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Car Dealership Test Drives
as the dealership’s assignee and holder of
the RIC. The court determined that the
assignee stood in the dealership’s shoes Go from First to Last
for all purposes, including being liable for
the dealership’s failure to give the buyer Demo drives once were an early part in
the title to the vehicle.
the step-selling process. Not anymore.
In light of its holdings, the appellate court
did not reach the assignee’s argument that By Steven Finlay, Senior Editor, WardsAuto
it was exempt from liability under MMPA
Section 407.020.2. The assignee had The test drive once was an initial part of anchor position. That’s an important
contended that, as a credit union subject the conventional step-selling process at spot; in races, the anchor athlete usually
to chartering, licensing, or regulation car dealerships. is the fastest and most experienced.
by the director of the division of credit
unions, it was exempt from MMPA Now, demo drives are among the final No matter at which part of the sales
liability resulting from the conduct of its steps, says John Possumato, a 30-year process they occur, test drives have
assignor. See Heinz v. Driven Auto Sales, veteran of the auto business. The switch- always been considered critical.
LLC, 2020 Mo. App. LEXIS 782 (Mo. App. up largely came about because of digital
June 16, 2020). retailing in the COVID-19 age. Online For dealers, the demo drive expedites
car selling has been around in a limited selling. For customers, it’s a chance to
This Month’s CARLAWYER © way for years but took off when the meet – and prospectively buy – a vehicle
Compliance Tip pandemic took hold. of interest.

Dealers should take careful note of Modern consumers use the Internet to do “It has become the last piece of the
the Department of Justice item above. much of the car deal. Then, as one of the puzzle,” Possumato says of the demo
Although the use by federal and state last parts of the so-called “contactless” drive. “It is the affirmation piece.”
enforcement authorities of so-called sales process, many dealerships, on
“mystery shoppers” isn’t all that common, request, will take test-drive vehicles Not everyone wants one. In a DME
the DOJ action is proof that it happens. to customers’ homes rather than the Automotive survey of 2,000 consumers,
Investigative reporters have also been customers visiting the dealership for the 320 said they skipped the demo drive for
known to employ this technique. The try-out spin. whatever reason.
only way to avoid the risk of a mystery
shopper’s “gotcha” is to assume that every Accordingly, “the test drive has Although auto digital retailing
customer is a mystery shopper. Do all become one of the last parts of the unwittingly gained traction when COVID
your customer contact personnel know (car-buying) experience,” Possumato, hit (temporarily closing dealership
what they need to know about the laws and CEO of Driveitaway, a dealer-focused showrooms in many states), consumers
regulations that apply to the sale, financing shared-mobility and subscription- seem to like the online approach to car-
and leasing of vehicles to consumers? services company, says at Informa Tech buying, Possumato says.
Automotive Group’s Summer Festival of
No? It might be time for a bit of schooling. n Automotive. (John Possumato, left) How has it affected the customer
experience? “Many people feel better
Eric (ejohnson@hudco.com) is a Partner in Possumato speaks of the traditional because the customer is more in control,”
the law firm of Hudson Cook, LLP, Editor dealership selling process that starts at Possumato says, adding, that “the market
in Chief of CounselorLibrary.com’s Spot the store with a meet-and-greet, then is telling us these trends are happening.”
Delivery®, a monthly legal newsletter for segues into an attempt to “land the
auto dealers and a contributing author to customer on a car.” That’s largely done He recalls early on talking to some dealers
the F&I Legal Desk Book. Tom (thudson@ during the demo drive. who feared a big shift from in-person to
hudco.com) is Of Counsel to the firm, has online retailing would hurt profits.
written several books and is a frequent Then come later steps in the process,
writer for Spot Delivery®. He is the Senior including price negotiations, financing, “That’s not happening,” he says.
Editor of CARLAW® and Spot Delivery®. For the presentation of F&I products and “Transactions happen online more
information, visit www.counselorlibrary. assorted paperwork. quickly and with profit margins
com. ©CounselorLibrary.com 2020, all sustained.” Whether some skeptics like
rights reserved. Single publication rights only, The step-selling system hasn’t completely it or not, “online car buying is not going
to the Association. HC/4847-4444-0519.1 reversed itself, but the test drive has away.” n
moved down to something of a relay

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