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We Build Alaska

Understanding the economic impact of Alaska’s dealer-friendly legislation

In Alaska, much like the rest of the country, people rely on their cars for everything: commuting to work, grocery shopping, accessing healthcare services, and more. In a state with virtually no public transportation, which has only declined even more since Capital Transit announced it would have to suspend bus routes due to staff shortages, owning a car is not a luxury. 

Yet, the cost of car ownership has reached unprecedented levels, with recent data revealing that car insurance premiums rose 26% over the last year. The escalating expenses associated with car ownership, including repairs, gas, highway tolls, and other unavoidable costs, make this number climb even higher. For many Alaskans, these rising costs are making car ownership increasingly more expensive and sometimes completely out of reach. 

Against this backdrop, pending legislation in Alaska threatens to exacerbate the growing affordability crisis for the state’s residents, pushing car prices even higher and favoring the profit margins of already rich auto dealers at the expense of everyday consumers.

Purchasing a new car comes with the assurance of an auto manufacturer’s warranty, which covers certain repairs for a specified period. Currently, in instances where warranty repairs are required, auto manufacturers reimburse dealers so that car owners incur no expenses. However, a disproportionate share of this reimbursement goes to the dealer, leaving only a small share for the technicians responsible for conducting the repairs.

The proposed legislation aims to significantly increase the reimbursement rate for warranty repairs, funneling millions annually to Alaskan auto dealers. This not only inflates expenses for automakers, but it makes cars less affordable for consumers. The legislation also does nothing to require dealers to pay their technicians a penny more. Additionally, it endorses a practice of charging consumers for labor repair time based on estimates from a book instead of the time actually spent working on the vehicle. Such a practice likely violates Alaska’s Automobile Repair Act, which is intended to protect consumers from misleading and misrepresented repair costs.

This is a clear example of how the sponsors of these laws contend they help out the “little guy” under the guise of fairness, and instead leave consumers paying the ultimate price. 

The American Consumer Institute examined similar laws enacted in other states, specifically those resembling House Bill 233 and Senate Bill 144, and found a concerning trend: these laws ultimately drive up vehicle prices, costing consumers $48 billion more annually which translates to a nearly $3,000 increase in the price of a new car.

Legislators must prioritize consumer interests and market competitiveness to ensure a fair, balanced automotive industry that serves the needs of all stakeholders. It’s time to put an end to dealer-centric legislation that puts consumers at risk.

Steve Pociask is the president and CEO of the American Consumer Institute. He has been involved in consumer public policy research for 40 years. He has published numerous economic studies, including three books for the Economic Policy Institute, and policy studies for numerous independent nonprofit organizations. Many of his research studies have focused on the consequences of public policies on consumer welfare.

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andy
1 month ago

What is the call to action – how do we prevent this?

Alaskans First
1 month ago
Reply to  andy

It’s complete BS they are feeding into this article. They don’t mention that Dealerships are asking for a fair compensation for the warranty repairs. Why does the manufacture get to have the repair done at a fraction of the cost of what the repair actually takes. IE at an independent shop you may pay $300 for a 3 hour repair. Well at a dealership when the manufacture is paying for the same repair, they also get to determine the hours billed regardless of actual time it takes, that same job may only pay the dealer at 1.5hours, Regardless of it… Read more »

andy
1 month ago
Reply to  Alaskans First

Wow I had no idea, not sure if this matters but seems like dealership maintenance is some of the worst.

3 days for a dealership by Chester Creek to warranty replace a 2 year old battery; cellphone disappeared from our car at a certain South Anchorage dealer – which FindMyDevice spotted it at a home off Vanguard…then it mysteriously appeared back at the dealership when I reported it missing; gaskets made out of silicone caulk at midtown dealer that ends in -ubaru…

Anecdotal? Sure. But I don’t think they’re sending their best.

Alaskans First
1 month ago
Reply to  andy

Dealers have long waits to get simple repairs done because we are required to do all sorts of warranty work. That includes recalls, and when Manufactures are producing 50-75 recalls a year, that slows down the shop to get real repairs done as again, dealers are required to perform those fixes. Well with minimal labor time be paid to the dealers, it’s hard to keep good workers as they can go to these independent shops and have zero concern for warranty work at reduced rates. They currently can earn more “hours” doing the same jobs as dealers but without the… Read more »

andy
1 month ago
Reply to  Alaskans First

This makes sense, sometimes our only perspective is from the outside looking in

Duane Bannock
1 month ago

This piece by Steve Pociask: How to say you’re an Automobile Manufacture Hack/Lobbyist without saying you’re an Automobile Manufacture Hack/Lobbyist

HB 233 passed by a combined vote of 55-2 and this guy’s mad because the auto manufactures are going to now be legally required to pay the local dealer at the same rate you do?

The only thing that noteworthy is that the twin clowns from the Valley of Trash voted against it.

Allen
1 month ago
Reply to  Duane Bannock

You can make a point without insults and name-calling. Although that is your regular m.o.

Akwhitty
1 month ago

This doesn’t bother me to much. There are lots of weed stores and now alcohol is available at 8 am I to fucked up to care