OLYMPIA – Car buyers are likely to be paying an extra $100 soon, after Washington lawmakers passed a bill intended to raise millions of dollars for struggling auto dealers.
House Bill 1939 was approved by the Senate this week and is expected to be signed into law by the governor soon. Ninety days after that, the law would take effect, allowing dealers to triple the $50 “document fee” they charge customers.
It’s not clear how many dealers would charge the full $150. Estimates of the total they’d get range from $25 million to $100 million per year.
Consumer advocates fought the change, saying now is exactly the wrong time to raise costs.
“Washington consumers are trying to cope with the present economic downturn,” Washington senior citizen lobbyist Bruce Reeves protested at a House hearing. “Now is certainly not the time to pass this industry windfall.”
The fee, set at a maximum of $50 two years ago, is intended to help compensate the dealership for the cost of collecting tax and filling out state paperwork for the transaction. The point of the increase – the paperwork hasn’t tripled – is to help an industry on the ropes.
“They’re hurting, and I don’t mind giving them a hand if this is something that they really need,” prime sponsor Rep. Dean Takko, D-Longview, told lawmakers at a recent hearing.
State tax officials say that new and used auto sales at dealerships dropped by 31 percent late last year compared to a year earlier.
Washington lost 22 dealers representing 44 franchises last year, according to Vicki Giles Fabre, executive vice president of the state auto dealers association. Allowing them to collect a higher fee, she said, “is going to help them survive.”
Fabre said $10 of the fee would go the Washington State Patrol. The remaining $140 would be kept by dealers.
The fee would revert back to a maximum of $50 in 2014.
Dealers would also have to tell buyers, in writing, that the fee is negotiable. But Nick Straley, a consumer-rights attorney, said that buyers are unlikely to learn that it’s negotiable until they’re signing the final paperwork.
“We submit that it’s the rare consumer who would actually step back and stop the deal at that time,” he said.
Critics also say that buyers will pay more and get nothing new in return.
“There’s no apparent benefit to consumers,” Reeves said.
Fabre said the higher fee would also make Washington auto dealers more competitive with rivals in Idaho and Oregon. When dealers quote a price, it doesn’t include fees.
In Idaho, there’s no maximum on such a fee, but the Washington dealers association believes it to average about $150 per car. In Oregon, the maximum is $75, but dealers are trying to raise that now. So auto quotes in other states can look cheaper than they actually turn out to be, Fabre said.
State Sen. Chris Marr, a former Spokane auto dealer, said keeping dealers in business helps everyone.
They provide family-wage jobs and pay state and local taxes, he said.
“Most dealers have lost way more in the last 12 months than they would ever, ever hope to recover in 5 years from a doc(ument) fee,” he said.