Auto Dealer Lobby Looks to State Legislature to Pad Profits at Consumer Expense

A story in the New Hampshire Union Leader with the somewhat biased headline, “Senate Bill Seeks Relief for Car Dealers” reports on alleged conflicts between auto manufacturers and New Hampshire’s auto dealers. No such conflict exists apart from the lawyer/lobbyist driven desire by the politically influential Auto Dealers Association lobbying group to use its political pull to increase profits.

The proximate cause of the lobby battle is SB 126, the so-called “Dealer Bill of Rights.” New Hampshire already has a “Dealer Bill of Rights,” according to the Union Leader story. SB 126 would grant them more “rights,” apparently.

But this isn’t a story about rights. It’s a story about one lobbied up industry with considerable political clout – purchased through vast candidate contributions – using the levers of power to circumvent market forces and increase their profits.

Look, I’m for profits. But the government has no place deciding what those profits should be. In any industry. That’s called “picking winners and losers” and in this case it’s a localized replica of everything Americans hate about Washington, DC backscratching.

What’s more, this particularly unwelcome act of government intervention would jack up the cost to consumers. According to the Union Leader:

[Auto Manufacturers spokesman Daniel] Gage said New Hampshire’s warranty law allows dealers to charge manufacturers retail service rates for warranty work, which drives up the cost to consumers because the dealers bump up the rates to get more money. And he said the bill would also allow dealers to charge manufacturers the retail rate for parts, which is not the current arrangement.

Most states allow bulk rates for warranty work, Gage said, and allow surcharges on new auto sales to hold the escalating rates of service departments in check, but the bill would not allow that.

In essence, the Auto Dealers Association is asking the state legislature to allow it to pad new profits into warranty repairs at greater cost to consumers and manufacturers. This is not the role of the state government. Does anyone actually believe this would be an issue in the State Senate if it hadn’t been for the craftiness of the auto dealers’ fleet of lobbyists?

Auto manufactures and auto dealers enter into franchise agreements. Presumably they do so under their own volition and without any guns to their heads. That one party in those agreements now believes it has a political edge over the other and feels it can use that edge to serve its own interest is a terrible indictment on how nakedly transactional representative democracy has become, even in our Granite State.

We must all remember what happened to health care insurance in New Hampshire. Prior to state government intervening, the state had twenty-two health care insurance providers and now there are only two with some of the highest health care costs in the nation. Government needs to stay out of free marketplace agreements.

Author: Jim Adams

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