California automobile dealers must start labeling salvaged vehicles with a red warning sticker under a new law signed Sept. 26 by Gov. Jerry Brown. A.B. 1215 will take effect July 1, 2012. The new law also requires dealers to use electronic vehicle registration for all car sales and allows dealers to charge consumers more to recoup added costs. About half of California's dealers already participate voluntarily in the electronic registration system.
Assembly Bill 1215 also allows dealers to raise their documentation fees for processing auto purchases and lease agreements from $55 for new- and used-car purchases and from $45 for car leases. The increase for dealers that participate in electronic vehicle registration would be to $75, and, to $65 for dealers that do not. Even with that jump, document charges in California will be the second lowest allowed in the nation. Registrations also will be processed much faster. Consumers will wait only a month for their license plates, instead of as long as six months under the current system.
Fees for participating dealers would be annually adjusted by the Department of Motor Vehicles due to changes in the California Consumer Price Index.
The law requires dealers to warn buyers whether a vehicle for sale has been previously totaled or salvaged. California law already requires the seller of a salvage vehicle to disclose to the purchaser that the vehicle has been declared a total loss salvage vehicle (Cal. Veh. Code 11515(h)(1))).
Under A.B. 1215, dealers are prohibited from displaying or offering for sale a used vehicle unless the dealer first obtained a report on the vehicle from the National Motor Vehicle Title Information System (NMVTIS) to check whether the auto has a branded title. The National Motor Vehicle Title Information System is a database of totaled autos administered by the U.S. Justice Department.
Under most states' laws, a salvage vehicle is a vehicle that has been wrecked or damaged to such an extent that it is considered too expensive to repair. In almost all cases, salvage title is given to any vehicle that has sustained damage worth 75% or more of its value. Requirements are going to vary by state. In Florida, a car has to be damaged to 80% of its value before the accident. Vehicles in Minnesota are considered salvaged when they are declared "repairable total loss" by an insurance company, were worth at least $5,000 before the damage or are less than six years old.
The title, license plates, and a required fee are submitted to the state department of Motor Vehicles (DMV) and a Salvage Certificate is issued for the vehicle.
Although many salvage vehicles are expertly repaired, some vehicles: are not properly repaired and/or tested and may be dangerous to operate and have been repaired with stolen parts. In California, if the Highway Patrol or DMV determines the vehicle or its parts have been stolen, the vehicle cannot be registered and the vehicle or parts will be seized. A revived salvage vehicle is one that was reported to the California Department of Motor Vehicles (DMV) by the owner or insurance company as a total loss and now has been restored to operational condition.
All sellers, including dealerships, are legally required to disclose the vehicle's salvage title and history, but the law is difficult to enforce, especially when cars come in from another state.
The bill is supported by such groups as the California New Car Dealers Association, Consumers for Auto Reliability and Safety (CARS) and the National Salvage Vehicle Reporting Program. Opponents include CarFax, which publishes vehicle history reports.
"No other state can match the built-in protections and convenience awaiting Californians," Peter Welch, president of the state's dealers association, said in a statement. "Like every small business, dealers want to focus on customers instead of paperwork."
Consumers also will benefit from the new warning sticker requirements. California is the first state in the nation to adopt that mandate. All new- and used-car dealers must post a red sticker on any used car flagged in a federal database as junked, salvaged or flood-damaged.
"Consumer advocates have long sought the protections offered in this bill," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety. "For the first time, auto dealers will be required to provide vital information about a vehicle's safety, reliability and worth before consumers even start negotiating."
The California Department of Consumer Affairs has found that more than 700,000 structurally damaged and 150,000 salvaged vehicles are returned to streets and highways every year without a safety inspection, and pose a potential hazard to all of the state's motorists
The State of California currently "brands" its titles with a vehicle's past history as follows:
Salvaged: Vehicles marked with a "salvaged" brand were involved in an accident or incurred considerable damage from another source, such as a flood or vandalism. This brand includes previously dismantled (junked) vehicles.
Original Taxi or Prior Taxi: Vehicles formerly used "For Hire" which usually have high mileage.
Original Police or Prior Police: Vehicles formerly used by law enforcement and which usually have high mileage.
Non-USA: Vehicles manufactured for use and sale outside the United States which have been converted to meet Federal and California safety and emissions standards.
Warranty Return or Lemon Law Buyback: Vehicles which have been returned to the manufacturer under California's Lemon Law.
Remanufactured; Vehicles constructed by a licensed remanufacturer and consisting of used or reconditioned parts. These vehicles may be sold under a distinctive trade name