[Federal Register Volume 66, Number 156 (Monday, August 13, 2001)]
[Notices]
[Pages 42533-42534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-20276]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Submission for OMB 
Review; Comment Request

AGENCY: Federal Trade Commission (``FTC'').

ACTION: Notice.

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SUMMARY: The Federal Trade Commission (FTC) has submitted to the Office 
of Management and Budget (OMB) for review under the Paperwork Reduction 
Act (PRA) information collection requirements contained in its Used 
Motor Vehicle Trade Regulation Rule (``Used Car Rule'' or ``Rule''). 
The FTC is seeking public comments on its proposal to extend through 
September 30, 2004 the current PRA clearance for information collection 
requirements contained in the Rule. That clearance expires on September 
30, 2001.

DATES: Comments must be submitted on or before September 12, 2001.

ADDRESSES: Send comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 10202, Washington, DC 20503, Attn.: Desk Officer for the 
Federal Trade Commission, and to Secretary, Federal Trade Commission, 
Room H-159, 600 Pennsylvania Ave., NW., Washington, DC 20580. All 
comments should be captioned ``Used Car Rule: Paperwork comment.''

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the proposed information requirements should be addressed to 
John C. Hallerud, Attorney, Midwest Region, Federal Trade Commission, 
55 East Monroe, Suite 1860, Chicago, Illinois 60603, (312) 960-5634.

SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), Federal 
agencies must obtain approval from OMB for each collection of 
information they conduct or sponsor. On May 22, 2001, the FTC sought 
comment on the information collection requirements associated with the 
Used Car Rule, 16 CFR Part 455 (Control Number: 3084-0108). See 66 FR 
28164. No comments were received. Pursuant to the OMB regulations that 
implement that PRA (5 CFR Part 1320), the FTC is providing this second 
opportunity for public comment while seeking OMB approval to extend the 
existing paperwork clearance for the Rule.
    The Used Car Rule facilitates informed purchasing decisions by 
consumers by requiring used car dealers to disclose information about 
warranty coverage, if any, and the mechanical condition of used cars 
they offer for sale. The Rule requires that used car dealers display a 
Buyers Guide that, among other things, discloses information about 
warranty coverage on each used car offered for sale.

Burden Statement

    Estimated total annual hours burden: 1,925,000 hours.
    The Rule has no recordkeeping requirements. The estimated buyers 
relating solely to disclosure is 1,925,000 hours. This estimate is 
based on the number of used car dealers (approximately 80,000 \1\), the 
number of used cars sold by dealers annually (approximately 30,000,000 
\2\), and the time needed to fulfill the information collection tasks 
required by the Rule.\3\ Staff retains its prior annual burden estimate 
as the changes in the approximate number of dealers and used cars they 
sold are marginal.\4\
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    \1\ The Used Car Market Report 2001 (``Manheim Market Report''), 
p. 24, published by Manheim Auctions, 1400 Lake Hearn Drive NE, 
Atlanta, Georgia 30319, citing NADA, CNW Marketing Research. Prior 
issues of The Used Market Report were published by ADT Automotive. 
The Manheim Market Report indicates the number of dealerships in 
2000 to be 77,750. See http://www.manheimauctions.com/HTML/ucmr/dealership.html#. For rounding purposes, staff retains its prior 
estimate of 80,000.
    \2\ Manheim Market Report, p. 15. The Manheim Market Report 
estimates the number of used cars sold by dealers in 2000 to be 
29,800,000. For rounding purposes, staff retains its prior estimate 
of 30,000,000.
    \3\ A relatively small number of dealers opt to contract with 
outside companies to perform the various tasks associated with 
complying with the Rule. Staff assumes that outside contractors 
would require about the same amount of time and incur similar cost 
as dealers to perform these tasks. Accordingly, the hour and cost 
burden totals shown, while referring to ``dealers,'' incorporate the 
time and cost borne by outside companies in performing the tasks 
associated with the Rule.
    \4\ See notes 1 and 2.
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    The Rule requires that used car dealers display a one-page, double-
sided Buyers Guide in the window of each used care they offer for sale. 
The component tasks associated with this requirement include: (1) 
Ordering and stocking Buyers Guide forms; (2) entering applicable data 
on Buyers Guides; (3) posting the Buyers Guides on vehicles; and (4) 
making any necessary revisions in Buyers Guides.
    Dealers should need no more than an average of one hour per year to 
obtain Buyers Guide forms, which are readily available from many 
commercial printers or can be produced by an office word-processing or 
desk-top publishing system. Based on a universe of 80,000 dealers, the 
annual hours burden for producing or obtaining and stocking Buyers 
Guides is 80,000 hours.
    For used cars sold ``as is,'' copying vehicle-specific data from 
dealer inventories to the Buyers Guide forms and checking off the ``no 
warranty'' box may take up to two minutes per vehicle if done by hand, 
and only seconds for those dealers who have automated the process. 
Staff conservatively assumes that this task, on average, will require 
1.5 minutes. For used cars sold under warranty, checking off the 
warranty box and adding warranty information may take an additional one 
minute, i.e., 2.5 minutes. Based on input from industry sources, staff 
estimates that approximately 60% of used cars sold by dealers are sold 
``as is,'' with the remainder sold under warranty. Thus, staff 
estimates the time required to enter data for used cars sold without 
warranty is 450,000 hours (30,000,000  x  60%  x  1.5 minutes  
60 minutes/hour) and 500,000 hours for used cars sold under warranty 
(30,000,000  x  40%  x  2.5 minutes  60 minutes/hour), for an 
overall total of 950,000 hours.

[[Page 42534]]

    Although the time required to post the Buyers Guides on each used 
car may vary substantially, FTC staff estimates that, on average, 
dealers will spend 1.75 minutes per vehicle to match the correct Buyers 
Guide to the vehicle and place it in or on the vehicle. For the 
30,000,000 vehicles sold, the burden associated with this task is 
875,000 hours. To the extent dealers are able to integrate this process 
into other activities performed in their ordinary course of business, 
this estimate likely overstates the actual burden.
    If negotiations between buyer and seller over warranty coverage 
produce a sale on terms other than those originally entered on the 
Buyers Guide, the dealer must revise the Guide to reflect the actual 
terms of sale. According to the rulemaking record, bargaining over 
warranty coverage rarely occurs. Allowing for revision in 2% of sales, 
at two minutes per revision, staff estimates that dealers will spend 
20,000 hours annually revising Buyers Guides.
    Estimated annual cost burden: 28,250,000 consisting of $19,250,000 
in labor costs and $9,000,000 in non-labor costs.
    Labor costs: Labor costs are derived by applying appropriate hourly 
cost figures to the burden hours described above. Staff has determined 
that all of the tasks associated with ordering forms, entering data on 
Buyers Guides, posting Buyers Guides on vehicles, and revising them as 
needed are typically done by clerical or low-level administrative 
personnel. Using a clerical cost rate $10 per hour and an estimate of 
1,925,000 burden hours for disclosure requirements, the total labor 
cost burden would be approximately $19,250,000.
    Capital or other non-labor costs: The cost of the Buyers Guide form 
itself estimated to be 30 cents per form, so that forms for 30 million 
vehicles would cost dealers $9,000,000. In making this estimate, staff 
conservatively assumes that all dealers will purchase preprinted forms 
instead of producing them internally, although dealers may produce them 
at minimal expense using current office automation technology. Capital 
and start-up costs associated with the Rule are minimal.

John D. Graubert,
Acting General Counsel.
[FR Doc. 01-20276 Filed 8-10-01; 8:45 am]
BILLING CODE 6750-01-M