It’s been less than 24 hours since the US 5th Circuit Court of Appeals overturned a rushed, redundant, and vague “feel-good band-aid” set rules for Car Dealerships (known collectively as the “CARS Rule”), originally put into effect last summer.
Despite 99% of Americans never even knowing about these “new rules,” they were designed to pander to a FTC- perceived “discontent” of everyday car buyers with a lack of transparency in car purchases. And despite 99% of Americans never even knowing about the flawed new rules, social media is lighting up anyway. So, being Born in a Dealership®, iFrog dove into the facts behind yesterday’s VERY consumer-friendly decision.
Firstly, the funny thing is the sheer redundancy of these “new rules” to very well enforced, regulated, and documented State and Federal Laws that were ALREADY protecting automotive consumers better than ever before (think of the last time you signed multiple forms at a Dealership!), actually added an estimated $1.3 billion in wasted car buyer time in researching and purchasing a vehicle. Funnier still is the FTC HAS ALWAYS had the ability to police price transparency and deceptive practices, which a bi-partisan Congress overwhelmingly gave them FIFTEEN YEARS AGO.
Secondly, the FTC “CARS Rule” was so rushed, the 16-step checklists and forms were never run-by or tested for practicality or consumer experience with the “US Consumer.” In fact, it created a windfall for the quickly-sprouting regulatory and compliance industries, which invested and made BILLIONS off the penstroke, on the backs of “US Consumers.” (Google the “CARS Rule,” and an endless stream of compliance companies appear, illustrating this point).
Lastly, the idea that MORE paperwork and regulation were needed to prevent US Dealer owners and investors from earning their profits, given one simple fact (below), is preposterous and negligent. Read this twice:
New Car Dealership earnings have been held more or less to under 1%, since 2010, as massive pressures beyond their control, including recessions, the pandemic, parts shortages, recalls, late launches, inventory stockpiles, and endless policy and incentive changes have all been “made sense of” by Franchised Dealerships to meet the daily demand of the American car-buying and servicing consumer.
And ANY of our client Dealership partners will tell you, even though a 1% profit margin would be flatly rejected by Wall Street and virtually any US corporations, that 1% is a badge of sheer strength, innovation, and courage, honoring their focused resilience in the growing complexity of the world all around them, their customers, and their communities, to keep America on wheels.
To quote contemporary parlance, US Franchised Dealerships juggle 99+ problems, but, finally, after a short, money-wasting, and barely-perceptible couple of quarters, CARS Rules ain’t one that they nor their customers have to worry about!