Federal regulation compliance in 2012 cost the average franchised auto dealership their earnings from a sale of 106 vehicles, representing more than 21% of the dealership’s before-tax net profits. 

According to a report by the non-profit Center for Automotive Research (CAR), the major portion of this cost is due to regulations related to vehicle loans, employment, and bookkeeping. Compliance with repair, marketing, sales, and business operations regulations was responsible for the remainder of this enormous cost. Given the increase in regulations since 2012 and the additional price of meeting state and local regulations, it’s clear that a significant difference to dealership’s earnings will result from improving compliance efforts. Automotive compliance is a complicated and time-consuming effort requiring ongoing research, training, and auditing.

For example, complying with the Federal Trade Commission’s Red Flag Rules requires dealerships to have a written identity theft prevention plan capable of detecting the “red flags” of this fraudulent activity, take actions to avert it, and alleviate its effects. Updating the program  to target new threats is also required. There is no one-size-fits-all solution to this requirement because businesses at higher risk need to have a much more comprehensive program than a business at lower risk.

It can be costly to attempt automotive compliance in-house, taking time from other tasks and often resulting in inadvertent errors. Another alternative is to bring in a specialist such as Dealership Development. Our proven system comprehensively ensures meeting legal responsibilities. Our services include audits, specific solutions based on the audits, in-person and online training, documentation, and complaint resolution.