MVA clears way for car-buying service in Md. CarBargains collects bids for consumers

March 27, 1992|By Ted Shelsby | Ted Shelsby,Staff Writer

In a move that could change the way at least some Marylanders buy new cars, the Motor Vehicle Administration reversed an earlier decision and ruled yesterday that a car-buying service offered by a Washington-based consumer group does not violate state laws.

The ruling applies to the CarBargains service offered by Consumers' CHECKBOOK, better known for its publication of a magazine that rates auto repair shops, hospitals, plumbers, banks, garden nurseries and other services.

In January, when the Consumers' CHECKBOOK announced plans to expand its CarBargains service into the Baltimore area, the MVA's preliminary opinion was that it did not conform to state laws governing the sale of new cars.

In explaining the state's new position, Ronald E. Forbes, director of licensing and consumer affairs at the MVA, said that after meeting with officials of Consumers' CHECKBOOK, the MVA concluded it was not technically a "buying service" and did not need to be licensed as a dealer.

"After our review, we see them more as a consumer information or consumer education service," said Mr. Forbes in noting the difference between CarBargains and other auto-buying services the administration has ruled against in the past.

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

CarBargains has been operating in Washington and San Francisco for about a year and has moved into other parts of the country recently. It has promoted itself as an information service all along, said Robert M. Krughoff, president of the non-profit Consumers' CHECKBOOK.

CarBargains' primary service is to collect bids from area dealers on a particular car that a client is interested in purchasing.

Mr. Krughoff said the service promises its customer at least five bids.

Each dealer commits itself to a dollar amount, either above or below factory invoice cost, for which it will sell the type of car the customer wants.

"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 does not claim it can save a car-buyer $500 or $1,000 on a car, Mr. Krughoff said.

The price buyers pay, he explained, depends heavily on their negotiating skills. He noted, however, that the service has saved clients up to $3,000.

The charge for the service is $96.

Steve Stern of Rockville thinks the service was worth the money. He said it saved him $2,000 on the purchase of a new Toyota last summer. "It was terrific," he said. "There was no hassle. It was so easy. We went to the dealership [Darcar Toyota in Silver Spring] and drove home with the car that night."

Mr. Stern said the bid he accepted was $500 below those of the other dealers and that the service gave him more bargaining clout than he would have had on his own.

Mr. Krughoff warned, however, that there are times when it does not pay to use the service. For example, General Motors Corp.'s Saturn is sold like televisions and refrigerators in a department store: Customers simply pay the price on the sales ticket. As a result, Mr. Krughoff said, there is very little variation in price from one Saturn dealer to the next.

Joseph P. Carroll, head of the Maryland New Car and Truck Dealer Association, said he doubts that any car buyer could save on a purchase by paying a fee to a third party.

Mr. Carroll said he does not agree with the MVA's decision regarding CarBargains and added, "We plan to sit down with [the MVA] in the near future to clarify the situation."

Mr. Krughoff said the MVA "made the decision I expected. We are a publisher. We collect and disseminate information on the marketplace that helps the consumer get a good competitive price on a car."

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