Trade Archives - Center for Automotive Research

Assessment of Costs Associated with the Implementation of the Federal Trade Commission Notice of Proposed Rulemaking (RIN 2022-14214), CFR Part 463

Mark Garrison — Sun, 04 Jun 2023 19:54:54 +0000

The Federal Trade Commission (FTC) published a proposed Motor Vehicle Dealers Trade Regulation Rule (16 C.F.R. § 463) (“Trade Rule”) on July 13, 2022. In the Trade Rule, the FTC solicited “comments from the public to improve [benefit or cost] estimates before the promulgation of any final Rule.” In response to this solicitation, the National Automobile Dealers Association (NADA) requested the Center for Automotive Research (CAR) to conduct this study to help determine and analyze the potential impact of the Trade Rule, if finalized as proposed, on franchised light-duty vehicle dealerships, their likely actions in response, and the costs associated with compliance.

Estimated costs for dealer compliance and the impact on their transactions with consumers were derived from approximately 60 dealer surveys and 15 interviews, conducted from August 2022 through December 2022, with dealers, ESIGN contract technology providers, and IT developers,3 as well as regulatory training professionals. CAR’s survey focused on five key areas including: 1) prohibited misrepresentations, 2) new consumer disclosure requirements, 3) “Add-On” prohibitions and disclosures, 4) recordkeeping, and 5) consumer vehicle transactions. Importantly, dealers were asked for incremental costs, directly related to regulatory compliance only.

The Center for Automotive Research also included qualitative feedback from dealers within our study to support key survey findings, provide essential dealer feedback, and capture respondents’ viewpoints on key regulatory challenges for consideration. Additionally, CAR researchers elected to present our dealer survey findings using median values, to reduce the influence of outlier responses, and to provide the most conservative estimate of costs.

According to the analysis in this study, median upfront costs for compliance with the Federal Trade Commission Rule, if finalized as proposed, were estimated by dealers to be USD 46,950 per location. These upfront costs include updated training, IT system investment, as well as planning and preparation. This results in a total median upfront cost of USD 2,184,348,750 for automobile dealers nationally.

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Trade Briefing: U.S. Consumer & Economic Impacts of U.S. Automotive Trade Policies

swhitehouse@cargroup.org — Fri, 15 Feb 2019 18:00:12 +0000

U.S. trade policy changes are projected to raise consumer prices for new and used vehicles and lower U.S. light vehicle sales, employment, and economic output. The Center for Automotive Research (CAR) estimates that the cumulative effect of current and potential U.S. trade actions on automobiles and auto parts could cause new car prices to rise by USD 2,750 on average. CAR estimates that the price of even U.S.-built vehicles could increase as much as USD 1,900 due to the current share of imported parts content, and imported vehicle prices could rise by as much as USD 3,700. The vast majority of the estimated price impacts are attributable to the potential auto and parts tariffs that the Administration is considering imposing under Section 232 of the Trade Expansion Act of 1962, as amended.

CAR’s analysis assumes that Canada, Mexico, and South Korea are exempt from potential Section 232 auto and based on the Korea-United States free trade agreement (KORUS) and exemptions from Section 232 auto and parts tariffs for Canada and Mexico that were agreed to in side letters to the USMCA that was signed in November 2018.

Rather than help the U.S. automotive and parts industries, the cumulative effect of the Section 232 steel and aluminum tariffs, Section 301 China tariffs, USMCA, and the potential 25 percent Section 232 tariff on imported autos and auto parts could lead to a 1.3 million drop in U.S. light vehicle sales, 366,900 fewer U.S. jobs, and $30.4 billion lower U.S. economic output (Gross Domestic Product). U.S. new automobile dealerships could lose as many as 77,000 jobs and $43.6 billion in revenue.

Used vehicle prices will also rise due to heightened demand and constricted supply, and higher automotive parts prices will drive up the price of vehicle maintenance and repair, so even holding on to an existing vehicle will become more expensive.

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Trade Briefing: Consumer Impact of Potential U.S. Section 232 Tariffs & Quotas on Imported Automobiles & Automotive Parts

swhitehouse@cargroup.org — Tue, 24 Jul 2018 12:43:21 +0000

The U.S. Department of Commerce is currently investigating whether U.S. automobiles and automotive parts constitute a national security threat under Section 232 of the Trade Expansion Act of 1962, as amended. The Center for Automotive Research (CAR) estimates that consumers will see the price of all new vehicles rise by $455 to $6,875 depending on the level of tariff or quota, where the vehicle was assembled, and whether the policy provides exemptions for automotive trade with Canada and Mexico. Used vehicle prices will also rise due to heightened demand and constricted supply, and higher automotive parts prices will drive up the price of vehicle maintenance and repair, so even holding on to an existing vehicle will become more expensive.

U.S. automotive and automotive parts manufacturers would not benefit from tariff or quota protection since all vehicles produced in the United States rely on imported content and a substantial share of U.S.-produced automotive parts and components are exported for assembly in vehicles built in other countries. CAR estimates that automotive demand will fall by between 493,600 to 2 million vehicles as a result of the implementation of tariffs or quotas. Declining demand is associated with employment losses ranging from over 82,000 to nearly 715,000 jobs and a $6.4 billion to $62.2 billion hit to U.S. Gross Domestic Product (GDP).

This briefing covers the economic, trade, employment, output, and price impacts of the potential Section 232 tariffs or quotas at a range of levels and levied against all trading partners or all non-NAFTA trading partners.

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NAFTA Briefing: Review of current NAFTA proposals and potential impacts on the North American automotive industry

swhitehouse@cargroup.org — Thu, 26 Apr 2018 16:59:36 +0000

The U.S. automotive industry is heavily dependent on trade within the North American Free Trade Agreement (NAFTA) region. Current proposals to change how NAFTA works in the automotive and parts industries have the potential to alter these U.S. industries dramatically. The renegotiation of NAFTA is ongoing, and proposals are changing every day. This briefing examines many of the current issues on the table and the potential impact of those proposals on the U.S. and North American automotive and parts industries.

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