Dealer Fees in California May Surge by an Astonishing 600% | Carscoops

      California lawmakers are contemplating an increase in dealer fees, potentially adding hundreds to purchase prices for consumers, which has raised concerns regarding higher vehicle costs and the influence of dealer lobbying.

      A proposed bill could raise document processing fees from the current $70-$85 to as much as $500. The group advocating for this increase has contributed millions in political donations recently.

      Political activity in California remains lively, particularly when it involves car dealers and legislators collaborating behind the scenes. This week, a significant shift occurred in state legislation with near-unanimous bipartisan backing for Senate Bill 791.

      The proposed legislation would raise dealer fees from the established cap of $70-$85 for non-PIP and private-industry partnership dealers to either 1 percent of the vehicle's sale price or $500, whichever is lower. This change would result in an astonishing increase of nearly 500 to over 600 percent. Notably, this proposal comes on the heels of substantial donations from a dealer lobbying group that has invested millions in state lawmakers.

      Only one senator opposed the bill, Henry Stern, who expressed that "The car dealers haven’t earned the trust to justify this major increase in junk fees. Bad behavior shouldn’t be rewarded."

      Stern's remarks are likely a reference to automakers who recently lobbied the federal government to withdraw California’s waiver allowing it to set its own environmental regulations. Additionally, it appears many dealers in the state are willing to inflate car prices at will, even against the backdrop of automakers criticizing such practices.

      Rationales for the Increase

      Dealers contend that rising operational costs necessitate an increase in fees. They argue that while other businesses can adjust prices as they see fit, they are required to obtain state approval for such changes. However, the rationale for tying fees to a car's sale price up to $500 is questionable, as the costs associated with filing registration documents likely remain constant irrespective of a vehicle’s make, model, or MSRP.

      Anthony Samson, a lobbyist for the California New Car Dealers Association, mentioned, “If we believed we could simply recover our costs and the price of the vehicle, I assure you that we would not be here today asking for your support on this measure.”

      The California New Car Dealers Association (CNCDA) actively lobbies for these types of changes. Their political contributions are transparent; the Digital Democracy database reveals that CNCDA has donated at least $2.9 million in recent years to lawmakers. Rosemary Shahan of Consumers for Auto Reliability and Safety stated, “This is the opposite of saving money for people. There’s no two ways about it. It’s just benefiting car dealers at the expense of car buyers. That’s it.”

      The bill is still in the legislative process. If it is enacted, consumers can expect further increases in expenses in California.