Local News

Some lawmakers want tougher oversight of auto dealers

Posted December 8, 2009 6:29 p.m. EST
Updated December 8, 2009 7:22 p.m. EST

— Some state lawmakers want to increase oversight of auto dealerships after the Division of Motor Vehicles found 861 cases over the past two years in which consumers say they never received their titles.

Of those, more than 500 cases have yet to be resolved because the DMV cannot track down the title.

The reasons vary, but according to DMV Commissioner Mike Robertson, some has to with "out-of-trust" situations in which dealers borrow money for vehicle inventory on a vehicle-by-vehicle basis. The dealers, however, do not repay the lender, meaning they never receive the title.

Some state officials are now calling for change.

One proposal is to increase the $50,000 surety bond needed to open a dealership in North Carolina because it is not enough of a deterrent.

"In some instances, one vehicle could extinguish the bond," said Joey Gardner, deputy director of the DMV's License and Theft Bureau.

That could be a problematic solution, according to Jim Edwards, chief executive officer of the Carolinas Independent Automobile Dealers Association.

"We favor increasing the bond to $100,000, but we're concerned asurety companies won't write those bond," Edwards said."

Representative Nelson Cole, D-Rockingham, and co-chair of the Joint Legislative Transportation Oversight Committee, owned a car dealership for 22 years.

"My concern is for the consumer, and if you can't be bonded above $50,000, maybe you shouldn't be selling cars," Cole said.

In the meantime, Cole said there are ways for used-car buyers to protect themselves.

"In North Carolina, the law says the title has to be available at the place of business where you do business," he said.

He suggests consumers ask to see the title before buying.

"Then, if you can't see the title, then you've got to be leery of that transaction," Cole said.

Other proposals also discussed at Tuesday's transportation oversight committee meeting would allowing the DMV to track all vehicle transactions online. Another would require dealers to put up a fee of up to $2 to create a trust fund for victims.

Lawmakers hope to introduce the bill when the next legislative session begins in May.