FTC’s proposed rules on car dealer ads, F&I would hurt customers, independent dealers say

As NIADA referenced, the FTC estimated the combined expense to car dealerships could reach $1.4 billion over a decade. It’s one of two cost-benefit scenarios the agency offered the public in its rulemaking proposal.

One FTC hypothesis — the one cited by NIADA — estimated dealerships would pay a combined $1.36 billion between 2022 and 2032 to comply. The other forecast costs of $1.57 billion over the same time. The largest element within these estimates involved dealerships spending $850.5 million or $994.4 million to disseminate various disclosures to customers. Either calculation assumes a sales professional paid $21.84 an hour spending 2 minutes preparing and delivering each disclosure.

While dealerships could over a decade absorb more than $1 billion in additional costs, the FTC estimated society would recognize more than $30 billion in benefits. It forecast $31.08 billion in gains over the decade under its first cost-benefit scenario and $36.34 billion under the second projection.

“The Commission assumes that, as a result of the proposed Rule provisions prohibiting misrepresentations and requiring price transparency, each consumer who ends up purchasing a vehicle will spend three fewer hours shopping online, corresponding with dealerships, visiting dealer locations, and negotiating with dealer employees per motor vehicle transaction,” the FTC wrote.

The average worker made $27.07 an hour in 2020 and is shown by research to view their time off the job as worth 82 percent of hourly pay, according to the FTC. Over a decade of millions of auto transactions a year, those 3 hours per deal at $22.20 an houradd up, the FTC said.