The New Jersey Motor Vehicle Commission in the past week or two has stepped up its efforts to stamp out illegal brokering in the state, a New Jersey source who asked not to be named told CDG News.
It wasn’t immediately clear if that meant personnel, audits, guidance, policies, a combination of all the above, or something else.
The MVC did not respond to a request for comment.
The agency has been auditing brokers since May, the source said, just months after the issue stormed into headlines, especially in the northeast.
For context: Brokers help arrange deals between car buyers and licensed dealers for a fee.
The practice goes back decades and, at its best, helps customers get past language or other barriers that might make them uneasy negotiating their own deal.
But critics say many brokers now operate unlawfully, and that aggressive manufacturer incentive programs push some dealers to rely on them to hit sales targets.
In February, Tom DeFelice III, dealer principal and general counsel at Circle Motor Group in New Jersey and an executive committee member of the New Jersey Coalition of Automotive Retailers (NJ CAR), described a cycle that keeps dealers hooked: A dealer who can’t hit a sales target turns to brokers, sells cars for less to make the numbers, earns more inventory, and repeats.
“It’s often described as a drug,” DeFelice told CDG News at the time.
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What they’re saying: Regulations covering brokering took effect in New Jersey in June 2024. We asked NJ CAR President Laura Perrotta about the apparent increased efforts.
“NJ CAR is impressed with the speed at which the NJ MVC is tackling the brokering issue,” Perrotta told CDG News via email. “The laser-like focus on making sure all dealers comply with the regulation, and ensuring that brokers adhere to the licensing requirements for the sale or lease of motor vehicles, is to be commended.”
Across the river (and the other side): New York allows brokering under strict regulations, some of which took effect in December 2024.
Brokers there, for instance, must have a physical address and a contract with the customer. They can also collect fees from only one side of the deal.
Still, not everyone finds brokering problematic. Tomislav Mikula, founder of Delivrd, charges consumers a $1,000 flat fee to handle their car deals.
Mikula said during an April Daily Dealer Live episode that that dealers should be asking how to make consumers’ lives easier.
“I go away the second [dealers] make it so easy to buy a car that [it’s] like, ‘Why would you pay that?’” Mikula said.
Manufacturer matters: Several OEMs addressed the issue with their dealer networks.
In April, Kia, Toyota, Nissan, and Hyundai reminded dealers of their broker policies, CDG News reported.
In May, Toyota and Lexus’s financial services arm said it would stop buying leases or sales involving brokers in New Jersey as of May 20, and Mazda’s did the same as of June 2. Dealers that buy a brokered deal by mistake have to repurchase it.
