They’re looking out for whom?

Not too many government agencies allow private industry to overrule their regulatory decisions, which is how consumer advocates describe California’s system for overseeing new-car dealers.

But change may be on the way as reforms wind through the California Senate, seeking to send an important message to the industry about the importance of consumer protection.

Surveys by the Consumer Federation of America show that car buying is the greatest single source of consumer dissatisfaction. Of course, getting a lousy deal on a car is a lot worse than a dry cleaning problem because the stakes are so much higher.

Those high stakes are one of the reasons that buying a car is such a highly regulated and formal process. The Department of Motor Vehicles is supposed to be the agency that licenses and regulates every new-car dealer and every new-car salesman in the state, ensuring that they live up to laws intended to provide fair treatment.

But there is another obscure state agency in the background of the DMV, known as the New Motor Vehicle Board. Nearly half the members of this agency, created in 1976 by former Gov. Ronald Reagan, are automobile dealers appointed by the governor.

The board is empowered to overturn regulatory decisions made by the DMV, such as the nontrivial issue of dealership license suspensions and revocations for consumer fraud.

For example, when the DMV attempted to suspend the license of Chrysler Corp. in 1995 for reselling lemons to consumers without disclosing their defect history, the board overruled the DMV. The case eventually ended up in court for so long the suspension died and Chrysler escaped with little more than a slap on the wrist.

“We should just get rid of the New Motor Vehicle Board,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento advocacy group.

Under state rules, the board has nine members, four of whom are automobile dealers. The other five members come from such businesses as real estate, trash hauling and restaurants. A single member of the board comes from the nonprofit sector.

Tom Novi, executive director of the board, said that Shahan has never approved of the panel, for reasons he can’t understand. “By all accounts, we have been very successful,” Novi said. “The last I heard, there was no support for getting rid of the board.”

Well, there is at least a little support. State Sen. Diane Bowen (D-Marina del Rey) introduced legislation that originally called for eliminating the board, which has a $1.7-million annual budget funded by fees imposed upon dealers, manufacturers and consumers. The legislation was amended and now simply eliminates the power of the board to overrule the DMV.

“It’s a board whose primary purpose is to protect car dealers, plain and simple,” Bowen said in a statement issued to The Times. “And there’s no reason why it should be handling complaints from car buyers or have the ability to overturn disciplinary actions the DMV takes against dealers.”

The bill, approved by the Senate Transportation Committee with bipartisan support last week, heads to an appropriation panel in May. Even if the bill passes both state chambers, it still would have to be signed into law by Gov. Schwarzenegger, no sure thing given his reported close ties to auto dealers.

The board’s primary responsibility involves mediating disputes between car manufacturers and dealers, as well as disputes between consumers and dealers. Shahan said the board has no power to enforce laws and is biased in favor of dealers.

“I would rather see consumers go to the Department of Consumer Affairs, the Bureau of Automotive Repair or the DMV,” Shahan said.

Novi said the board receives more than 4,000 calls every year and takes formal written complaints from about 450 consumers. Out of those, it is able to obtain an outcome that satisfies consumers about 37% of the time, which he regards as a successful public service. “That role is very valuable,” Novi said.

But Shahan said the board’s performance is poor, leaving almost two-thirds of consumers whose cases they accept without a satisfactory outcome.

A DMV spokesman said the agency has elected not to take a position on the reforms, but former DMV chief Steve Gourley called the board’s oversight of the DMV “silly.” Gourley said that every time his agency got into an enforcement action against a dealer, the dealer threatened to take the matter to the board and have it overturned.

“Dealers have an industry with veto power over the government,” he added. “Dealers have to meet certain minimum standards and the persons who should decide that should not be members of the industry. Absolutely, dealers are less responsive to consumer problems, knowing that the board will back them up.”

Ralph Vartabedian can be reached at ralph.vartabedian @latimes.com.