. This is certainly true in the instance of vehicle
leases, whose current fee limit has been in place through 15
years of inflation and new mandates. On the other hand, one
might question why the cost of document preparation is not
simply built into the sale (or lease) price of a vehicle, just
as any number of other costs are recovered through the price
structure.
Legislative history : AB 1001 (Nunez) of 2005 would have
increased the document preparation fee for vehicle sales to $55
from the then-maximum level of $45. That bill was vetoed by
Governor Schwarzenegger who said he did "not believe California
consumers should be saddled with another hidden fee." SB 44
(Torlakson), Chapter 623, Statues of 2006, raised the document
preparation fee to its present level of $55, but only for
vehicle sales, not for leases - which remained at $45. AB 1939
(DeSaulnier of 2008) would have raised the document preparation
fee to $65 for both vehicle sales and vehicle leases. That bill
passed the Assembly floor but died in the Senate without having
been heard in policy committee.
Related legislation : SB 125 (Emmerson) would allow for the
impoundment of a vehicle that is registered to a chronic evader
of toll payments until all outstanding tolls and all required
AB 1215
Page 5
penalties are paid to the issuing agency. SB 125 is scheduled
to be heard in the Senate Committee on Transportation and
Housing on April 26.
Double referral : This bill is also referred to the Committee on
Judiciary.
REGISTERED SUPPORT / OPPOSITION :
Support
AutoNation, Inc.
California Association of Highway Patrolmen
California New Car Dealers Association
CarMax Superstores, Inc.
Opposition
None on file
Analysis Prepared by : Howard Posner / TRANS. / (916) 319-2093