BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 2324
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: gatto
VERSION: 6/25/12
Analysis by: Carrie Cornwell FISCAL: NO
Hearing date: July 3, 2012 URGENCY: YES
SUBJECT:
Electronic vehicle registration: fees
DESCRIPTION:
This bill limits to $22 the amount a business providing
electronic vehicle registration services can charge a dealer for
those services.
ANALYSIS:
Since 2001, the Department of Motor Vehicles (DMV) has offered
an electronic vehicle registration (EVR) program in which motor
vehicle dealers may enter into contracts to act as DMV business
partners for vehicle registration and titling purposes. A
dealer business partner communicates electronically through an
EVR service provider with DMV to register a vehicle it has sold
and then either the dealer or the EVR service provider mails
license plates, registration cards, and registration stickers to
the buyer. DMV estimated last year that less than half of new
car dealers were participating in this voluntary EVR program.
Last year the Legislature passed and the governor signed AB 1215
(Blumenfield), Chapter 329, which requires new car dealers
starting on July 1 2012 to become DMV business partners and to
electronically register both new and used vehicles they sell.
AB 1215 generally increased the fees that a dealer can charge a
car buyer at the time of sale. The bill did, however, limit the
specific fee that a dealer may charge a car buyer for this now
mandatory EVR to no more than the actual amount the dealer pays
to the EVR service provider for processing and mailing license
plates, registration cards, and registration stickers. DMV
regulations further limit a dealer to charging consumers no more
than $29 for EVR. DMV regulations, however, do not place any
limit on the amount that an EVR service provider can charge
AB 2324 (GATTO) Page 2
dealers for electronic vehicle registration services, but AB
1215 authorizes DMV to adopt such regulations.
This bill :
1.Caps the amount an EVR service provider can charge a dealer
at $22 per EVR transaction, and allows DMV to increase this
cap through regulations, if it deems this amount insufficient.
2.Is an urgency measure.
COMMENTS:
1.Purpose . The author and sponsor assert that because of AB
1215's mandate for EVR on all cars sold by new car dealers,
EVR service providers should see a huge increase in their
business volume without a commensurate increase in their
expenses. They assert, therefore, that prices should decrease
or hold steady and note that the largest EVR service provider
is maintaining its current charge. They further note that two
EVR service providers did raise their prices from $19 to $29
and that because it takes months for a dealer to switch from
one EVR service provider to another, affected dealers and
their customers will soon face these inflated pass-through
charges.
2.The competitive market . DMV reports that there are six EVR
service providers who charge dealers a range of prices for
electronically registering a vehicle but none of whom charge
more than $29. As $29 is the maximum amount that a dealer may
pass through to a car buyer pursuant to DMV existing
regulations and, in any case, a dealer can pass through no
more than his actual EVR service provider cost, no dealers are
paying more for EVR than they can charge car buyers for those
services. Also, the six EVR service providers compete with
each other both on price and services or add-ons offered.
This bill asks the Legislature to intervene in that
competition, something which AB 1215 assigned DMV the
capability to do, but which DMV has chosen not to do at this
time.
3.Opposition . The opponent views this bill as interference with
the competitive market and asserts that an existing business
relationship between the California New Car Dealers
Association and one EVR service provider is the impetus for
the bill. The opponent, Motor Vehicle Software Corporation,
AB 2324 (GATTO) Page 3
has recently raised its price per EVR transaction to $29 for
most dealers but reports that it also offers a premium service
for handling difficult registration transactions that can
arise when titling a vehicle. This company notes that those
dealers that prefer one of its lower priced competitors are
free to buy EVR services from those competitors and that the
price cap in this bill is unfair to its business model.
4.A DMV enforcement issue . DMV regulates both vehicle dealers
and EVR service providers. If an EVR service provider is
bundling its services under a single charge beyond what
statute allows a dealer to pass through to a car buyer, then
DMV should notify that EVR service provider that it is not
complying with California law and is, therefore, at risk of
discontinuing business with DMV. Similarly, if a dealer is
passing through charges to car buyers that statute does not
permit it to pass through, then DMV should take action as the
regulator of vehicle dealers in this state. The committee may
wish to hold this bill and instead direct DMV to pursue the
regulatory issues it raises.
Assembly Votes:
Previous votes are not relevant.
POSITIONS: (Communicated to the committee before noon on
Wednesday, June 27,
2012)
SUPPORT: California New Car Dealers Association
OPPOSED: Motor Vehicle Software Corporation