ALBANY (TNS) — While the state Legislature is on summer break, a battle between auto brokers and mainstream auto dealers is continuing at full speed.
At issue was an attempt last session to bring more regulation and oversight to the growing business of auto brokers, who are independent agents that match buyers and sellers or leasers of cars.
Supporters of the bill say there have been abuses in this growing field and it needs more oversight.
Brokers say the dealers don’t like the competition.
It’s the latest example of how the business of selling vehicles is changing and how it is reverberating across many sectors including the Legislature.
Several years ago, for instance, the electric car manufacturer Tesla fought back opposition from dealers to get permission to operate five direct-to-consumer outlets in the state, most of which are downstate. Tesla is still pushing for more outlets, although more traditional franchise dealers continue to push back.
Auto dealers don’t actually sell vehicles directly — they purchase cars from the manufacturers with which they have franchises. Thus a Chevrolet or Dodge dealer buys an allotment of cars which they then sell to consumers.
Brokers have been around for a while, although they have been more numerous downstate in New York City, with its high concentration of potential customers.
They arrange deals, often to lease vehicles for buyers. That, they say, saves consumers the hassle of shopping around themselves.
“We’re basically lining it all up,” said David Friedman, of Brooklyn-based Duo Leasing. In business since 1986, he gets referrals from word-of-mouth and repeat customers.
He’s among the brokers who have spoken out against a proposed bill that would add a new layer of regulation for brokers, who are currently required to register with the state Department of Motor Vehicles.
The trouble is, not all of the brokers have registered with the DMV, noted Brooklyn Democratic Assemblyman Robert Carroll, who sponsored the bill for more regulation.
“The auto broker industry in my view is very lightly regulated compared to the auto dealer industry,” Carroll said.
His proposal would do a number of things. Brokers would have to offer customers contracts for their services and there would be more disclosure of how the broker is paid (usually by the auto dealer). It also would require brokers to get three separate bids for the car a customer wants.
Dealers could sue brokers who didn’t get three quotes if the legislation passed.
That’s important because Carroll said many brokers, at least in New York City and the southern part of the state, have become “alter egos” for New Jersey auto dealers. These Garden State businesses, which face lower real estate and operating costs as well as lower taxes than their New York City counterparts, may in some instances offer better prices.
Both Carroll and Friedman agree that city dealers face challenges — several of the smaller ones have even closed down in recent years.
Nor is everyone convinced that three bids are needed, since some simply trust their brokers to get them a new leased vehicle every few years.
“I’m highly dependent on my vehicle,” Suffern, Rockland County insurance broker Yoel Bodek said. A wheelchair user, he’s leased a half-dozen vans through Friedman over the years. He likes that Friedman can arrange for his lift and other adaptive equipment to go right into the new vehicle. “I’m never without a vehicle for more than a day,” he said.
Brokers do say they serve specialized clientele, such as wheelchair users. And they are popular in some ethnic or religious communities such as among ultra-Orthodox Jews as well as immigrant groups such as Indians or Russians, some of whom may speak little English and for whom buying a car can be a challenge.
The bill to regulate brokers passed easily in the Assembly, by a 147-5-vote margin on the last day of this past session.
It stalled in the Senate though and never came up for a vote.
“When it works it’s a valuable service but there are some really bad actors,” Staten Island Democratic Senator Diane Savino said. She sponsored the bill in her chamber.
She stressed that the legislation is meant to regulate, not shut down legitimate auto brokers.
All sides say much of the opposition to brokers comes from downstate dealers. And many dealers don’t mind working with brokers who they see as bringing them customers.
But there also is opposition beyond auto dealers. The service departments in many downstate auto dealerships are unionized as are many of the drivers who bring newly manufactured vehicles to car lots.
And Savino said there also was opposition from relatively new entrants in the sales field who sell cars online such as Carvana.
“It became very complicated at the last minute,” she said of the legislation.
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