Auto sales licensing is a real lemon - East Valley Tribune: Opinion

Auto sales licensing is a real lemon

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Posted: Thursday, March 30, 2006 7:02 am | Updated: 4:50 pm, Fri Oct 7, 2011.

A nasty fight is under way at the state Legislature between a Scottsdale auto broker and the influential lobby of the Arizona Automobile Dealers Association.

New car dealers are pushing a change in state law intended to make clear the “proper” role of auto brokers is to connect a car buyer with a licensed seller, and not to pretend the broker actually owns the vehicle or can get it registered with the state.

Centennial Leasing and Sales, supported by sister company AAA Arizona, argues the bill would cripple its business by forcing a customer to have contact with a car dealer before the sale is complete.

The latest version of the bill offered by Rep. Gary Pierce, R-Mesa, appears to be a reasonable short-term compromise by addressing concerns of new car dealers that they remain liable, not the broker, if anything goes wrong with a transaction. So the car dealers want to know exactly who is buying their vehicles.

At the same time, broker clients would be able to insist a vehicle be delivered to them, instead of going to a dealership, and have their broker on hand to fend off a dealer’s aggressive salesman.

But this spat has called attention to a rather unwieldy licensing system for selling vehicles in Arizona. The state regulates who can sell autos to protect customers from fraudulent sales or incorrectly filed title registrations. Recently, the federal government has started requiring new car dealers to check if potential buyers are on any terrorist watch lists.

Overall, the system has evolved to protect the car dealers and their partners, the big auto makers, from encountering too much competition. The state issues separate licenses for new car dealers, used car dealers, auto brokers and salvage operations, and forbids each one from treading into an area covered by another license.

As innovators explore gray areas and threaten the comfortable monopolies of new car dealers, their lobbyists traipse to the Capitol to demand further protections.

All of this is unnecessary, as auto manufacturers can protect their interests by signing exclusive contracts with selected dealers. There’s no reason for government to use its police powers, and grow its bureaucracy, to interfere with the free market in this manner.

The state should issue a single type of dealer license to anyone who wants to sell, lease or “facilitate transfer of” a vehicle. The license would certify a dealer will be honest about a motor vehicle’s history, will correctly handle the title and registration, and won’t sell to suspected terrorists. With some review to work out the details, the Legislature would be able to sweep away the artificially imposed distinctions currently in place.

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