MVA clears way for car-buying service in Md. Customer pays $96 for at least 5 bids from car dealers.

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.

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.

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.

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.

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