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What New-Car Dealers Offer

March 18, 1993

An article in the Feb. 11 View section, "How to Avoid Driving a Hard Bargain," has drawn angry criticism from a number of franchised new-car dealers.

The article suggests ways to avoid a new-car dealer, including brokers, fleet and credit union purchases, bidding services, dealerships with fixed prices, buying services and the purchase of 1-year-old used cars. The article states, "Even if alternate services provide good value, it might make sense to buy from a dealer, consumer advocates say."

As a working dealer and first vice president of the 1,600-member California Motor Car Dealers Assn., I'd like to second that last statement because franchised new-car dealers offer these benefits:

* Purchasing a new car from a franchised dealer eliminates a middleman and therefore increases the likelihood of obtaining the lowest price.

* Only franchised new-car dealers are licensed by the state to sell cars as new. Used-car dealers, including brokers, may purchase new vehicles for resale, but those vehicles have to be resold as used cars.

* Only franchised new-car dealers are authorized by their franchising manufacturer or distributor to sell and service new cars and are contractually obligated to do so in a professional and accountable manner.

* Manufacturer warranties start running the date a dealer sells a car, not the date a middleman resells it as used to a subsequent buyer.

* Eligibility requirements for new-car factory rebates and incentives are contingent upon the sale and delivery of a new car directly to the retail customer.

* Franchised dealers offer more models, options, colors and safety features, often available for immediate delivery.

* Only franchised dealers can offer financing rates through a manufacturers' financing subsidiary.

* Only franchised new-car dealers are authorized to sell extended factory warranties and other factory sponsored products.

* Franchised dealers know their models and options like no broker or referral service can.

* Only franchised new-car dealers are required to maintain service and repair facilities for new cars. Many consumers feel uncomfortable dealing with a middleman who doesn't have facilities for service or warranty work and who purchased a vehicle from a dealer located perhaps hundreds of miles away.

* Only franchised dealers can place "factory orders" for color and option combinations or use computers to arrange a dealer-to-dealer trade.

* All franchised new-car dealers must meet factory standards for investments in land, buildings, employees, parts inventories and service facilities. These requirements protect the public from "fly by night" operators.

The dealer of today has a vested interest, not only in having the initial sale of the vehicle be a pleasant buying experience, but in repeat business for service, parts and ultimately another new or used car. Yes, it not only might, but it does make sense to buy from a franchised new car dealer.


California Motor Car Dealers Assn.

Playa del Rey

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