The CARS Rule is headed to court in October.
The lawsuit filed by the NADA and Texas ADA against the Federal Trade Commission will be argued Oct. 9 in the U.S. Court of Appeals Fifth Circuit in New Orleans.
Each side will get 30 minutes to argue their case in the courtroom. The arguments can be downloaded after the court appearance https://www.ca5.uscourts.gov/oral-argument-information/oral-argument-recordings. There will be a link available for a live stream of the proceedings available Oct. 9.
A stay on the regulation remains in place as it works through the court. The FTC issued the stay after the NADA and TADA filed its lawsuit.
NIADA and Texas IADA have joined the effort to stop the Federal Trade Commission from enforcing the vehicle shopping rule. NIADA and TIADA filed an amicus brief to the NADA and Texas ADA lawsuit in the Fifth Circuit, asking for the rule to be vacated. The filing pointed to the harmful impacts on dealerships and consumers if the rule is put in place.
Consumers will see vehicle price increases due to the additional requirements for disclosures and recordkeeping. They will also be faced with a more time-consuming and confusing sales experience. Dealers will have to maneuver through many requisites, including providing an offering price and monthly payments in any discussion of a vehicle.
Consumers, who already have limited options, may find it impossible to secure financing as banks and third-party creditors reduce the funding to dealers lacking the resources to meet the requirements of the rule.
More than 80 percent of NIADA dealer members who employ less than 10 employees will be faced with considerable costs from the rule. Costs involve professional fees from attorneys and IT personnel, as well as record-keeping storage. Dealers may also see a decline in sales due to the extended sales process with the added disclosures and repetition of underwriting procedures for every vehicle inquiry.
The increased time spent covering the disclosure requirements could also limit the amount of customers sales personnel may serve, impacting compensation and the overall performance of the dealership.
The rule’s ramifications could lead to the closure of many small dealerships due to a decrease in revenue and credit tightening. The loss of potentially thousands of dealerships will create ripple effects throughout the economy and in communities of all sizes.
