- Most auto dealerships (like the Pennsylvania Jeep dealer pictured above) are closed right now or very limited in how they can serve customers during the coronavirus pandemic.
- If dealers are open, there are heavy restrictions on how they can deal with the public; if they’re closed, you can still buy, but one thing that’s hard to do is get a test drive.
- We’ll walk you through the pitfalls and offer some suggestions.
In any other economic downturn, car dealers would be tripping over each other for your business. You’d strut into every showroom in a square mile, lowball them on something rotting on their lot, and drive off with a killer deal. Now the finance manager can’t berate you in his office for refusing the conveyance fee, because the poor guy has no office. Automakers have had to concede to the very sales tactics their dealers dislike, like online ordering and home delivery. But buying a car is still a contact sport. Even in normal times, the convenience of remote sales may not only be impossible for the local dealership—and frustrating as hell for you—it could be illegal. We’ll break down everything standing between you and a new car.
TL;DR: It depends how aggressively your state’s governor has adopted coronavirus measures, whether by suggested limitations (six-foot distances) or enforceable orders (closure of restaurants). At the moment, most franchised and independent dealers are at least partially closed. The majority of states have split dealer operations between “essential” (parts and repair) and “nonessential” (sales). But the reality is sobering. Showrooms are closed, which means you can’t so much as grace a tire with your pinky toe.
Limited In-Person Sales
However, most states ordering closures are allowing dealerships to conduct in-person sales following social-distancing guidelines, which means you’ll have to secure an appointment and the dealer must safeguard any employees who show up for you. Often, you’ll be restricted to a contained area inside the showroom or within a service bay, after which the area must be re-sanitized. In Delaware, for instance, dealers can’t book more than two appointments per half-hour. A handful of states prohibit sales of any kind, anywhere, according to the Arkansas Automobile Dealers Association. (Ironically, in a state without any dealer restrictions at this time, it has done a great job tracking restrictions in the other 49 states.)
The rules can change quickly during this unprecedented situation. For example, during March and early April, Michigan required dealerships to be closed and only let dealers sell cars to people “with a genuine and emergent need,” not to the guy unhappy with his 2014 Focus. But then, on April 9, the governor declared that online vehicle sales and deliveries of sold vehicles are now okay, and that dealership employees involved in them are considered “critical workers.” Showrooms still have to stay closed, though.
States may not be able to force compliance now, but no reputable dealer will ignore a governor and risk the wrath of an attorney general—who will no doubt investigate business abuses and violations after this is over—just because you’re waving a check.
Home Deliveries May Not Fly
Tesla pioneered home deliveries. While we’re not going to debate the legality of it in those early days (before it began receiving state dealer licenses), traditional car dealers may risk violating the Federal Trade Commission’s rule on at-home sales and a penalty reaching more than $43,000. The dealer must finalize every part of the sales negotiation with you prior to delivery—not a single thing can be changed or added. In some states, car dealers aren’t allowed to conduct sales off-site, which may include deliveries, according to Patty Covington of Hudson Cook, a Virginia law firm advising car dealers. In many cases, what’s considered an at-home sale is murky and may conflict between state law and federal law (the latter which requires the seller to offer a three-day cancellation policy, a big ask for a car purchase). Advice: Check with your local dealer, and if you get a no, you’ll still be able to pick it up at the dealer’s business.
Limited or No Test Drives
It’s one thing to know exactly what car you want. If you were shopping weeks or months before—or if you’re the impulsive kind who buys a car sight unseen, like automotive journalists—then all you need is to close a sale. But the majority of car buyers are normal people. Reading car reviews can only go so far if you’re uncomfortable in the seat or feel banged up by the suspension. You’re the one who has to live with a car every day. So what happens when a dealer can’t give you a test drive?
In Connecticut, the state’s dealer association is banning them because they violate the six-foot rule, even though a salesperson could cram into an SUV’s third row while you drive. Most dealers don’t let anyone test a car alone even after they’ve copied your driver’s license. That’s sales pressure and reasonable security in good times, but now, this policy is a potential deal breaker. Check to see if your chosen dealer will allow a test drive and exactly how they’ll do it. Will they let you drive several cars? We’ll bet that comparison-testing cars at the same dealer or at competitive dealers nearby will be next to impossible. You can’t drop into a showroom at the moment, and if the day’s appointments are filled up, there’s nowhere else to go.
Used cars are far riskier to buy without a test drive, including certified pre-owned (remember, the dealer self-certifies a CPO car, and there is no true guarantee it meets the manufacturer’s standards). How about an older car that should really be inspected by an independent shop? If you have any whiff of uncertainty—about how a car feels, what equipment it has, anything at all—you really need to drive it.
Some luxury dealers have offered at-home test drives, but that requires them to show up with two cars and two employees. It’s not sustainable. However, used car franchises like Carvana and CarMax offer some respite. Carvana already drops off cars to homes, only now the delivery driver will wipe down the interior and will stay away from you while you test drive. CarMax is launching a “curbside” pickup next week at select locations where your favorite car will be waiting for you. But these situations require more commitment than a casual buyer might want (such as getting pre-approval for a loan, a credit check, and submitting personal information).
All-Digital Car Sales Still Don’t Exist
You’re ready to buy. The dealer wants like mad to sell. So why won’t the dealer let you do everything online and drop the car off like a pizza? State DMVs are the major reason car dealers ask you to come in person and sign your name in wet ink, according to Daniel Doman, chief counsel for RouteOne, which supplies dealers with software to broker loans.
“In many states, odometer readings have to be signed in tangible form because of the highly suspect nature of manipulating those forms,” Doman said. “Many dealers have adopted a hybrid process.”
That means financial contracts, purchase orders, trade-in forms, and documents for anything else you agree to buy (such as extended warranties) can be received and signed online. Dealers and banks have been doing this since the Electronic Signatures in Global and National Commerce Act (E-Sign Act) and the Uniform Electronic Transaction Act (UETA) became federal law in 2000. Digital signatures and electronic records carry the same binding legality as those printed and signed in ink, but only if the buyer elects to use them and gives explicit consent. A dealer or any other company can’t force you to e-sign anything.
All states have adopted those laws in practice. Most states allow dealers to send documents for titles, registrations, and odometer readings through a state-run online database. But most of those same states won’t let a dealer generate a full electronic form—they’re required to scan the original paper documents. Texas is one of the few, if not only, state that allows dealers and customers to generate and sign electronic titles, registrations, and odometer readings. The latter is a federal requirement to mitigate mileage tampering. But while in 2014 the National Highway Traffic Safety Administration provided guidance to states to allow the submission of digital readings, most have no such software in place.
As recently as 2017, California law had prohibited e-signing of any car sales contract even though that conflicted with the federal E-Sign law. Even Tesla, the king of online new-car ordering, requires customers to sign actual paperwork upon delivery (and in the current climate, drop off the paperwork in a box at a Tesla center). This tangle of differing state laws and guidelines (made more difficult when a dealer registers a car in another state) is why car sales, in the year 2020, is still a paper business.
“We live in a litigious society. Paper documents have been the preferred method for a long time because they’re hard to dispute,” said Todd E. Merriam, a CPA for O’Connor & Drew, P.C., an accounting firm that advises dealerships in the New England area. “These have been the standard and dealers have been slow to adopt to the new technology.”
When car dealers do offer e-signing, they’re often unable to bring a laptop or tablet with every form loaded outside their showroom. RouteOne CEO Justin Oesterle says dealer demand for his company’s remote e-signing service tripled since the coronavirus outbreak, but admitted it’s a tiny business and dealers have resisted the investment. And let’s also remember—car-buying is a psychological game, and dealers are mind wizards. Once you’re alone in the finance office, you’ll be more likely to pay fees or buy more products you might not if you had signed in the comfort of your home.
“Remote e-signing has been mostly for training over the last couple years,” said Oesterle.
Many of these same car-buying hurdles will remain well after the coronavirus has settled into memory and the auto industry stabilizes. Good luck, stay safe, and if you’ve bought a car during this unprecedented shutdown, let us know how it went.