The laws governing car dealers and the auto industry can be, to put it mildly, complex.
Marc Bonanni, the new associate general counsel at Beepi, would know.
He has been an attorney in the auto industry for 32 years, holding counselor positions at places like Autobytel and Peugeot Motors of America. He has also worked with dealers, both as a partner at Auto Advisory Services and his most recent position, where he ran his own law firm that represented dealers and tech companies.
Bonanni joined the Beepi team officially on April 1, part of a few recent moves the company has made on the legal and tech fronts.
Marjorie Lewis, who joined Beepi’s advisory board, has taken on the role of chief counsel. Additionally, Beepi named Sri Subramaniam its vice president of engineering.
Auto Remarketing caught up with Bonanni to talk about the intricacies of the regulatory world facing a company like Beepi.
‘Work with them’
Marc Bonanni, Beepi
Given the legal complexities of auto retailing by itself, you can imagine the landscape when you throw online, peer-to-peer and/or direct-to-consumer modeling into the mix.
Particularly when the laws that govern car retailing are, as Bonanni argues, often outdated.
The key, he says, is to work with regulators to adjust to the new ways of retailing, and he is taking that approach in his role with Beepi, which is on the front lines of this new wave of car buying — joined by peers, automakers, dealers and more.
“I know firsthand the laws that are based in the ‘50s and ‘60s are not addressing this new-age buying process. So from an attorney’s standpoint, this is an opportunity to work with the regulators — not work against them, but work with them — to get the definitions more in line with what today’s buying process is,” Bonanni said.
“And that’s, quite frankly, (what has) hamstrung the traditional car dealers for all these years, having these large brick-and-mortar facilities. Because a lot of it has to do with the laws and the way they are on the books. And they have been since before I was born,” he continued.
“From the regulatory standpoint, I think there are tremendous opportunities to advance the understanding of the regulators to change the laws to a degree that it addresses more accurately the online buying process. So for Beepi, what that means is we have to have a foot in both ponds for a while,” Bonanni said.
He said the company has “committed to obtaining vehicle dealer licenses appropriately generated for the state” and has facilities in each of those states, per the license requirements.
In working with regulators, Beepi’s approach is to ask regulators for guidelines beforehand. Bonanni said it has worked well so far.
“We’re not adversarial with any of the states at this point,” he said. “We don’t need to be.”
Laws perhaps in need of tune-up
In the interview, Auto Remarketing asked Bonanni for examples of laws that are on the books but don’t necessarily make sense for today’s car market.
For one, he said, some states don’t allow for vehicle delivery outside a brick-and-mortar facility.
“That doesn’t necessarily fit today’s model, especially for Beepi, but also car dealers in general,” Bonanni said. “Many customers request that the vehicle be delivered, especially if it’s a long distance from their home.”
Advertising is another area of impact: “When you look at the FTC guidelines, you look at the state guidelines for vehicle advertising, much of the disclaimers would fill the entire banner, for example, and there would be no room for advertising.”
“So we have to develop an electronic version that’s acceptable to the (regulators) and addresses the intent of the law, which is to make sure that the customer is well-informed and that there’s nothing being misled,” he said. “How do you do that when it says that you have to have, in some cases, almost a quarter page of disclaimers, depending upon what you’re advertising?”
Bonanni said he was involved with some of FTC’s enforcement actions in recent years, “so I understand where they’re coming from.”
Another key area that may require updating: Some states require physical possession of the plates for titling and licensing.
Point is, it begins by working with the regulators.
“The Internet and the global nature of it has always been a challenge for regulators. Because they think in terms of a storefront,” he said. “So a customer coming to a storefront as opposed to sitting at their computer in Poughkeepsie, N.Y., and never actually seeing a physical facility. So there’s issues that surround that that we need to deal with on a regular basis as we get into different markets.”
Bonanni said that in the seven principal states (and 16 total markets) where Beepi operates, those issues have been addressed and taken care of with regulators.
What defines ‘automobile sale’ or ‘dealer’?
One challenge for companies like Beepi can be simply defining what constitutes an “automobile sale” or what the definition of a “dealer” is in various states, Bonanni said.
“For example, is the act of putting the car on a website a dealer activity? Well, in some states, they took the position that it was; other states, they didn’t. And that’s why you see some challenges along the way,” he said.
“Because we could be compliant with the states of California and Texas, and then we move into Oklahoma and we have to deal with a different set of regulations. The model has to be fluid for a while and hopefully we get it all standardized.”
Auto Remarketing asked Bonanni what drew him to Beepi. He said that with his experience in working with traditional car dealerships over the years and his work with Autobytel.com as an online startup, he has “always been cognizant of how the Internet and the use of electronics could change the buying process.”
Bonanni added: “And over the years … I’ve witnessed very few attempts to do that, and it’s always been met with challenges and just didn’t seem to be there. When the Beepi model came to my attention, I saw an opportunity that this can, in fact, be the model that works because a few things have happened: The electronics have caught up better, the mindset of the consumer is more towards the electronic in comparison to the previous models.
“The traditional auto dealers are moving in these directions but because of their restrictions, their franchises, their big brick-and-mortar facilities, they’re slower to move towards these solutions,” he said.
“So I looked at Beepi as the one model that could blend the car-buying experience and move that to the next level — not without its challenges, of course, but because it’s focusing on the pre-owned market, it gives a far better latitude to develop the infrastructure that it takes to address the digital buying customer.”
Editor's Note: Story updated to clarify Beepi's total market count.