How California Convinces Buyers Not to Purchase New Cars — and How This Hurts Dealers

BAY AREA, Calif. & SANTA CRUZ, Calif. & MONTEREY, Calif. & SAN LUIS OBISPO, Calif. - EntSun -- Have you ever met someone who moved away from California simply because of DMV fees? I have — and it's not hard to see why. Depending on the county, registration fees on a $60,000 vehicle can approach $940 (and that's before sales taxes, dealer fees, and mandatory add-ons).

For a family living paycheck-to-paycheck, that's not a minor nuisance. If a household owns three vehicles, their annual DMV burden alone could exceed a month's rent in many parts of the country.

And that's just one piece of the puzzle.

Californians already face the nation's highest gasoline taxes, some of the highest base prices due to reformulated fuel requirements, and a regulatory climate that raises the cost of nearly everything involved in transportation. But none of these are the real barrier that stops families, retirees, gig workers, and small business owners from buying a new car.

The real stumbling block — the one that freezes the entire purchase decision — is California's sales tax system.

I drive a Lincoln MKZ Hybrid with 130,000 miles on it. It has been a faithful companion through campaigns, commutes, and countless meetings. By any reasonable measure, I could justify buying a new vehicle. But I won't — not in California's current policy environment. And I'm not alone. Across our state, families, retirees, gig workers, and small business owners are quietly making the same decision: not to buy.

Why? Because California has created one of the most punitive cost structures for vehicle ownership in the nation. What used to be a straightforward purchase has become an intricate dance with sales taxes, registration fees, regulatory hurdles, and "use-tax" traps that hit honest consumers with a bill they never saw coming.

The "Punishment" for Buying a Car

Let's be candid: California has turned new vehicles — especially modest luxury or hybrid models — into a tax event rather than a transportation decision.

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When a consumer buys a car in California, they simultaneously trigger:

• Some of the highest sales tax rates statewide
• Steep registration and licensing fees
• Regulatory costs unique to California
• Insurance premiums inflated by the overall cost environment

These are not mild incremental costs. On a $40,000–$90,000 vehicle, the consumer can easily face $5,000–$10,000 in mandatory add-on expenses before driving off the lot.

That's not "supporting green transportation." That's discouraging mobility.

The Absurdity of Deterring Responsible Buyers

In my case, I considered upgrading. As a candidate for U.S. Congress, I drive thousands of miles across Santa Clara, Santa Cruz, Monterey, and San Luis Obispo counties. A newer, fresher vehicle would be a rational choice.

But I chose not to buy one — and not because I lack the means.

My MKZ Hybrid is running beautifully. It should easily reach 180,000 to 200,000 miles. Even if the hybrid battery eventually needs replacement — an estimated $3,000–$4,000 expense — that is dramatically cheaper and more practical than handing the State of California an additional $8,000+ in taxes and fees simply for choosing to upgrade responsibly.

This isn't frugality. It's rational behavior in the face of irrational government incentives.

The Deadweight Loss: When Taxes Become So High They Reduce Revenue

Classical economics teaches us about deadweight loss — the idea that when taxes or costs become excessively high, individuals simply stop buying. Everyone loses:

• The consumer, who is priced out.
• The business, which loses the sale.
• The government, which ironically collects less revenue than if it kept taxes reasonable.

This is not theory. It is happening right now in California.

Walk into a dealership anywhere from Los Gatos to Salinas and ask managers about foot traffic. Ask them about the slowdown. Ask them how many qualified buyers are delaying purchases purely due to the cost structure created in Sacramento.

California's policies don't just hurt wealthy buyers; they hurt the middle class, working families, car dealerships, union mechanics, and local tax bases. It's a perverse incentive structure that tells consumers:

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"If you're smart, you won't buy here."

And many are listening.

The Ripple Effect on Local Dealerships

Dealerships are often multigenerational family businesses. They employ:

• Salespeople
• Service technicians
• Detailers
• Administrative staff
• Finance workers

When Sacramento makes new car purchases unattractive, these jobs suffer. When consumers hold onto cars longer, service departments stay busy — but new car sales collapse, dragging down everything from inventory turnover to local economic activity.

This is not environmental policy.
This is not consumer protection.
This is a politically engineered choke point on mobility and commerce.

When Government Becomes the Barrier, Not the Bridge

A government should encourage responsible purchasing — not punish it. It should incentivize:

• Cleaner vehicles
• Safe vehicles
• Efficient vehicles
• Local commerce

Instead, California is achieving the opposite. It is turning prudent, tax-paying residents — people like me — into reluctant participants in a distorted marketplace.

I would love to support a local dealership. I would love the benefits of a fresher hybrid or EV. But until Sacramento stops treating middle- and upper-middle-income buyers as walking revenue units, I will keep my MKZ Hybrid running for another 50,000–70,000 miles. And I suspect hundreds of thousands of Californians will do the same.

A Better Way Forward

California needs a policy environment where:

• Moderate, reasonable taxes encourage purchases rather than suppress them
• Hybrid and EV buyers are not penalized with contradictory fee structures
• Consumers can upgrade without fearing hidden penalties
• Dealerships can thrive again
• Families aren't pushed into keeping aging vehicles simply to avoid government overreach

As your candidate for U.S. Congress, I will continue to speak out on these bread-and-butter issues — the issues that affect your commute, your budget, your safety, and your daily life.

The State of California may have forgotten how everyday economics works.  But the voters haven't.

— Peter Coe Verbica
U.S. Congressional Candidate
Santa Clara • Santa Cruz • Monterey • San Luis Obispo Counties

Interested in making a difference?  Support Verbica's campaign and help him fight for you in California and DC: Support - Verbica for Congress

(Image source: Midjourney 2025 with inputs by P. Verbica.)

For more information: www.peterverbica.com

Paid for by Verbica for Congress.