The Niello Company and other California dealers had a year to prepare for the California Combatting Auto Retail Scams Act and its price transparency and sales rules.
Nine days after the law went into effect on Oct. 1, Dennis Gingrich, sales and finance director at The Niello Company, joined Sam D’Arc on Daily Dealer Live Friday to share how the 10-location group prepared its staff and processes to comply with the new law.
Driving the news: Like the Federal Trade Commission’s price transparency push, the California CARS Act requires dealers to share a vehicle's total price in ads and in first written correspondence with any customer.
Any deal penciled requires disclosures of not only the total price, but monthly payment comparisons for financing that include total price. A third disclosure should cover the price of add-ons and F&I products, presented as optional and providing value to the customer.
The California CARS Act also requires records to be kept for two years on any deal getting to pencil.
Additionally, dealers must offer a 3-day return option for used vehicles under $50,000.
Getting ready: A little more than a week into the new law, Gingrich explained that making sure inventory feeds are in sync with the correct math stack has been stressful.
He even shared that there was testing of the company’s sites and third-party listings.
“That was a big lift. It required just a lot of effort from our team, a lot of communication with our partners,” Gingrich said.
Complying with state and federal: Gingrich noted that even without the CARS Act in his home state, the dealership had to comply with the FTC’s requirement for price transparency, including the total price.
Doc fees, which are limited in California to $85, must be included in the total price along with the electronic vehicle registration fee for EVs, and the smog certification and adjustment fees.
Gingrich pointed to the leadership of California New Car Dealers Association President Brian Maas in helping dealers get prepared, along with the work of vendors including Reynolds and Reynolds, Automotive Systems Analysis, and Drive Centric, and third-party inventory listing sites.
“Being able to get that number across all the places was a challenge just because it was new, and all of our third parties that was it was new to them,” Gingrich said. “Their infrastructure wasn’t built to accommodate it. So all of them had to hurry up and find a way to do it.”
Changing approach: Using an example of a customer asking about the color of the interior of the vehicle, Gingrich explained that the first response must include the total price along with answering the customer’s question.
“There’s a lot riding on that we give them that total price in that first written communication when it comes in as a lead, or… on the showroom floor our proposals change,” Gingrich said.
He added that a big adjustment has been seven new forms, including the new retail installment contract to go along with their pre-contract disclosure form about purchasing optional products, now required by the state.
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Return policy: Before the CARS Act's 3-day return requirement, Gingrich said the Niello Group offered a 7-day, 700-mile return policy.
Gingrich said they’ll follow the letter of the law with the 3-day policy because of the requirements about holding trade-in vehicles or the greater of the three: value of the vehicle, fair market value, or what the vehicle was sold for to the customer on a return.
Centralized buying: Niello also went to a centralized buying hub for the group a month ago, with a set of individuals focused on setting appointments, completing inspections, and finalizing purchases.
In the first month, the approach increased acquisitions by 34, to 154 vehicles.
Bottom line: There were some pain points in getting ready for the CARS Act, but Gingrich sees it as a net benefit.
“It’s going to be good in the long term after we get through the change management, and we will, and everybody will be fine,” Gingrich said.
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