November 20, 2024
By Barrie Charapp Beaty
Charapp & Weiss, LLP
bbeaty@cwattorneys.com
The election of Donald Trump to the presidency of the United States portends significant changes affecting all segments of the economy. During his campaign, he made promises of deregulation, which could benefit car dealers. Let’s look at how the auto industry could possibly change in the next four years.
- Environmental Protection Agency. There are likely to be major policy shifts that change various regulatory mandates affecting the vehicles customers will buy. In 2022, the Biden Administration issued a regulation that a majority of new passenger cars and trucks sold in the United States needed to be all-electric or hybrids by 2032. This regulation looks to be on the chopping block, along with the EV tax credit.
However, the Trump Administration’s deregulation authority extends to federal regulations and not state regulations. Thus, for those states that adopted the California Air Resources Board (CARB) regulations, which currently requires the end sales of gasoline-only vehicles by 2035, will remain in place. Many, including those in California, have already questioned the feasibility of the CARB mandates by 2035. So even though the Trump Administration cannot change regulations in CARB states, it can certainly make meeting the 2035 regulations under CARB almost unfeasible.
It is anticipated that EV vehicles are about to get more expensive because the tax credit most likely will be gone. For those dealers that are having issues with the IRS website, the IRS has established a cure period to fix those issues starting on November 25, 2024 through December 10, 2024. During that time, dealers can submit time of sale reports that have not yet been submitted for 2024. Now is the time to get those monies because after January 20, 2025, they may not be available.
- Federal Trade Commission. Under the Dodd Frank Financial Reform Act, the FTC was given greater oversight of motor vehicle dealers and funding to do it. In the last 4 years, under the direction of Lina Khan, there have been significant regulations proposed and/or issued by the FTC that have great impact on motor vehicle dealerships. After the Supreme Court’s blow to the FTC, where it found the FTC was unable to get monetary damages but for discriminatory practices under the Equal Credit Opportunity Act, the FTC sought to regulate the motor vehicle industry with penalties and regulations known as the CARS Rule or Vehicle Shopping Rule. While that Rule is on a stay pending a challenge in the Fifth Circuit, it appears that the Trump Administration could attempt to prevent it from ever being enacted along with the Junk Fees Rule that the FTC wants adopted prior to the start of the Trump Administration.
In recent years, the FTC has brought a number of significant lawsuits against motor vehicle dealers. This could be tempered during a Trump Presidency. It is anticipated that Lina Khan will no longer be the Chair of the Commission, as her term ended in September, and President-Elect Trump will nominate a Republican Commissioner for the Chair position and fill the vacancy so that the Commissioners are 3-2 Republican. However, under a Trump Administration, there could still be enforcement action against dealers, like during Trump’s previous term in office. However, the frequency and the nature of those actions could be tempered from the last 4 years.
Even if the enforcement actions are tempered by the FTC under the Trump Administration, state attorney generals could be more inclined to pick up the slack in enforcement. In many previous cases, state attorney generals have joined with the FTC in actions, so it is unlikely state enforcement actions will stop just because the FTC does not wish to take on a case. In many instances, state attorney generals have penalty damages for noncompliance or breach of consumer protection laws, so enforcement by them could yield monetary damages. What this ultimately means is that compliance should be the top of every dealers’ list of to dos regardless of political changes!
For Virginia dealers, the Motor Vehicle Dealer Board appears to be stepping up advertising violation actions, thus compliance is of the upmost importance. In October 2024, the Motor Vehicle Dealer Board posted in its Dealer Talk Newsletter that dealers have until November 22, 2024 to be in compliance with advertising. The article reminded dealers that dealers are responsible for compliant advertisements, but if there is proof that salespersons have been trained and educated on compliant advertisements, then the salespersons will be held accountable for noncompliance as well.
To learn more, you can join me, Don Hall, president and CEO of VADA and Anne Gambardella, VADA’s chief general counsel and executive vice president, as we discuss advertising compliance and more during VADA’s upcoming Legal and Legislative Update. There are two sessions early next month. One is in the Greater Richmond area and in Hampton Roads.