BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
(Wieckowski) - Used vehicle sales: labeling requirements.
Amended: June 25, 2012 Policy Vote: Judiciary 3-2
Urgency: No Mandate: Yes
Hearing Date: August 16, 2012
Consultant: Jolie Onodera
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
from a nationally recognized pricing guide (including but not
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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
(General Fund) per year.
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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.