The updated profile of a new car dealership is now available! With data gathered from our Economic Impact Survey, we have updated data on the average profile of a new car dealership.

The average franchised new vehicle dealership in the Cincinnati region (Hamilton, Butler, Warren, & Clermont Counties):
• Generates $55 million in total retail sales, $28.6 million in new vehicle sales.
• Employs 69 Ohioans.
• Pays $3.7 million in employee wages.
• Collects and paid $2.9 million in state and local sales tax.
• Pays $362,563 in payroll taxes.
• Pays $57,748 in real estate taxes.
• Pays $124,140 in CAT Tax.
• Spends $704,838.33 on advertising.

By Shelley B. Fowler*

No matter how hard we try to avoid them, mistakes happen. Sometimes mistakes made at a dealership are no big deal and can be remedied fairly easily, with little to no harm to the dealership or its customers. But many mistakes can present big threats. In a recent case, a dealership’s advertising mistake resulted in a lawsuit, which cost it money to defend, but it did not result in liability for the dealership. Nevertheless, the mistake the dealership made in misadvertising the price of a car could have been a bigger deal, especially if, in an effort to lure customers into the showroom, the dealership had the bad habit of advertising cars for prices lower than it actually intended to sell them.

Carla Burkhart saw a vehicle advertised online by Wolf Motors of Naperville, Inc., for $19,991. Burkhart told the dealership that she wanted to buy the vehicle at that price, but the dealership said that the advertised price was a mistake and that the vehicle was actually $36,991. The dealership subsequently offered to sell Burkhart the vehicle “at cost,” which was $35,000. Burkhart refused the offer. She sued the dealership for breach of contract and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The dealership submitted evidence that the correct price for the vehicle was $36,991 and that the advertised price was a clerical error on the part of an employee who entered an incorrect price for the car into a database. The trial court granted summary judgment for the dealership, finding that no contract was formed between the parties because there was no mutual assent and that there was no fraud. Burkhart appealed.

The Appellate Court of Illinois affirmed the trial court’s decision. The appellate court rejected the breach of contract claim because a valid and enforceable contract did not exist. The advertisement did not serve as the basis of a binding contract between Burkhart and the dealership because the advertisement was not an offer to contract and did not reflect a price for which the dealership intended to sell the vehicle.

The appellate court then addressed whether the dealership committed fraud when it advertised the vehicle without intending to sell it at the advertised price. Even though the appellate court acknowledged that certain evidence supported some of the elements of a cause of action for fraud, it concluded that there was no evidence that Burkhart suffered specific actual damages, thereby precluding her claim under the ICFDBPA. The appellate court rejected Burkhart’s argument that her damages were the difference between the advertised price and the appraised value of the car.

So, in this case, the dealership was relatively lucky. But not all dealerships that make similar mistakes will get off as easily. You should check and double-check your advertisements before they are disseminated. If, more than once, you advertise a car for less than you intend to sell it, your “mistake” may start to look a lot more like “fraud.”

Burkhart v. Wolf Motors of Naperville, Inc., 2016 Ill. App. LEXIS 630 (Ill. App. September 21, 2016).

*Shelley B. Fowler is a Managing Editor of the CARLAW, HouseLaw, PrivacyLaw, InstallmentLaw, and Spot Delivery publications.  Shelley is located in the Hanover, Maryland office of Hudson Cook, LLP/CounselorLibrary.com.  Shelley can be reached at 410-865-5406 or by email at rfowler@hudco.com.

By Christopher J. Capurso and Lauren T. Hunt*

At long last, the Federal Trade Com-mission has announced final amendments to the Used Car Rule (officially titled the Used Motor Vehicle Trade Regulation Rule). If you’ve been following along, you’ll remember that this regulatory review process began back in 2008. Before we jump into an overview of the amendments, here’s a quick history lesson.

The Used Car Rule was introduced in 1984 to prevent used car dealers from making oral misrepresentations and unfair omissions of material facts to consumers. The FTC’s primary aim was to curb unfair and deceptive practices, particularly in the warranty coverage area. The Used Car Rule requires dealers to disclose warranty information in a uniform manner on a window sticker known as the “Buyers Guide,” with those disclosures being incorporated by reference into the sales contract. Dealers must also provide Spanish-language versions of the Buyers Guide when conducting sales in Spanish.

The Used Car Rule amendments take effect January 27, 2017, and revise the Buyers Guide by

• placing boxes in the Buyers Guide that dealers can check to show whether a vehicle is covered by a third-party warranty and whether a service contract may be available;
• providing a box dealers can check to show that an unexpired manufacturer’s warranty applies;
• adding air bags and catalytic converters to the Buyers Guide’s list of major defects that may occur in used vehicles;
• adding statements that direct consumers to obtain a vehicle history report, to check for open recalls, to visit www.ftc.gov/usedcars for information on how to obtain a vehicle history report, and to visit www.safercar.gov to check for open safety recalls;
• adding a statement, in Spanish, to the English-language Buyers Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer conducts the sale in Spanish;
• providing a Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide; and
• changing the description of an “As Is” sale.

Note that there are two new versions of the Buyers Guide, and your state’s law will determine which version you must use. Fillable versions of the new Buyers Guide forms and updated guidance are available on the FTC’s website.

Although the revisions appear straightforward, the devil is in the details. Dealers should review the new Buyers Guide forms, revised instructions, and used car warranty and service contract options they offer and consult with their legal counsel to make sure the revised forms are accurately completed.

Finally, don’t recycle the stacks of old Buyers Guides you may have lying around just yet. The amended rule permits dealers to use their remaining stock of Buyers Guides until January 27, 2018.

*Christopher J. Capurso is an associate in the Virginia office of Hudson Cook, LLP. Chris can be reached at 804.212.2998 or by email at ccapurso@hudco.com.
*Lauren T. Hunt is an associate in the Virginia office of Hudson Cook, LLP. She can be reached at 804.212.2697 or by email at lhunt@hudco.com.