EL PASO, Texas (KTSM) — Small car dealerships in El Paso blame the backlog on vehicle registration permits on inadequate staffing at the El Paso County Tax Office.
They said the backlog is costing them thousands and even a couple millions of dollars, while others are being put out of business.
“That’s really hurting our pockets. There’s about 10 dealers that already went out of business. So that’s kind of scary for all dealers right now,” said Ricardo Gardea, owner of Gardea Auto Group located on Alameda Avenue.
Gardea is one of about 250 small car dealers in El Paso who have joined together to ask the El Paso County Commissioners Court to find a resolution for the backlog.
The backlog was spurred by a new Texas law, House Bill 718 that went into effect on July 1. The law banned the use of temporary paper license plates issued by car dealerships and instead requires that permanent metal plates be issued at the time of a vehicle sale.
However, Gardea said that the issue is that dealerships are also now required to use the Texas Department of Motor Vehicles’ (DMV) “webDEALER” online system to process title and registration applications and issue the new metal plates.
El Paso car dealerships struggle with new permanent plate law
Gardea explained that most small car dealers in El Paso use floor planning financing, a short-term loan arrangement that dealers use to buy and stock their vehicle inventory. This allows them to put the vehicles on display for customers and pay off the loan as they sell a vehicle.
With floor planning, however, Gardea said they have to pay off their loan within 10 days of selling a vehicle. He said the problem they’re now encountering is that due to the backlog on registrations, they can no longer quickly cash out on their sales and pay back the loan within those 10 days.
“For us to collect a check from the bank, we have to have the registration in-hand to go and collect it from the banks, from the financial institutions,” Gardea said.
As we previously reported, El Paso County blamed the backlog on the County’s Tax Assessor/Collector Ruben Gonzalez. According to a statement by the County, Gonzalez failed to train and prepare dealers to use the online system.
However, Gardea said the backlog issue has more to do with a lack of staffing. He said the County currently only has four title clerks processing thousands of pending permits.
“Most of the dealers are prepared. There’s a lot of backlog because the County can’t handle them,” Gardea said. “They’re so behind, that if you make a mistake on your paperwork, they put your application back to the bottom of a stack. And then you have to wait another 500,000 registrations before your deal goes back.”
Gardea said there are only a handful of clerks working to process the backlog of thousands of registrations, and said the County is no longer allowing them to process their registrations through private title clerks.
“They have four people working on that. They’re never going to get ahead of the game,” Gardea said. “Private offices would take a lot of our deals from their hands. And we would collect the plates right there in the private offices. Now, they’re not doing it.”
To make matters worse, Gardea said that many dealers are running out of the metal plates that the DMV initially sent them, and that the DMV is not sending them new ones promptly. Without the plates, he said they can’t give customers the vehicle.
Gardea said all of the issues combined ultimately hurt the customer’s experience and impact the dealer’s bottom line.
Read: Read More