New York Assembly Bill 4066A and Senate Bill 5085A threaten to make new cars, including electric vehicles, even more expensive. At a time when inflation is devastating consumer purchasing power, dealerships are continuing to make record-breaking profits.
Unfortunately, this decision is only the latest in decades of dealership-centered legislation, costing automotive buyers billions annually in what amounts to little more than corporate welfare. The proposed bill would allow car dealerships to raise auto repair reimbursement charges by 50 percent, which would increase carmaker warranty costs, thereby leading to significantly higher automobile prices for consumers.
The bill is similar to a history of increased dealership protections that ratchet up automobile costs to consumers. Some of these protections were designed in the 1950s to counteract a carmaker duopoly that today no longer exists. Since then, dozens of foreign automobile brands have entered the market, adding significant market competition. Despite the substantial increase in competition, states, like New York, have passed multiple laws favoring dealerships in their relationship with manufacturers. Because of this, according to a study by the American Consumer Institute, consumers are paying nearly 10 percent more, or upwards of $5,000 extra per vehicle.
Bills A4066 and S5085 add insult to injury, as they would allow warranty costs to increase by 50 percent, which means that carmakers would need to raise their prices to recoup these costs. Automobile ownership is part of the American dream, yet young people today are less likely than young people 30 years ago to own a car. The reason is economics. With less purchasing power, any increase in car prices can result in young people getting priced out of the market. This trend needs to stop. The car manufacturing market is highly competitive and no longer needs legislative intervention to interfere with mutually beneficial privately-negotiated contracts between dealerships and carmakers. New York lawmakers need to rethink increasing consumer prices at a time of high inflation and let competition work for the benefit of consumers.
Also published in the Medium