MVA seeks curb on new-car buying service Broker operates without dealer license, state agency says.

January 29, 1992|By Ted Shelsby

Steve Stern of Rockville estimates that he saved $2,000 on the purchase of a new Toyota Camry last summer by taking advantage of a service offered by Consumers' CHECKBOOK, a Washington-based non-profit consumer advocacy group.

"It was terrific," he said. "There was no hassle. It was so easy. We went to the dealership and drove home with the car that night."

Though hundreds of Maryland car buyers have used the service -- which finds cars for consumers by soliciting bids from auto dealers -- others may never get the chance.

In a preliminary decision yesterday, the Maryland Motor Vehicle Administration said the service, called CarBargains, violates state laws governing sales of new cars.

Under Maryland law, anyone who charges a fee for completing a sale must be licensed as a dealer.

Robert Krughoff, president of Consumers' CHECKBOOK, an organization better known for its magazine -- which rates businesses such as auto repair shops and hospitals -- balks at the suggestion that its CarBargains service is illegal.

"I think such a law has no right to be on the books," he said. "It's a self-serving law created by the dealers to limit competition."

However, W. Marshall Rickert, administrator of the Motor Vehicle Administration, pointed out that the law also is designed to protect consumers by regulating dealers and policing the industry.

He said the benefits of the state system might outweigh any benefits of being able to buy a car for less.

The idea behind CarBargains is to help the consumer buy a car at a good price without haggling, Mr. Krughoff said.

A customer tells CarBargains which car he wants. The service promises to deliver at least five bids from Baltimore-area dealers within two weeks.

"We tell them they get one opportunity to bid, so they had better come with their best price," Mr. Krughoff said. "This is your chance if you want the business."

CarBargains charges $96.

Mr. Stern said the service was well worth the money. "They gave us five bids, and one was $500 below everybody else," he said. "I was really impressed with the service."

Since being introduced in Washington and San Francisco last March, Mr. Krughoff said, CarBargains has helped about 1,300 car buyers, about 700 of them in the Washington area. In all, he said, "we've had only three or four cases where a dealer did not make good on his promise." When that happens, the dealer is dropped from bidding for future sales.

Not everyone is happy with the service, however.

Joseph P. Carroll, head of the Maryland New Car and Truck Dealer Association, said the trade association opposes buying services. "How can you get a better deal," he asked rhetorically, "if you have another person to pay? Our feeling is that you can get just as good a deal acting on your own."

Mr. Carroll agreed with the MVA's position, arguing that anyone involved in selling cars should be licensed by the state as an automobile salesperson. The MVA needs to police the industry and prevent misrepresentations, he said.

Mr. Krughoff countered that CarBargains "is an information service, not a buyer service, although that is what people call it."

He said he sees no difference between offering the service to individuals and publishing the information in the organization's Bargains magazine for 45,000 subscribers.

"All we are trying to do is facilitate competition," Mr. Krughoff said. Consumers' CHECKBOOK is prepared to "litigate to the hilt" for the right to provide its service to Maryland car buyers, he said.

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