SACRAMENTO, Calif. -

A new California law signed this week created changes for salvage vehicles that eventually make it onto a dealer’s retail lot.

Now any franchised or independent store in California that tries to retail a salvage unit must place a special sticker on the window and include the report from the National Motor Vehicle Title Information System (NMVTIS).

Gov. Jerry Brown signed the measure — AB1215 — Monday after California legislators introduced it back on Feb. 18. The new law goes into effect on July 1, 2012.

Rod Davis is president of the Independent Automobile Dealers Association of California. Davis told Auto Remarketing the majority of dealers might not know yet this new law is in place, but he and the rest of the association’s executive committee have discussed it regularly.

“There has been a lot of discussion about whether this is something we want to support or not. As we look at all of the pros and cons, it’s definitely a benefit,” Davis surmised.

“The percentage of vehicles that this applies to is minimal. It’s a very, very small percentage,” Davis emphasized. “It’s only vehicles that have some sort of a branded title. It would be a salvage title, a lemon-law vehicle, anything like that.

“What the selling dealer has to do is put that notation and a copy of that report on the window, disclosing this has a branded title,” he went to say.

The law also states it does not create any legal duty upon the dealer related to the accuracy, errors or omissions contained in a NMVTIS vehicle history report that is obtained from a  NMVTIS data provider or any legal duty to provide information added to NMVTIS after the dealer obtained the NMVTIS vehicle history report. 

Another element to this new law is a raise in the allowance California dealer can charge in documentation fees. Previously, the cap stood at $55 for sale transactions and $45 for lease contracts. Now, stores can charge $80 for either deal.

“What the increase in the doc fee does is it allows the dealer to make up some of the money they have to spend on these history reports,” Davis indicated.

“Most dealers do some sort of a history report on their vehicles right now,” he continued. This is nothing new to the industry doing a history report on vehicles you’re selling because the selling dealer obviously wants to know if there is any sort of a brand on that vehicle that needs to be disclosed to the customer. That happens pretty much on every vehicle.”

While Davis serves in an executive role for IADAC, he is also assistant general manager of Brasher’s Sacramento Auto Auction. From the wholesale perspective, Davis reiterated what officials from Insurance Auto Auctions and Total Resource Auctions told Auto Remarketing.

“This law effects only retail dealers,” Davis stressed.

Manheim group vice president of Total Resource Auctions Bill Tiedemann also shared with Auto Remarketing that salvage vehicles winding up on retail lots was a much larger problem in the past.

“The days of what used to be called laundering titles, cleaning the salvage brand somehow, really have been over for some time. As every month goes by, it gets tighter and tighter,” Tiedemann stated.

“Being able to able to hide a salvage history on a vehicle, I’m not going to say it’s impossible because that’s too strong of a word, but it’s insignificant today,” he continued.

Tiedemann went on to explain why he believes it’s so difficult for a TRA salvage unit to be retailed without full disclosure making it to the consumer.

“We’ve been reporting to NMVTIS since day one. We were actually instrumental in working the Department of Transportation setting up the system,” he insisted.

“In addition since Total Resource Auctions is subsidiary of Manheim, we report all of the salvage-title vehicles to AutoCheck,” Tiedemann explained. “And as a member American Salvage Pool Association, all of our salvage title sales through that organization get reported to Carfax.

“That’s at least three databases that we’re already reporting to anytime we’re handling a salvage-titled vehicle,” he added.