BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          AB 1534 (Wieckowski) - Used vehicle sales: labeling 
          requirements.
          
          Amended: June 25, 2012          Policy Vote: Judiciary 3-2
          Urgency: No                     Mandate: Yes
          Hearing Date: August 6, 2012                           
          Consultant: Jolie Onodera       
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: AB 1534 would require a buy-here-pay-here (BHPH) 
          dealer to affix to and prominently and conspicuously display a 
          label on any used vehicle offered for retail sale that states 
          the reasonable market value of the vehicle, as specified.  A 
          violation of this provision would be an infraction.

          Fiscal Impact: 
               Increased enforcement costs of $91,000 (Motor Vehicle 
              Account) to the Department of Motor Vehicles (DMV) in 
              2012-13; ongoing costs of $157,000 thereafter.
               Minor ongoing costs to the Judicial Branch of less than 
              $10,000 (General Fund) annually for 100 new infraction 
              filings, offset to a degree by fine revenue.

          Background: Existing law regulates the accuracy of information 
          provided to consumers during vehicle sales, including the 
          information contained in advertising, brochures, and manuals, as 
          specified. Existing law also requires manufacturers, as 
          specified, to disclose certain information regarding a vehicle's 
          engine, as specified, by affixing a label on the vehicle.

          Proposed Law: This bill would require a BHPH dealer to affix to 
          and to prominently and conspicuously display a label on any used 
          vehicle offered for retail sale that states the "reasonable 
          market value" of the vehicle, as defined. The bill would require 
          the label to contain specified information used to determine the 
          vehicle's reasonable market value and the date the value was 
          determined.

          The bill would require a BHPH dealer to provide to a prospective 
          buyer of the used vehicle a copy of any information obtained 








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          from a nationally recognized pricing guide (including but not 
          limited to the Kelley Blue Book, Edmunds, the Black Book, or the 
          National Automobile Dealers' Association Guide) that the dealer 
          used to determine the reasonable market value of the vehicle. 

          This bill would define "reasonable market value" as the average 
          retail value of a used vehicle based on the condition, mileage, 
          year, make, and model of the vehicle, as determined within the 
          last 60 days by a nationally recognized pricing guide that 
          provides used vehicle retail values or pricing reports to 
          vehicle dealers or the public.

          This bill would define "buy-here-pay-here dealer" as a seller 
          who does both of the following: 1) enters into conditional sales 
          or lease contracts, as specified, and, 2) assigns less than 90 
          percent of all unrescinded conditional sales contracts and lease 
          contracts to unaffiliated third-party finance or leasing sources 
          within 60 days of the consummation of those contracts. This bill 
          would provide that notwithstanding the aforementioned 
          definition, a seller would not be a BHPH dealer if the seller 
          does both of the following: 1) certifies 100 percent of its 
          vehicles, as specified, and, 2) maintains an on-site service and 
          repair facility that is licensed by the Bureau of Automotive 
          Repair and employs a minimum of five master automobile 
          technicians who are certified by the National Institute for 
          Automotive Service Excellence.

          Related Legislation: SB 956 (Lieu) 2012 would enact the 
          Buy-Here-Pay-Here Automobile Dealers Act, as specified, to 
          regulate contract terms and other activities of entities meeting 
          the definition of BHPH automobile dealers. This bill has been 
          referred to the Assembly Appropriations Committee. 

          AB 1447 (Feuer) 2012 establishes consumer protections for 
          vehicles bought or leased from BHPH dealers, as specified. This 
          bill is scheduled to be heard today in this Committee.

          Staff Comments: By creating a new infraction, the provisions of 
          this bill will result in non-reimbursable local costs for 
          investigation of violations, offset to a minor degree by fine 
          revenue. The Judicial Council has indicated that based on the 
          average cost to handle a new infraction filing of approximately 
          $65, the estimated cost for 50 to 100 new infraction filings 
          annually would result in increased costs of $3,250 to $6,500 








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          (General Fund) per year.

          Additionally, the Department of Motor Vehicles (DMV) has 
          indicated the provisions of this bill would require DMV dealer 
          inspections to include a review of business records to ascertain 
          if a dealer is a BHPH dealer, as defined, and subsequently 
          inspect for the posted valuation stickers placed on their used 
          vehicle inventory. Investigation caseloads are also expected to 
          increase in response to consumer complaints about compliance 
          with the provisions of this bill. These increased activities are 
          estimated to cost approximately $91,000 (Motor Vehicle Account) 
          in 2012-13, and $157,000 annually thereafter.