(September 16, 2004) California Chamber-opposed “job killer” legislation that will increase consumer car prices and litigation against car dealers in California awaits action by Governor Arnold Schwarzenegger.

AB 1839 (Monañtez; D-San Fernando), as amended August 27, severely limits credit sources for the purchase of personal vehicles and harms many car dealers by curbing their ability to profit on certain types of sales.

The Chamber has labeled AB 1839 a “job killer” because it will have a negative effect on California’s vehicle sales industry and could ultimately cause car dealerships in the state to close their doors.

”By limiting financing options, AB 1839 could lead to higher car prices for consumers.  Further, this bill will also result in an increase in litigation because it contains a number of vague and ambiguous terms that will undoubtedly permit and encourage frivolous lawsuits against California car dealers,” said Erika Frank, Chamber legislative advocate and general counsel. 'Legislation that will result in unnecessary and expensive litigation and ultimately drive up costs for all parties cannot be construed as a consumer protection measure.'

AB 1839 limits the options dealers may offer when vehicle contracts are sold to consumers.  The Chamber believes it is bad public policy for the state to regulate the price of goods and services. State regulations on any sale of goods is bad for business and government price controls could interfere with consumer’s ability to negotiate for the best possible price. In addition, because the marketplace determines interest rates, the regulations proposed by this bill will not reduce the amount of finance charges that consumers will ultimately pay.  

 AB 1839 had the potential of becoming a measure that would have educated and protected consumers from fraudulent and unscrupulous dealers.  Instead, if enacted, AB 1839 could lead to higher car prices, will make it more difficult for consumers to obtain financing, and will hamper car dealers ability to make a profit on certain types of sales.

The Chamber has asked Governor Schwarzenegger to “veto” AB 1839. The Chamber is urging all members to also write the Governor and request a veto of this bill.

For more information on AB 1839 or to use our easy-to-edit position letter to request a veto, please visit our website at www.calchamber.com.