Dealer Fee Hike

Fee Hike

California’s Senate recently gave the green light to a piece of legislation boosting the document processing fee car dealers can charge. Now, dealers can charge their buyers up to 1% of the car’s price, capping it at $500. That’s a pretty steep jump from the previous $85 limit, marking an almost 500% increase. Given that the average starting price for a new car in May was $48,656 according to Cox Automotive, this change could significantly affect buyers.

This adjustment comes after an overwhelming yes vote in the Senate, except for a single dissenting voice. Backing the bill, the California New Car Dealers Association highlighted that the fee hike was overdue. They argued that the $85 cap hadn’t matched rising business costs over the years. The increased fees are said to cover various admin costs like loan paperwork, fraud safeguards, and DMV registration documentation. Anthony Samson, a lobbyist for the association, emphasized that unlike other businesses that can just tack on service charges, car dealers can’t easily do the same without legislative changes.

Opposition

But hold on, not everyone is on board with this. Senator Dave Cortese mentioned he’s still negotiating with the New Car Dealers Association about reducing that fee limit when the bill hits the Assembly. Senator Henry Stern, the lone dissenter, reasoned that dealerships haven’t built enough trust to warrant such a hefty increase. He pointed out their previous lobbying efforts against California’s electric vehicle mandates as a concern. He believes automakers should work more towards supporting consumer and environmental protection.

Ray Shefska from CarEdge chimed in, critiquing the bill by saying it reflects the notion that politicians can be influenced through donations, potentially compromising affordability for Californians looking to buy new cars. Over the years, the California New Car Dealers Association has shelled out about $2.9 million to state lawmakers, which, according to Digital Democracy’s database, raises questions about whose interests are really being served.

The Road Ahead

The bill hasn’t crossed the finish line yet; it still needs to pass through the state’s Assembly before hitting the Governor’s desk. If it’s cleared without changes, Governor Newsom might take issue with the $500 cap, possibly leading to a veto. For reference, Florida currently tops the charts with the highest dealer document fee cap at $999, while Virginia and Colorado follow with $799 and $699 limits, respectively.

For the average Californian, who already deals with one of the highest sales tax rates and significant registration fees, this proposed change adds another layer of cost to car buying. The debate continues whether this fee increase will help balance business expenses or further burden consumers during their next vehicle purchase. Stay tuned as the bill develops and its implications on car buying in California become clearer.