Assemblymember Robert Carroll (D-Park Slope, Windsor Terrace, Kensington, Ditmas Park) is under fire from nearly all the major auto manufacturers in this country for a bill he is sponsoring that critics say will kill a major new component to the auto industry and cost 2,000 jobs – including a number in his own district.
The proposed legislation, A6655, seeks to clamp down on the auto broker leasing business with harsh new regulations, including a requirement that automakers certify in writing that an automobile broker is permitted to serve as an approved registered broker for that manufacturer in a particular geographic area.
“This provision is a dagger to the heart to the entire auto broker leasing industry that could cost 2,000 jobs and that will benefit a few local businesses,” said David Hazan, owner of Montage Auto Leasing, 707 McDonald Avenue in Carroll’s district.
The auto broker leasing business began for the most part in the late 1980s as an alternative to going to car dealers for leasing mainly new cars. For example, a consumer wanting to lease a car prior to the advent of brokers would have to go to individual auto dealers – say a Ford dealer – where they could only lease a Ford.
However, brokers deal with almost all the major car manufacturers, and because of the volume they do, these brokers lease cars from both local dealers and out-of-state dealers for less. This allows for both lower prices and more choice of vehicles to consumers.
Hazan alleges that Carroll sponsored the bill as a favor to a few local car dealers, along with the Teamsters and United Auto Workers Unions, that dealers employ to service the vehicles.
Hazan and the auto broker industry are receiving strong support from the Alliance of Automobile Manufacturers (AAM), which called the legislation and its Senate counterpart, 4364, both “Anti-Consumer and Anti-Manufacturer.”
The AAM represents 70 percent of the car manufacturers in the country including BMW Group, FCA US LLC, Ford Motor Company, General Motors Company, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche Cars North America, Toyota, Volkswagen Group of America, and Volvo Car USA.
“The role of an automobile broker is to connect a prospective vehicle buyer to a franchised automobile dealer, so that a final sale can be made. Many automobile brokers specialize in a specific religious or ethnic community, and serve to help overcome language barriers or religious mores to facilitate a transaction. To be clear, an automobile broker has no relationship with a vehicle manufacturer; their sole interaction is between the prospective purchaser and the selling dealer. These bills as drafted inappropriately seek to insert vehicle manufacturers into this arrangement,” wrote the AAM in a memorandum of opposition to the bill.
“Automakers strongly support their dealers and recognize that this unique relationship depends upon working together toward their mutual gain. Automakers manufacture vehicles that – under the state’s existing automobile franchise laws – are delivered to franchised dealers within the state for sale to a consumer. Automakers have neither the motivation to incur these additional, onerous burdens, nor the desire to be in a position to investigate and then approve automobile brokers. To avoid the challenging scenario above, the likely net effect of this legislation would be to eliminate automobile broker businesses,” the memorandum added.
Carroll responded that the legislation is written to bring the auto broker industry “out of the shadows.”
“Auto dealerships are highly regulated and with brokers there are folks who are basically unregulated,” said Carroll, noting that two years ago the state passed a law that brokers had to register with the state and get licensed. “There are about 1,000 auto brokers and only about 150 registered.”
Carroll said among the issues on which brokers must be regulated includes sharing of personal and credit information of consumers. He also defended the unions, who are the largest campaign contributors to Carroll, as payers of millions of dollars of taxes to the state.
“The intent of the bill is not to put any reputable people out of business, but there are folks [dealers] who invested a lot of money and there are people [brokers] importing vehicles from out of state,” said Carroll, adding he won’t negotiate legislation through the press.
But Hazan said he has no problems with the regulations written two years ago, but it is up to the state to enforce them, and that Carroll’s bill as written will literally put the brokers out of business.
“It’s [the bill] unAmerican, undemocratic and goes against the values of what this country should be, and that is not to be for the few politically connected local businessman to have control over such a large industry like this,” he said.
