By Ryan Sabalow and Jeanne Kuang | CalMatters

The California Senate overwhelmingly – and with bipartisan support – approved legislation that would allow car dealers to charge buyers up to $500 extra on each vehicle purchase, a blatant departure from promises both parties made this year to lower costs for Californians.

The bill’s opponents said they were shocked senators would disregard their pledge by adding more “junk fees.”

“This is the opposite of saving money for people,” said Rosemary Shahan of Consumers for Auto Reliability and Safety. “There’s no two ways about it. It’s just benefiting car dealers at the expense of car buyers. That’s it.”

Yet on Tuesday, just one senator voted against Senate Bill 791 that would raise the fees car dealers can charge to process documents by $415 from their current cap of up to $85 for a new or used vehicle. The proposal would allow dealers to charge as much as 1% of a vehicle’s purchase price, up to $500. The average listed price of a new vehicle in the U.S. in May was $48,656, according to market research firm Cox Automotive.

In recent years, lawmakers have taken aim at similar so-called “junk” or “hidden” fees, requiring businesses to be more up front about them so customers aren’t surprised by the final price tag.

California car dealers say they need to be able to raise fees to cover the rising costs that come with processing the paperwork required to buy a vehicle, including loan documents, Department of Motor Vehicles registration and fraud protection forms. The fees are charged separately from the purchase price.

Dealers want higher fees

Anthony Samson, the California New Car Dealers Association’s lobbyist, told the Senate Transportation Committee in April that the Legislature continually passes new laws that add costs on car dealers and other California businesses. Other businesses are allowed to recoup similar costs through service charges, but dealers can’t, he said.

Other businesses can adjust charges, but auto dealers “must continue to come back to the Legislature to ensure (they) can do so,” Samson said. “If we believed we could simply recover our costs and the price of the vehicle, I assure you that we would not be here today asking for your support on this measure.”

The vote comes amid reports that auto dealers are using creative tactics to maintain profits without raising sticker prices to compensate for the Trump administration’s expected tariffs.

The California New Car Dealers Association has donated at least $2.9 million to lawmakers since 2015, according to the Digital Democracy database.

The group has an ally in Sen. Dave Cortese, a Democrat from San Jose, who authored the bill on the car dealers’ behalf. He’s received at least $7,000 in campaign donations from the dealership association, according to Digital Democracy.

In an interview with CalMatters Wednesday, Cortese acknowledged it’s “not ideal” that the legislation would raise the cost of buying a vehicle, but he said it was necessary because the permissible fee hasn’t kept up with California’s rising costs. He said he and his fellow lawmakers are still committed to lowering costs, citing other legislation the Senate passed last week.

The affordability agenda “isn’t a gimmick,” he said. “We are very serious about the affordability issue.”

He said he is working with the dealers association to lower the fee ceiling when the bill is heard in the Assembly, noting that to get Gov. Gavin Newsom to sign it “we’re going to have to justify it in the next couple of months and we’re going to have to be more exacting.”

Seven Republicans, including Sen. Brian Jones, the Senate’s Republican leader, voted for it. Jones, who has repeatedly criticized Democrats for making California too expensive, would not comment. Jones has received at least $28,700 from the car dealers association since 2015, according to Digital Democracy.

Republican Sen. Roger Niello, whose family owns car dealerships in the Sacramento area, recused himself from voting, saying the bill “directly affects my private-sector business.”

The law would exempt the state from paying the fee when it buys vehicles for its fleet.

Twenty Democratic senators, including Sen. President Pro Tem Mike McGuire, voted for the measure. McGuire has received at least $13,000 from car dealers since 2016. He didn’t explain his vote Tuesday, and his spokesperson didn’t make him available for an interview.

Some push back on “junk fees”

Calabasas-area Democratic Sen. Henry Stern was the only senator to vote “no” on the bill. In an emailed statement, he said car sellers have undermined California’s efforts to protect consumers and the environment, including lobbying hard for the U.S. Senate to pass federal legislation that seeks to block California’s electric vehicle mandates.

“The car dealers haven’t earned the trust to justify this major increase in junk fees,” Stern said. “Bad behavior shouldn’t be rewarded.”

One of the senators who didn’t vote Tuesday was Sen. Carolyn Menjivar, a Democrat representing the Van Nuys area.

She didn’t explain her rationale for not voting on Tuesday. But when the bill was before the Transportation Committee in April, she said she suspected that car dealers would add “additional junk fees” onto the cost of buying a car but wouldn’t lower the purchase price – or their profits.

“If we’re looking to help everyday Californians with affordability, why are we looking at helping an industry that is making a healthy profit?” she said. “And Californians are continuing to scream at us saying they can’t afford things.”

She didn’t vote at that hearing either.