Dealers ought to take a look at a proposal from a consumer advocate group in California that would prohibit “dealer markup.”
The group, Consumers for Auto Reliability and Safety, based in Sacramento, is trying to get a bunch of restrictions on dealerships on the state’s November 2014 ballot. Besides the “markup” proposal, the group would also prohibit so-called yo-yo financing, in which a customer has to come back and sign a new finance contract at a higher rate than the original deal.
Auto finance insiders get frustrated that such proposals are aimed at an out-of-date, no-holds-barred image of auto retailing. But like it or not, many consumers are ready to believe the auto dealer caricature.
The Consumer Financial Protection Bureau provided Consumers for Auto Reliability and Safety with a platform when it included the group in a panel discussion at the CFPB auto finance forum in November.
The point is the CFPB may seem tough on the auto finance industry, but it’s by no means alone.