4501:1-3-08 Place of business required for used motor vehicle dealers.

 

 

 

Rule Summary and Fiscal Analysis (Part A)

 

Department of Public Safety

Agency Name

 

Bureau of Motor Vehicles                                  Anne Vitale

Division                                                                  Contact

 

1970 West Broad St., Suite 531 P.O. Box 182081 Columbus OH 43218-2081

614-466-7014        614-752-6063

Agency Mailing Address (Plus Zip)                                       Phone                     Fax

4501:1-3-08

Rule Number

NEW

TYPE of rule filing

Rule Title/Tag Line              Place of business required for used motor vehicle dealers.

RULE SUMMARY

1.  Is the rule being filed consistent with the requirements of the RC 119.032 review? No

2.  Are you proposing this rule as a result of recent legislation? No

3.  Statute prescribing the procedure in accordance with the agency is required to adopt the rule: 119.03

4.  Statute(s) authorizing agency to adopt the rule: R.C. 4501.02, R.C. 4517.32

5.  Statute(s) the rule, as filed, amplifies or implements: R.C. 4517.02, R.C. 4517.03, R.C. 4517.05, R.C. 4517.12

6.  State the reason(s) for proposing (i.e., why are you filing,) this rule:

This rule is being filed pursuant to a R.C. 119.032 five-year rule review.

This rule was previously filed and subsequently withdrawn to give the Dealer's Board the opportunity to review and consider how to integrate suggestions received from concerned stakeholders at its public hearing.

The amended language proposed in this rule incorporates many of the changes requested by stakeholders thereby providing greater flexibility for dealers in

choosing business hours and means of telephone service and business hours/telephone service display.

Integrated changes may provide a cost savings compared to this rule's previously filed version due to flexibility as dealerships will not be required to display their business hours and telephone number in a telephone directory. This rule proposes that dealerships can choose to display their hours and telephone number on their business sign, a sign which is already required by rule 4501:1-3-03 of the Administrative Code.

Further, a landline telephone service is no longer required, a service which may duplicate a dealership's cost if mobile telephone service is already established. The amended language in this rule provides flexibility for dealerships to choose between the two types of telephone service which may further reduce expenditures. The changes provide a better balance between regulatory needs and stakeholder impact.

7.  If the rule is an AMENDMENT, then summarize the changes and the content of the proposed rule; If the rule type is RESCISSION, NEW or NO CHANGE, then summarize the content of the rule:

This rule sets forth place of business requirements for used motor vehicle dealers.

The language in this rule has been amended to expand consumer accessibility to used motor vehicle dealerships with the goal of enhancing consumer service and protection, while also providing dealers a greater opportunity to meet consumer needs.

Proposed changes to the rule establish flexible requirements for the display of business hours and the dealership's telephone number and clarify which spaces are excluded when measuring interior office area.

Additionally, amended language establishes that a dealership be open a minimum of sixteen hours per week, four of which must occur consecutively during generally accepted business hours of seven a.m. and seven p.m. Monday thru Saturday. The minimum hours proposed in this rule are based on research of thirteen states, three of which are Ohio neighbors, as well as public input.

Research results show that two states require twelve hours, one requires sixteen, and the remaining ten states require between twenty and forty hours. The average required business hours is twenty three.

Testimony shared by the Ohio Independent Automobile Dealers Association at a public hearing held at the Ohio Department of Public Safety on December 18, 2008, indicated that it would be a burden to require independent dealers to be open "40 hours, with 30 hours between 9 to 5" (p. 7, 16). Acknowledging the benefit that

a minimum number of business hours might decrease the number of consumer complaints about "fly-by-night dealers" (p. 6, 15), the Association representative shared that they would accept "a much lesser 20 or less" (p. 8, 13), but requested that hours not be required between 9 a.m. and 5 p.m. during the week as many dealers work at other jobs, or as sole owners, they must also be available to attend to other business needs.

Other testimony at the public hearing indicated that dealers set their business hours based on customer traffic which may not necessarily be every day of the week of beginning at 9:00 a.m.

The 16 hours proposed in this rule are substantially less than the average hours indicated in research results and also fall within the Association's request for 20 or less. This rule proposes only 4 of the 16 hours must occur consecutively during generally accepted business hours, but that time period is extended to 7 p.m. and includes Saturday, which provides the flexibility that the Association requested when stating "not between 9 and 5" and the dealerships a choice when setting business hours.

8.  If the rule incorporates a text or other material by reference and the agency claims the incorporation by reference is exempt from compliance with sections

121.71 to 121.74 of the Revised Code because the text or other material is generally available to persons who reasonably can be expected to be affected by the rule, provide an explanation of how the text or other material is generally available to those persons:

This response left blank because filer specified online that the rule does not incorporate a text or other material by reference.

9.  If the rule incorporates a text or other material by reference, and it was infeasible for the agency to file the text or other material electronically, provide an explanation of why filing the text or other material electronically was infeasible:

This response left blank because filer specified online that the rule does not incorporate a text or other material by reference.

10.  If the rule is being rescinded and incorporates a text or other material by reference, and it was infeasible for the agency to file the text or other material, provide an explanation of why filing the text or other material was infeasible:

Not Applicable.

11.  If revising or refiling this rule, identify changes made from the previously filed version of this rule; if none, please state so:

Not Applicable.

12.  119.032 Rule Review Date:

(If the rule is not exempt and you answered NO to question No. 1, provide the scheduled review date. If you answered YES to No. 1, the review date for this rule is the filing date.)

NOTE: If the rule is not exempt at the time of final filing, two dates are required: the current review date plus a date not to exceed 5 years from the effective date for Amended rules or a date not to exceed 5 years from the review date for No Change rules.

FISCAL ANALYSIS

13.  Estimate the total amount by which this proposed rule would increase / decrease either revenues / expenditures for the agency during the current biennium (in dollars): Explain the net impact of the proposed changes to the budget of your agency/department.

This will have no impact on revenues or expenditures. 0

Although it is not anticipated that this rule will have a measurable financial impact to the Agency's budget, it is possible that by requiring a minimum number of hours and display of business hours may decrease expenditures incurred if an investigation of a dealership is warranted. Investigators will know the hours that the dealership is open, minimizing return trips, and can fulfill their responsibilities on a weekday, as opposed to a weekend, both of which can avoid overtime costs.

14.  Identify the appropriation (by line item etc.) that authorizes each expenditure necessitated by the proposed rule:

N/A

15.  Provide a summary of the estimated cost of compliance with the rule to all directly affected persons. When appropriate, please include the source for your information/estimated costs, e.g. industry, CFR, internal/agency:

Based on comments received at the public hearing held on December 18, 2008, and

the Dealer Board's estimate of potential impact, less than 10% of Ohio's used motor vehicle dealerships currently conduct business at fewer than the sixteen hours proposed in this rule; these businesses may incur an additional cost of compliance. For those dealerships who do conduct business at fewer than the minimum hours proposed in this rule, costs may be incurred to ensure that a person licensed and regulated pursuant to Chapter 4517. of the Revised Code is available to assist retail customers. It is difficult, however, to estimate this cost of compliance as many used vehicle dealerships have sole owner/operators who would absorb both the cost and/or revenue of being open a set number of hours. Additionally, if an extra staff person must be employed, employee costs can vary between minimum wage, base salary, and commission with "most automobile sales workers paid on commission" (Bureau of Labor Statistics, U.S. Department of Labor, Career Guide to Industries, http://www.bls.gov/oco/cg/cgs025.htm). But for those paid hourly, the national median rate for automobile dealers retail salespersons, as reported by the U.S. Bureau of Labor Statistics, is $18.91 (May 2008 Industry-Specific Occupational Employment and Wage Estimates, http://www.bls.gov/oes/2008/may/oes_nat.htm#b41-0000), while Ohio's median hourly rate for non-industry specific sales and related occupations is $11.05 (May 2008 State Occupational Employment and Wage Estimates from http://www.bls.gov/oes/2008/may/oes_oh.htm). Finally, additional staffing costs cannot accurately be determined because the number of additional hours required to meet the minimum hours proposed in this rule would be based on the hours a dealership has traditionally been open which would vary with each business.

However, national statistics show that on average, 84% of automobile dealership employees work at least 40 hours per week with 37% working more than 40 hours per week (Bureau of Labor Statistics, U.S. Department of Labor, Career Guide to Industries, from http://www.bls.gov/oco/cg/cgs025.htm). These figures support the Dealer Board's estimate that less than 10% of dealerships may be required to extend their business hours to meet the minimum hours set in this rule, thus the cost of compliance to Ohio dealers may be minimal.

16.  Does this rule have a fiscal effect on school districts, counties, townships, or municipal corporations? No

17.  Does this rule deal with environmental protection or contain a component dealing with environmental protection as defined in R. C. 121.39? No