Two firms face allegations that rent-pricing systems facilitate collusion among some big apartment owners

If you want to know why apartment rents got so high, some people say look to big data. Many landlords outsourced their pricing decisions to software that told them what rents to charge.

These algorithmic pricing systems analyze giant troves of information about the rental market. Then they direct landlords on how much to increase rent for each lease renewal, or what to ask for newly vacated apartments.

Algorithms and other big data have changed the way many landlords do business. In the past, landlords would often make deep cuts to rents when the market started to head south, but algorithms showed them that wasn’t always necessary. Many building owners also once believed keeping their apartment buildings as full as possible was the best way to maximize profits.

Algorithmic pricing systems, by contrast, calculated that some landlords could earn more money by pushing up rents, even if that brought about higher vacancy rates.

At least dozens of landlords across the U.S. rely on pricing systems from two companies—RealPage and Yardi Systems—to determine what they charge millions of renters.

Now, these two firms face allegations that their rent-pricing systems facilitate collusion among some of the country’s biggest apartment owners.

Two lawsuits, one against RealPage and one against Yardi, allege that the pricing systems enable an exchange of confidential pricing information to set rents across buildings and markets. That reduces much of the natural competition that might exist if landlords didn’t outsource their pricing decisions to software, the complaints allege.

The lawsuits, brought by tenants in federal courts in Tennessee and Washington, allege that the two companies and their landlord customers are engaged in illegal behavior, and that it has translated into higher rents for tenants.

The U.S. Justice Department might soon weigh in on whether algorithms unlawfully drive up rents. The department’s antitrust division has been investigating RealPage’s practices and is considering a potential enforcement action, according to people familiar with the matter.

Earlier this month, the department filed a notice in the case against RealPage, saying it would consider posting a “statement of interest” by next month that would attempt to guide the court’s decision in that case.

The scrutiny is part of a broader effort by antitrust enforcers to examine whether the use of algorithms in price setting facilitates collusion or otherwise keeps prices artificially high.

RealPage has previously denied these allegations. It declined to comment further on pending litigation. Yardi denied the allegations against the company.

In a letter to members of Congress who called on the Justice Department to investigate RealPage, the company said last year that the purpose of its system wasn’t to boost rents or drive up vacancies. It was to analyze supply and demand so landlords can more efficiently manage buildings.

In some cases, that can mean lowering rents to preserve occupancy, RealPage said.

The firm pointed to the general decline in apartment-vacancy rates in recent years as evidence that its software didn’t contribute to an increase in empty apartments. It also played down the role that nonpublic pricing data plays in its algorithm. Yardi, meanwhile, has said it never uses nonpublic data to adjust rents. Both firms said they don’t allow their clients to directly see each other’s pricing data.

Apartment owners are hardly alone in embracing sophisticated pricing systems. Student-housing operators also use rent-setting software, as do owners of single-family rental homes. More companies, from grocery stores to ride-sharing entities, rely on automated pricing to make sales.

Regulators and the Biden administration have expressed concerns about the pricing effects of big data. In September, the Justice Department filed a complaint against Agri Stats, an analytics company focused on the pork and poultry industry, alleging that it was helping processors raise prices and reduce market competition.

“So many of the products we buy have prices set by algorithms,” said Zach Brown, an economics professor at the University of Michigan who has studied the effects of pricing technology. “These issues are going to be increasingly relevant, and for a long time.”

In the multifamily market, asking rents have flattened out this year and even fallen in some places after a boom in new construction. But rents rose to record levels during the pandemic, up about 25% between 2021 and 2022, according to some metrics.

The companies that offer pricing software have indicated that their technology helps landlords to raise prices. In promotions for Yardi’s pricing system, formerly called RENTmaximizer, one landlord said it allowed the firm to “push rents more aggressively” and “quickly.” Another landlord said it enabled her firm to eliminate concessions for tenants.

By Brian Planalp – Reporter, Cincinnati Business Courier

Kenwood Dealer Group, Greater Cincinnati’s second-largest auto group, has gifted more than $1.2 million to Cincinnati State Technical and Community College to help bridge a growing labor gap of auto technicians, especially those with the expertise to service hybrid and electric vehicles.

“Today’s auto technician is a highly skilled professional. Gone are the days when you can learn to be a mechanic in a back alley garage,” Dave Fay, director of fixed operations for Kenwood Dealer Group, said at a press event Nov. 16. 

Cincinnati State will rename its automotive program the Kenwood Dealer Group School of Automotive Technology. 

Kenwood Dealer Group’s Bob Reichert (center right) and Dave Fay (center left) announced a 10-year partnership with Cincinnati State to train the next generation of auto technicians. Cincinnati Business Courirer photo.

“The auto trade is going to change a lot over the next 50 years,” said Chuck Butler, professor and automotive program chair at Cincinnati State. “This partnership is going to allow us to take our program from where we are to where we need to be.” 

Bob Reichert, CEO of Kenwood Dealer Group, which has 14 dealerships and nearly 1,200 employees, described it as “a groundbreaking, once-in-a-lifetime opportunity” for his business. Kenwood Dealer Group is the region’s 18th-largest private company, according to Courier research, with $987 million in 2022 revenue.

The gift will augur a 10-year partnership, with funds used to create scholarships, expand offerings, fund facility upgrades and purchase new hybrid and electric vehicles to supplement the program’s 30 vehicles on-hand so students can learn from state-of-the-art machinery. 

“That’s one of the biggest things I see with some of these schools – they have a lot of cars, but they’re from the ‘90s,” Fay told the Business Courier. “So what we want to do is start upgrading that fleet so the students that are here are working on the newest technologies, and when they get to the dealer, its not the first time they’re seeing these new things.” 

The automotive industry doesn’t have enough workers to service the 290 million cars and trucks on American roads. 

The National Auto Dealers Association estimates the industry needs to replace 76,000 technicians every year just to keep up with retirements and new job demand, but U.S. career and technical colleges and training programs produce just half that. 

Cincinnati State’s program currently enrolls around 75 students. It is expected to expand to around 100 students in the first year of the new partnership. 

“We will attract more students by raising the awareness of just how lucrative a career in the automotive field can be,” Fay said. “A tenured certified auto tech has exceptional earning potential without a decade of student debt to go along with it.” 

The students Kenwood Dealer Group recruits to Cincinnati State will be free to get jobs anywhere they choose afterward.  

“I think Cincinnati State is the most under appreciated educational institution in the city,” Reichert said. “I’m proud and excited that we can be part of a program that can prepare these techs for a rewarding career no matter where they’re employed.” 

A spokesperson said Cincinnati State receives generous support in different forms from many local companies, but the partnership with Kenwood Dealer Group is groundbreaking in its comprehensiveness, and the college sees it as a model for other programs.

“I think Cincinnati State has been that secret on the hill for the last half century, and maybe today people are gonna find out about it,” Butler said. 

In April, the federal Environmental Protection Agency (EPA) proposed new rules on electric vehicles (EVs) that would even make California regulators blush.   

• The EPA now effectively proposes that two-thirds of new cars and trucks sold starting in 2032 be zero emission.

NADA has branded the proposal “too far, too fast.”

• The overly aggressive proposal is opposed by NADA and the Alliance for Automotive Innovation – the trade group representing automobile manufacturers doing business in the United States. Notably, the Alliance has not opposed past iterations of EPA regulations, but is vociferously opposing the EPA’s current proposal.

NADA Advocacy on the Proposal
NADA’s entire advocacy staff has been very active in response to the EPA proposals. Advocacy initiatives include:

• May 2023
  • NADA published Dealerships On Track to Invest $5.5 Billion in EV Infrastructure, highlighting the huge investment dealers are spending to support the sales and service of EVs.
    • The investment figure has since been increased to $6B to include commercial truck dealers.
  • NADA Regulatory Affairs Committee Member Jeff Weber testified on the problems of the proposal, and submitted remarks for the record.
  • Former ATD chair Jodie Teuton testified on behalf of ATD regarding the EPA’s aggressive greenhouse gas emissions standards for heavy-duty commercial trucks. See Jodie’s testimony here.
• July 2023
  • NADA filed extensive comments in response to EPA’s proposal, focused on the vehicle demand side of the equation.
    • NADA stressed that new standards must account for factors such as vehicle affordability, consumer incentives, charging infrastructure, utility capacity, and model availability.
• September 2023
  • Reversing EPA’s “too far, too fast” approach is one of NADA’s Legislative Priorities.
  • During NADA’s Washington Conference Dealers and ATAEs began pressing Congress to correct EPA’s EV policy.
  • NADA urged Members of Congress to sign a letter led by Rep. Lisa McClain, which expressed strong opposition to “EPA’s misguided attempt” to push EVs before consumers are ready. The letter currently has 179 total signers (21 Senators, 158 Members of the House).   
• September-November 2023
  • NADA began advocating for the “Choice in Automobile Retail Sales (CARS) Act,” H.R. 4468/S. 3094, which permanently prohibits the EPA from finalizing its emissions proposal.
  • NADA held numerous in-person meetings with senior White House and EPA officials, voicing practical concerns about the impact of the proposed emissions regulation and providing data demonstrating why the regulations will actually slow, rather than accelerate, EV adoption. 
• October/November 2023
  • NADA influenced a front-page New York Times article about the realities confronting policymakers with EV tax credits.
  • NADA Director and Past Chairman Rhett Ricart was quoted as a Ford dealer on the front lines.
• November 2023
  • NADA and ATD jointly submitted a letter to House Republican leadership in support of the House Interior-Environment Appropriations bill (H.R. 4821), which would prevent the EPA from finalizing or implementing the unrealistic EV mandates for light-duty and medium- and heavy-duty trucks. The House passed H.R. 4821 on November 3.

The Reality on the Ground
The Biden Administration holds the unilateral power to finalize the EPA EV rule, so NADA has engaged directly with the White House for the past 14 months to bend the Administration’s policy in a more realistic direction.

• That said, Congressional action can influence the Biden Administration. Republicans are united in opposition to the EPA’s mandate and while Democrats are generally supportive, some Democrats have supported legislation to rein in EPA because of practical concerns about the EPA regulations – specifically a lack of an adequate and reliable charging infrastructure. These concerns could affect the stringency of the final rule as well as lay the groundwork for potential changes in 2025.

In the Media

• NADA is currently pushing an op-ed by President and CEO Mike Stanton that offers a better way forward – broad promotion and adoption of plug-in hybrids as an alternative to the EPA’s zero emission mandate.

Adding Cooks to the Kitchen
The EPA mandate does not just impact automotive – it will broadly impact the economy, from trucking, to farming, wholesale distribution and a variety of other industries. NADA is in the early stages of forming a coalition broader than the automotive industry to voice concerns about the mandate and the negative consequences it will have on the broader economy.

Want to Go Deeper? Read…

• EPA Proposal
• NADA Comments
• Automotive News summary of EPA proposal
• NADA Legislative Priorities

Questions?
Email us at publicaffairs@nada.org

The Big Three tell Biden his fuel-economy rules will ‘devalue’ their EVs

On Sept. 14, the day before the United Auto Workers launched its strike, the Energy Department sent letters to Ford, General Motors and Stellantis asking for help understanding “specific challenges” to its proposed rule that would reduce the credits under the corporate average fuel economy (Cafe) standards for producing electric vehicles.

The issue is technical, but bear with us because this is a tale of regulation at crazy cross-purposes. Congress’s 1979 Chrysler bailout required the Energy Department to impute a “petroleum equivalency factor” for EVs they might produce to give Detroit auto makers a means of complying with Cafe standards besides making more fuel efficient trucks.

In 2000 the Clinton Administration sweetened the regulatory subsidy for EVs by assigning them a fuel economy multiplier of 6.67. Ergo, an EV calculated to get 40 miles per gallon would receive credit for 266.8 mpg under the Cafe standards.

Although Congress had limited this multiplier credit to cars that run on biofuels, natural gas and hydrogen, the Clinton Administration said it was only fair to give the bonus to EVs too. Subsequent Presidents kept this EV fillip because it has let Detroit auto makers churn out profitable gas guzzlers while meeting ever-rising fuel economy mandates.

Enter the Sierra Club and Natural Resources Defense Council, which petitioned the Biden Administration in 2021 to scrap the 6.67 multiplier for EVs. They note that its legal justification “is questionable, as the statute expressly provides for different treatment” between electric vehicles and those that run on so-called alternative fuels. They’re right.

But their real goal is to force auto makers to manufacture more EVs to meet Cafe standards, which the Administration has also proposed ratcheting up. “Excessively high imputed fuel economy values for EVs means that a relatively small number of EVs will mathematically guarantee compliance,” they noted.

The Energy Department in the spring proposed to eliminate the 6.67 multiplier while softening the impact with other changes. As a result, a Ford-150 Lightning would only be credited with 67.1 mpg, down from 237.7 mpg. But taken altogether, the Administration’s proposed revisions would in effect mandate that EVs make up 100% of new vehicles by 2032.

Detroit auto makers would be slammed harder than foreign competitors by the regulatory changes because pick-ups and SUVs make up a larger share of their fleet sales. “The average projected compliance cost per vehicle for the D3 is $2,151, while non-D3 auto manufacturers only see an increase of $546 per vehicle,” the Big Three recently told the Energy Department.

They add that the proposed rule would “devalue” their EV investments. This gives away that complying with government mandates, not satisfying consumers, is their chief preoccupation. GM’s strategy has been to produce just enough EV pick-ups to meet the Cafe standards. But under the Energy Department’s proposal, it could make more sense to pay the government penalties than to increase production of EVs that don’t sell. This may be why GM is now throttling EV production, as Ford has also done.

Unrealistic fuel economy standards combined with inflated credits for EVs have let auto makers pretend that their cars are more efficient than they are. It’s nice that the Administration is showing concern about the costs of its EV mandate, but it would be far better if it set fuel economy rules that were realistic and honest.

The 2024 race for the White House reignites debate over EVs

The EV transition is running head on into polarizing politics.

Already this year, pricier electric vehicles got even more expensive for many potential buyers thanks to higher interest rates, which affect loan costs.  

Intensifying the debate is a continuing labor strike against the Detroit car companies by auto workers worried about whether they will have jobs in the new EV world.  

The tensions have risen as Ford and other global automakers have spent billions of dollars designing and building EVs, a move that looked especially smart a year ago when they were caught off guard by the strong demand for their new offerings. 

Now, they are pulling back those plans in the midst of a slowing pace of growth in demand. 

This past week, General Motors said it would delay opening a large EV truck factory in Michigan by a year, citing a need “to better manage capital investments while aligning with evolving EV demand.” 

The move followed an earlier announcement by Ford pushing back to late 2024 a target of building 600,000 EVs annually. The company has also temporarily cut one of the production shifts for its electric pickup and paused construction of a $3.5 billion battery plant in Michigan. 

Even Elon Musk sounded worried Wednesday when he suggested that 

Tesla was slowing work on a new factory in Mexico. It was a rare moment of caution from the CEO, an entrepreneur who is targeting the sale of 20 million electric vehicles by 2030 and has cheered on other automakers to follow his path to a renewable-fuel future. 

“Tesla is an incredibly capable ship, but we need to make sure, like if the macroeconomic conditions are stormy, even the best ship is still going to have tough times,” Musk said. “The weaker ships will sink.” 

The demographics of car ownership show the political wedge. 

In the U.S., for every five Democrats owning an EV there are two Republicans, said Alexander Edwards, president of Strategic Vision, which surveys new-vehicle buyers. 

His data finds that Democrats give priority to “environmentally friendly” when buying their cars while Republicans have other things they are looking for, such as performance and prestige.

A key part of Tesla’s success as an electric vehicle maker was focusing on marketing its cars beyond just those appealing to environmentally conscious consumers. Musk often said he wanted the Model S sedan to be the best car on the market that just happened to be electric and has heavily emphasized his vehicles’ performance and styling over the years. Others have tried to follow suit.

On the campaign trail, however, EVs don’t always sound so cool. The GOP presidential hopeful Vivek Ramaswamy, who is against subsidies, has drawn laughs as he suggests that EV buyers are motivated by “a psychological insecurity,” while former Vice President Mike Pence said during the second Republican presidential primary debate that Biden’s efforts “are driving American gasoline, automotive manufacturing, into the graveyard.”  

Former President Donald Trump, the GOP front-runner, has fanned the flames against the transition, whether it is tapping into consumers’ concerns about the mile range of EVs or auto workers’ worries about losing their jobs because of the new technology.

In the battleground state of Michigan, which Trump carried in 2016 but lost in 2020, Biden is narrowly leading in a potential rematch, according to the research firm EPIC MRA’s August statewide survey of voters. Among the state’s United Auto Workers union members, Trump leads 46% to 43%. Bernie Porn, the pollster, said the slippage among union members was likely because of Biden’s support of EVs. 

So, it wasn’t surprising that Trump and Biden showed up last month in the Detroit area shortly after the UAW began striking. 

“I don’t get why Ford and GM, why these carmakers, aren’t fighting…to make cars that are going to sell, to make cars that are going to be able to go on long distances,” Trump said at a rally during which he predicted the EV policies would lead to “hundreds of thousands of American jobs” being lost. 

Biden visited the UAW picket line, one of several trips he has taken to the region, including to last year’s Detroit auto show, where he touted his work to help EVs. 

“The real question is whether we’ll lead or we’ll fall behind in the race to the future; or whether we’ll build these vehicles and the batteries that go in them here in the United States or rely on other countries,” Biden said while visiting a Ford factory early in his administration. 

Underpinning the politics of EVs is an economic divide, made more stark by the rise of interest rates. Most EVs are more expensive than the average new vehicle—which sold for about $46,000 in September.

As new cars and trucks become more costly, the practical effect on buyers shows up in Strategic Vision’s survey: The median family household income of new-car buyers has risen to $122,000. That is a significant increase from around $90,000, where it had been at for a couple of decades until just recently. EV buyers are even better off, with a median household income of $186,000.

In some ways, the green car tensions are a return to the 2012 political season, when GM’s Chevrolet Volt became the embodiment of the Obama administration’s rescue of the Detroit auto industry in 2009 and efforts to promote electrified vehicles.

Former House Speaker Newt Gingrich, who unsuccessfully sought the Republican presidential nomination, said the problem with the “Obama car” was that one couldn’t put a gun rack in the plug-in hybrid vehicle.

Sales of the Volt disappointed, and Dan Akerson, then CEO of GM, was left fuming that the company hadn’t designed the sedan to become “a political punching bag.”

GM later killed off the Volt.

Write to Tim Higgins at tim.higgins@wsj.com

EAST LANSING, Mich. – Oct. 16, 2023 – Michigan economic consultancy Anderson Economic Group, LLC reports that total economic losses from the UAW’s strike against the Detroit 3 OEMs have now reached $7.7 billion. Losses are calculated through the fourth full week, which ended at midnight on October 12.

AEG estimates the following cumulative losses through week four:

• Wages of OEM Workers: $359 million
• OEM Losses: $345 billion
• Supplier Wages and Earnings: $2.67 billion
• Dealers, Customers, Other Industry Losses: $1.21 billion

These figures do not include plant closures, additional strike targets, or layoffs that took effect
on or after Friday, October 12. These will be included in our loss calculations in the fifth and any
successive weeks. 

Week Five is Danger Zone
“We’ve entered the danger zone for many suppliers, and more than one production line.
Without a settlement soon, a plausible restart with higher costs will likely lead to some
permanent losses of production, and suppliers that will need financial assistance to return to
operation. “

Anderson noted that the magnitude of losses the firm previously estimated were now being
corroborated from other sources. “We’re already seeing retail sales, airline travel, and income
tax collections dropping in the State of Michigan. There are also increasing layoffs among
vulnerable suppliers.”

“Most of these costs” he added, “are being borne by workers and by small- and medium-sized
businesses, not by the Detroit 3.”

Estimating Economic Losses
To determine the ongoing economic impact of the UAW “stand-up” strikes, AEG estimates aggregate
losses that include:

• Lost wages to workers, including striking workers and others temporarily laid off or forced to
  decrease work hours. AEG estimates cover both UAW and non-union auto workers, along with
  workers employed by impacted suppliers. Estimates were made based on the number of UAW
  workers in the U.S, average daily wages, and lost health care benefits.
  
  
• Lost earnings for the Big Three auto manufacturers. AEG estimates company losses, noting
  wages that would not be paid to striking workers.
  
  
• Supplier losses. Because a strike reduces demand for automotive parts and components, AEG
  estimates lost supplier wages and earnings.
• Dealer, customer, and other auto industry losses. Automotive dealers and custmers needing repairs both experience strike-related losses.

Loss estimates do not include unemployment benefits or unemployment taxes; income taxes on
wages; any settlement bonuses (which are transfers from shareholders to workers and do not
represent U.S. income lost); or any reputational damage to the union or the employer(s). We count
strike pay as a loss to the union and a gain to striking employees.

Source: Anderson Economic Group, LLC.
Notes: Week 4 revisions include refining the direct wage loss category to include only OEM workers, with other wage
losses in the supplier category; adjusting for GM covering some health care costs for striking workers; downward
revisions in prior week losses for dealers, given current inventory levels; and upward revisions in supplier losses given
additional layoffs. Results by category are not precisely comparable with earlier releases.
Strike-caused economic losses include only direct losses to affected workers, businesses, and customers.
Estimated losses do not include settlement bonuses, transfer payments, strike pay, unemployment insurance taxes or
benefits, or income tax changes. OEM stands for Original Equipment Manufacturer.
Columns may not total precisely due to rounding. Presumes no permanent change in production or employment
caused by strike. Company losses are direct economic losses and will differ from accounting charges. They include
both facility losses and production losses spread across multiple facilities.
“Week 1” is defined as Friday, September 15 – Thursday, September 22, 2023. “Week 2” is defined as Friday,
September 23 – Thursday, September 28. “Week 3” is defined as Friday, September 29 – Thursday, October 5. “Week
4” is defined as Friday, October 6 – Thursday, October 12. Estimates for time periods during a strike are necessarily
imprecise, reflecting apportionment and estimates of costs incurred under fixed contracts over longer periods of time.

2023 Research Methodology
The firm’s consultants followed the same proven methodology used to estimate impacts from
the 2019 UAW strike, the threatened 2022 rail union strike, the threatened 2023 Teamsters
strike against UPS, two West Coast port shutdowns, the 2003 East Coast electrical blackout, the
2022 Türkiye-Syria Earthquake, and other significant events in the firm’s 27-year history. Inputs
to the estimates included production and sales figures for the industry and specific automakers,
financial disclosures including form 10Ks, contract documents, public statements by the union
and the companies involved, and other industry and economic sources. AEG has calibrated
estimates by comparing recorded losses in GDP and earnings in affected states after prior
events. The firm further compared its estimated cost of the 2019 UAW strike against General
Motors with later reported GDP in Michigan, Ohio, and the U.S., and with accounting losses
reported by General Motors in early 2020.

Follow AEG’s ongoing strike analysis at www.andersoneconomicgroup.com/news/uaw-strike-analysis-2023/ , along with key economic indicators for the auto industry on our Automotive
Dashboard.

About Anderson Economic Group, LLC
Clients of AEG have included original equipment manufacturers, tier I and tier II suppliers,
automotive, business and manufacturing trade groups, auto dealers, labor unions, state
governments, and colleges and universities. No party to the current labor dispute
commissioned our analysis.

Anderson Economic Group routinely produces meticulous studies that illuminate economic
trends in Michigan and across the U.S. AEG’s practice areas include public policy and economic
analysis, market and industry analysis, and strategy and business valuation. For more
information about the East Lansing and Chicago-based company, now in its 27th year, see
AndersonEconomicGroup.com.

Instant $7,500 tax credit starts in 2024

The tax break for buying an electric vehicle is about to hit the accelerator.

Getting the EV tax credit now vs. later

“There are a bunch of factors: Which car are you thinking about? Is it eligible now? What’s your taxable income for ’23 or ’24? How comfortable are you with leasing?” Levin said.

Consumers who want certain vehicles should buy before year-end. The list of eligible vehicles could shrink in 2024. That is because the IRS has yet to issue expected rules on a provision of the law that excludes vehicles with parts from certain countries, possibly China. Rules around the origin of battery manufacturing also get stricter in 2024.

The income limits—$150,000 for individuals and $300,000 for married couples filing jointly—could also affect a decision. If your income is going above the limit in 2023 or 2024, you need to buy this year to get the credit. 

The new rules don’t apply to leases. If you lease an electric vehicle, the manufacturer or lender can build the federal tax credit into the cost. Check the lease payments to make sure the dealer is passing the credit on to you.

“People weren’t intending to lease but they do it for the credit,” Levin said.

The income limits—$150,000 for individuals and $300,000 for married couples filing jointly—could also affect a decision. If your income is going above the limit in 2023 or 2024, you need to buy this year to get the credit. 

The new rules don’t apply to leases. If you lease an electric vehicle, the manufacturer or lender can build the federal tax credit into the cost. Check the lease payments to make sure the dealer is passing the credit on to you.

“People weren’t intending to lease but they do it for the credit,” Levin said.

Two U.S. senators introduced a bipartisan bill last week that would force the Federal Trade Commission to go back to the drawing board on its proposed rule for dealerships.

The FTC last year proposed its Motor Vehicle Dealers Trade Regulation Rule — or Vehicle Shopping Rule — that critics including the National Automobile Dealers Association argue would add unnecessary costs, paperwork and complexity to the car-buying process.

A new bill from Sens. Jerry Moran, R-Kan., and Joe Manchin, D-W.Va., would direct the FTC to “redo” the proposal by requiring the agency to issue an advanced notice of proposed rulemaking for public comment — a regulatory step the lawmakers say was instead replaced with 49 open-ended questions about the proposal.

The senators’ bill — known as the FTC REDO Act — would require the FTC to also conduct studies on auto retailing and consumer product testing and publish a cost-benefit analysis driven by data.

“The FTC’s rule would create more paperwork when buying a car at the dealership and lead to more bureaucracy and red tape for small businesses,” Moran said in a statement.

“If the FTC plans to overhaul the way Americans purchase vehicles, they should be required to ask for and receive input from the public at the very least,” he continued. “This legislation will make certain FTC regulators can’t finalize the rule without first receiving feedback from industry leaders and the general public.”

Concerns about high sticker prices and limited charging infrastructure for electric cars are driving renewed interest in the gasoline-electric vehicles.

When Amber Lombardi went car shopping last year, she knew she needed an efficient vehicle able to haul a large trailer for her mobile dental practice. And it would be great if it could help provide electricity for some of her onboard equipment. The Ford F-150 pickup she chose has plenty of towing capability, and her drills and teeth-cleaning tools can draw juice from a 7.2-kilowatt generator built into the bed of the truck, powered by the same battery that helps propel it down the road.​

Lombardi’s truck isn’t one of Ford Motor Co.’s hot-selling F-150 Lightning electric pickups. It’s a gasoline-electric hybrid version of the venerable F-150, which costs less and still saves big on her fuel bills. “It just wasn’t within our reach to have a fully electric vehicle at this time,” says Lombardi, chief executive officer of Mainely Teeth in Portland, Maine. “So this is kind of bridging our gap.”

More than a quarter-century ago, Toyota Motor Corp. introduced the Prius, a car with a new technology—a small gasoline engine paired with a relatively large battery—that would become a darling of the green movement. But in recent years those hybrids fell out of favor as automakers raced to develop fully electric vehicles, which captured generous government incentives and sparked the imaginations of forward-thinking drivers. Now hybrids are making a comeback as would-be electric vehicle buyers are increasingly put off by stiff sticker prices and spotty charging infrastructure.

US sales of hybrids have more than doubled since 2020 and are heading toward a 35 percent increase this year, according to researcher GlobalData. “The auto industry doesn’t function in a mode where you just flip a switch and everything’s different,” says Jeff Schuster, GlobalData’s executive vice president for automotive. Hybrids are “a way for the mass market to start edging into electric vehicles.”

To win over some of those customers, Ford is doubling production of its three-year-old F-150 hybrid and lowering the price by $1,900—making it about equal to the full-gasoline model, and almost 10 percent cheaper than the all-electric version it introduced in 2022. Ford aims to quadruple hybrid sales over the next five years and offer the technology across its lineup, even as it throttles back ambitious production plans for its fully electric models. “We have been surprised, frankly, at the popularity” of hybrids, Ford Chief Executive Officer Jim Farley said on an earnings call in July.

For drivers seeking to tow big trailers, hybrids are a better option than fully electric versions, because heavy loads sap the battery and reduce the range of an all-electric pickup. The F-150 hybrid combines an electric motor with a 3.5-liter V6 engine, giving it 430 horsepower, among the most powerful in the F-150 lineup. The 2023 model averages about 25 mpg, versus 21 mpg for a conventional F-150 with the same engine, according to the Environmental Protection Agency.

GlobalData expects Toyota’s hybrid sales to rise 7.5 percent this year, to more than 600,000. About one-third of Toyota’s sales in the US are hybrids, and some models are only available as gas-electrics, including the Sienna minivan and Sequoia full-size SUV.

The Sienna has a waiting list of at least eight months, and Toyota would sell more hybrids as a percentage of its total—especially plug-in models—if it had more powertrains available, says Jack Hollis, Toyota’s US sales chief. “If you look at plug-in hybrids, it’s really growing fast,” he says. “We could easily double our plug-in hybrid” sales.

While plug-in hybrids—which come with a charging port like a fully electric vehicle—provide added flexibility, they also add thousands of dollars to the sticker price. Hollis says many American buyers are satisfied with cheaper so-called mild or rechargeable hybrids, especially when the vehicles are tuned to eke out more horsepower—even at the expense of fuel economy.

The number of hybrid models for sale in the US market is expected to grow to 369 by 2026, more than double the 164 on sale in the US in 2020, according to GlobalData. Hyundai Motor Co. and Honda Motor Co. also are major hybrid players that combined are expected to control 32 percent of the US market for gas-electric models this year.

Hybrids account for almost one-fifth of Honda’s sales in the US. “Hybrids are really contributing to the sales success we’re seeing—both on the Honda and Acura side of the business,” says Mamadou Diallo, Honda’s US sales chief. “The kind of volume we’re doing with hybrids really sets the tone for our future EVs.”

Honda attributes its recent hybrid success to a new dual-motor system that provides a boost to horsepower and fuel economy, unlike its previous generation of single-motor hybrids. Production of the newly fashioned CR-V hybrid started almost a year ago, and the new Accord hybrid hit the road in January. Diallo said that a hybrid version of the Civic compact is planned for next year and that gas-electric versions of other models are in the works.

The hybrid surge is not limited to the US. Globally, sales of hybrids are expected to be up 20 percent this year and grow by 71 percent over the next five years, GlobalData forecasts. Asia and North America will lead the charge, but Europe, where regulations favor all-electric vehicles, is still expected to see an 11 percent jump in hybrid sales this year, GlobalData says.

Environmental groups have assailed Toyota for sticking with hybrid technology that still relies on pollution-emitting fossil fuel, but former Chairman Akio Toyoda insists many buyers aren’t ready to fully embrace EVs. So Toyota is doubling down on its hybrid offerings, even as it boosts spending on EVs to $50 billion and plans to roll out 10 fully electric models by 2026. “Toyota is a department store of all sorts of powertrains,” Toyoda told reporters at a dealer meeting in Las Vegas last year. “It’s not right for the department store to say, ‘This is the product you should buy.’”

Hybrids continue to outsell EVs in the US, with sales approaching 1.4 million vehicles this year, versus nearly 1.2 million full electrics, according to GlobalData, which sees hybrids controlling 9 percent of the American car market in 2023, while full-electrics command 8 percent. Americans have been slower to adopt EVs than European and Chinese consumers because of the lack of charging infrastructure as well as the higher price of EVs, even after Tesla Inc. repeatedly cut prices this year. The average price of an EV in the US in August was $59,752, compared with $45,567 for models that run on gasoline, according to researcher Edmunds.com.

And with car loans currently averaging 7.4 percent, financing adds about $9,000 in interest over the 68-month life of a $40,000 loan, according to Edmunds. “There’s an element of pragmatism right now, where people aren’t opting for all the bells and whistles,” says Jessica Caldwell, executive director of insights at Edmunds, which adds up to slowing sales for vehicles over $50,000. That helps explain why more consumers are turning to hybrids, which are typically priced below a model’s comparable all-electric version.

Ford has struggled to keep up with demand for the hybrid version of its small Maverick pickup, which starts at $23,400. The Maverick hybrid accounts for nearly 60 percent of the model’s sales; CEO Farley said that “was far beyond our expectations.”

That’s why Ford sought to erase the price premium on the 2024 F-150 hybrid, which it unveiled at the Detroit Auto Show on Sept. 12 with new styling and features. Ford now expects the hybrid F-150 to account for one-fifth of the sales of the truck, the bestselling vehicle on the US market for the past four decades. That’s double the current hybrid take rate, and as production picks up, the company will offer the hybrid F-150 with a starting price of $55,000—the same as an equivalent gas-fueled model.