Motor Vehicle Dealers And Manufacturers

Current law prohibits a motor vehicle manufacturer (manufacturer) from requiring a motor vehicle dealer (dealer) to substantially alter a facility or premises if the manufacturer required it within the last 7 years at a cost set in statute based on the type of dealer. Section 1 of the bill extends this prohibition to 10 years. Section 1 also prohibits a manufacturer from:

• Selling a similarly equipped motor vehicle to one dealer at a lower price than to another dealer;
• Requiring or enforcing a contract giving the manufacturer a right of first refusal or an option to purchase the dealership; and
• Using an unreasonable, arbitrary, unfair, or surprise performance standard in determining a dealer's compliance with a franchise agreement.

Section 2 repeals a provision that gives a dealer a right of first refusal for new franchises when the dealer was terminated due to the insolvency of the manufacturer. Section 2 also authorizes a dealer to sue in court to contest a manufacturer adding or moving a dealership to a market with a current dealer when this action would materially and adversely affect the dealer or the public. Such an action may currently be done administratively. Procedures are set for the civil action and an administrative hearing. Standards are set for determining the outcome. A prevailing party may get attorney fees and costs.

Section 3 authorizes a dealer to sue a manufacturer in court to contest whether a termination was for just cause or for failing to provide notice of a termination. Such an action may currently be done administratively. The current process for staying the termination is strengthened. The manufacturer has the burden of proof. A prevailing dealer may get attorney fees and costs.

Section 4 requires a manufacturer, when the manufacturer requires the dealer to stop selling a used motor vehicle due to a technical mechanical issue, to provide parts and a solution within 30 days or to provide compensation to the dealer. Standards are set for eligibility and payment.
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)