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2 min read

Addendum Stickers and the CARS Rule

Updated: Oct 31

Conceptual image of a car dealership with a car, price tag, and addendum sticker, surrounded by compliance symbols like checklists and a magnifying glass, emphasizing regulatory changes and transparency under the FTC's CARS Rule.

The automotive industry is facing significant changes with the introduction of the FTC's CARS Rule. One area that could see a substantial impact is the use of addendum stickers. These stickers, traditionally used as a sales tactic, are set to undergo major transformations to comply with the new regulations. In this blog post, we explore how the CARS Rule affects addendum stickers and what dealerships would need to do to stay compliant.

 


The End of Traditional Addendum Stickers

Addendum stickers have long been a tool for dealerships to increase the front-end gross. However, under the new CARS Rule, this practice is likely to become obsolete. The rule mandates that any additional costs reflected on the addendum sticker must already be included in the advertised price.


Challenges with Addendum Stickers

Dealerships that continue to use addendum stickers as a means to increase prices will find it difficult to navigate these new regulations. For instance, if a dealership is selling a product like Pulse, which reduces rear-end collisions, the cost of this product must be included in the initial advertised price, not added later with an addendum sticker.


Compliant Usage

While the traditional use of addendum stickers may be fading, they can still be used in a legally compliant manner. Dealers can use addendum stickers to describe what is included in the vehicle without using them to increase the price above what was originally advertised.


Avoiding Illegal Practices

Dealerships must avoid illegal practices when using addendum stickers. For example, adding costs for unnecessary or non-existent services, like engraving the VIN on a catalytic converter in an electric vehicle, is both illegal and unethical. Such practices not only violate the CARS Rule but also damage the dealership's reputation and customer trust.


Adapting to the CARS Rule

If the CARS Rule survives litigation in its current form, dealerships will need to adapt their pricing strategies. This includes:

  1. Including All Costs in the Advertised Price: Ensure that any additional costs are part of the initial advertised price to avoid surprises for consumers.

  2. Using Addendum Stickers Transparently: Use these stickers to inform customers about what is included in the vehicle.

  3. Training Staff: Educate sales teams on the new regulations and the importance of compliance to avoid legal repercussions.

  4. Regular Audits: Conduct regular audits of advertising and pricing practices to ensure adherence to the CARS Rule.


Check out the full CARS Rule Keynote:






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More About the CARS Rule:

2 min read

Does the CARS Rule Mean the End of Dealer Fees?

Updated: Nov 12

Conceptual image of a car dealership focusing on 'dealer fees' with visual elements like a car, price tag, compliance documents, dollar signs, and a calculator, emphasizing transparency and regulatory compliance.

Dealer fees have long been a contentious issue. These fees, often tacked onto the final price of a vehicle, have drawn criticism for their opacity and perceived unfairness. However, recent developments in regulatory compliance, particularly the CARS Rule, are reshaping the landscape of dealer fees and how they are perceived and implemented.



Dealer Fees: A Thing of the Past?

Traditionally, dealer fees have been a method for dealerships to maintain their front-end gross profit, ensuring that salespeople can't offer excessive discounts during negotiations. However, the CARS Rule fundamentally changes this practice. According to industry expert James Ganther, dealer fees, whether labeled as documentation fees, pre-sale preparation fees, or otherwise, are likely to become obsolete unless they are included in the advertised "Offering Price."


The Legitimacy of Dealer Fees

Dealer fees have long been considered legitimate as long as they are reasonable and not exorbitant. These fees can, for example, help cover the costs associated with complying with numerous regulations, including the CARS Rule. Complying with all these regulations requires substantial financial investment, which dealerships can recoup through these fees. However, the CARS Rule mandates that any such fees must be included in the advertised price of the vehicle, which poses a significant challenge.


The End of Separate Dealer Fees?

Under the CARS Rule, separate dealer fees will likely become a thing of the past. Any additional charges, such as documentation fees or pre-sale preparation fees, must be included in the initial advertised price. This change means that dealerships can no longer list these fees separately in the transaction paperwork. Instead, they must be part of the overall "Offering Price," simplifying the pricing structure but potentially impacting profitability.


The Future of Dealer Fees Under the CARS Rule

According to Ganther, if the CARS Rule survives ongoing litigation in its current form, dealer fees, as we know them, will likely disappear. This change will fundamentally alter how dealerships handle pricing and compliance. However, by understanding and adapting to these changes, dealerships can navigate the regulatory landscape effectively and continue to thrive in a competitive market.


Stay Informed

As the legal landscape surrounding the CARS Rule continues to evolve, dealerships must stay informed. Check out James Ganther's full keynote on the CARS Rule:






More About the CARS Rule:

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