Kia and Toyota each issued statements this week reminding dealers of their broker policies and the consequences of violating them, with Toyota also announcing a slight revision to its existing policy on broker transactions.
Driving the news: The memos arrive in an era when brokering, or at least illegal brokering, keeps popping up in conversations, especially in regions such as the northeast, where it’s more prevalent.
Dealers who posted about the memos or spoke with CDG News were largely satisfied with the announcements.
Andrew Habberstad, CEO of Habberstad Auto Group, for example, became a Kia dealer in December.
“I woke up at 6:30 in the morning and opened my phone,” Habberstad said. “It was the first message I received, and my head almost hit the ceiling with excitement.”
What we know: Kia’s letter was dated April 7 and addressed to all dealers, though it wasn’t immediately clear whether they were sent to all dealers or only a specific region.
It was a reminder of existing policies:
Broker sales don't count. Any sale involving a broker is not an "Eligible Sale" and won't trigger incentive payments or count toward retail volume. Misreporting broker sales triggers chargebacks.
Broker sales must be flagged. Dealers must use the BRKR sales type for any transaction involving a broker.
Some broker activity is outright banned. Dealers cannot conduct Kia sales at unauthorized locations, allow a broker to do so on their behalf, or delegate sales obligations to a broker or third party. Violations can lead to dealership termination.
Kia said in the memo that it would monitor compliance.
“The letter was sent to reiterate and confirm Kia’s established sales policies with [the] goal of accelerating recent brand and sales momentum through enhanced engagement between our dealers and future customers,” a Kia spokesperson told CDG News via email.
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Toyota’s memo was dated April 8, and in the copies obtained by CDG News, was addressed to “All New York Region Toyota Dealer Principals and General Managers.”
The details: It underlined an added revision “that sales to brokers without an immediate ultimate consumer do not qualify as valid transactions.”
And also reminded of established rules:
Broker sales are defined as sales to those buying for resale rather than personal use and don't count toward retail sales credit for allocation purposes, and are ineligible for incentives or contests, including DAP and MCB, which together represent 2.5% of MSRP.
Toyota reserves the right to adjust a dealer's allocation if it determines the dealer manipulated the allocation system, including by reporting sales to non-ultimate consumers.
The memo noted this was a follow-up to a prior letter sent in November 2025.
The April letter was signed by a general manager for Toyota’s New York region. That manager did not return a request for comment. Another Toyota spokesperson acknowledged the request but did not yet comment.
For context: Many dealers and dealer associations have been speaking out and pushing for change, including asking manufacturers to enforce their own dealer agreements and approaching legislative bodies to make changes or add laws.
Tom DeFelice III, a former lawyer who is now dealer principal and general counsel at Circle Motor Group in New Jersey, doesn’t own either brand but has been part of the discussion, including in his role as an executive committee member for The New Jersey Coalition of Automotive Retailers (NJ Car).
DeFelice told CDG News via text that he thinks it should be effective.
“It is a very strong stance, the strongest I’ve seen from an OEM on brokering,” DeFelice said. “They actually will not pay incentive money on a broker deal. Never seen an OEM tie money to brokering.”
Worth noting: In some states, such as New York, brokering is legal, provided they have all the proper documentation and adhere to guidelines, including the rule that a broker must have a physical place to do business.
And overall, industry people who have spoken to CDG News and made appearances on the Car Dealership Guy podcasts want to see OEMs and legislative bodies clamping down on illegal brokers.
Some brokers also reached out to share their experiences and to advocate for the proper use of such services.
Either way: Dealers like Habberstad are grateful for the enforcement. He thinks every Kia dealer in the country will feel more confident than ever in the brand and called the memos perfect timing.
“The situation, especially in the Tri-State area, has continued to get worse over time,” Habberstad said. “And not only was Kia corporate extremely proactive, but they also set the standard for the rest of the industry by being the first one to release that.”
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