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

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In May of 2023, the Center for Automotive Research (CAR) produced an assessment of costs associated with the implementation of the Federal Trade Commission (FTC) notice of proposed rulemaking Motor Vehicle Dealers Trade Regulation Rule (16 C.F.R. § 463) (“Proposed Rule”), called the Assessment of Costs Associated with the Implementation of the Federal Trade Commission Notice of Proposed Rulemaking (RIN 2022-14214), CFR Part 463 (“CAR Report”). On January 4, 2024, the FTC issued the Combating Auto Retail Scams Trade Regulation Rule (“Final Rule”) and Statement of Basis and Purpose (“SBP”)1 . The Final Rule had several changes from the Proposed Rule on which the original CAR Report was based. In response to these differences, CAR, at the request of the National Automobile Dealers Association (NADA), has reassessed the costs associated with the Final Rule and reports its findings in this addendum to the original May 2023 CAR Report.

The Final Rule, while pared down from the Proposed Rule published in July 2022, is largely a subset of the notice of proposed rulemaking and would have unintended consequences for consumers and franchised lightduty vehicle dealerships across the country. According to CAR’s estimations, the Final Rule, which was published on January 4, 2024, would require an additional hour to complete the vehicle purchasing process, divided across the sales process and the review of financial disclosures and documentation required to comply with the rule.

CAR’s research continues to show that the impact on consumers goes beyond just additional time and includes financial implications. The extended purchasing process would likely result in costs passed on to consumers.

CAR also revisited the dealer compliance costs resulting from the Final Rule including updated and ongoing training, investments in IT systems, as well as planning, preparation, and compliance review. The recomputed study found that each dealership location would face median upfront compliance costs of USD 31,450 with the average recurring annual costs for dealers at approximately USD 39,862 per location, ranging from USD 14.39 to 17.24 million over a ten-year period for automobile dealers nationally.

Furthermore, CAR’s recompute of its original assessment estimates the Final Rule will generate a net cost of USD 24.1 billion over 10 years, reduced from the original CAR Report estimated net cost of USD 38.1 billion.