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Bill to lower auto bonds would be harmful

February 18, 2011

Legislation to Reduce Oregon Auto Dealer Bond Is Not a Good Thing
By Jose Mesa,
Auto Wholesale, LLC

Every auto dealer in the state of Oregon has to produce a $40K dealer bond in order to be an Oregon Auto Dealer. The average new vehicle today is around $25K while a used vehicle is around $15K. The price of vehicles has risen and this is why the dealer bond has gradually gone up through the years in order to protect the consumer.
Currently in the legislature there happens to be Senate Bill 533 which will lower the bond down to $21K if it passes. This makes no sense whatsoever! In a world where there is more and more protection for consumers I cannot figure out why there would be any kind of legislation that would lower consumer protection. This is especially true in times like this.

Banks and financial institutions have increased their safeguards so why should Oregon auto dealers lower theirs? I have been an Oregon auto dealer for twenty years and never have I complained about the price of the dealer bond. Bond prices are based on credit so with the best credit you get the lowest rate of $700 for three years. As your credit score drops you will see that your premium go up. Eventually you will be priced out of the market keeping the bad people out of the business and this is actually a good thing.

There is a major problem with identity theft and giving up drivers license, social security and other personal information is not comfortable for most people. Let’s say this bill did pass which made it easier for anyone to get into the car business. Would you feel comfortable providing your personal information to them? How about trading in your car that had a loan balance and feeling confident that the dealer would pay it off within the required time limit of ten days? I will tell you right now that if I was a consumer I sure would not feel comfortable at all. Making it too easy for anyone to get into the car business is not a good thing for consumers and this is my exact point. I feel the bond is just fine at the current level of $40K.
If anything it needs to go up but certainly not down! As the 2008 President of the Oregon Independent Automobile Dealers Association I know that this is a serious concern and I feel that consumers need to know about this. I would like to hear your views on this issue and welcome your thoughts through my e-mail at
Thanks, José
Auto Wholesale, LLC

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Bob Clark February 18, 2011

Sorry, but this seems like another case where existing businesses want to restrict competition from new entrants. Why do we have professional licenses? Mainly to keep people from competing to provide services. People should have the right to work and establish reputations for quality service. There’s too much protectionism (restrictionism) as it is? Bravo when the cost of restrictions is reduced.

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