By Benjamin Goad - 05/30/14 11:29 AM EDT
The nation’s auto dealers are shelling out billions of dollars a year to comply with scores of federal regulations, leading to higher prices for customers and thousands of lost industry jobs, a new study concludes.
The Ann Arbor-based Center for Automotive Research (CAR), a nonprofit formerly part of the University of Michigan, found that U.S. new light-duty vehicle dealers spent $3.2 billion in 2012 to comply with 61 major rules.
“The additional cost for new-car dealerships to comply with federal regulations are passed along to our customers in the form of higher prices, which results in lower vehicle sales and reduced employment at dealerships,” said Forrest McConnell, an Alabama Honda/Acura dealer who serves as chairman of NADA.
According to the report, the average dealership paid $182,754 in 2012 compliance costs associated with regulations governing employment, business operations, vehicle financing, sales, marketing, vehicle repair and maintenance.
That total amounts to nearly 22 percent of an average dealership’s pre-tax profit — or roughly $2,400 an employee, the study found. As a result, the industry shed an estimated 10,500 dealership jobs, according to the CAR report.