BILL ANALYSIS Ó SB 155 Page 1 Date of Hearing: August 30, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 155 (Padilla) - As Amended: August 21, 2013 Policy Committee: TransportationVote:15-0 Judiciary 10-0 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill modifies the relationship between motor vehicle dealers and manufacturers to improve protections for dealers. Specifically, this bill: 1) Modifies automobile warranty repair rules, as specified, regarding disapproval, appeal, notice, protest, and audit requirements. 2) Modifies the franchisor incentive program provisions with similar to the warranty requirements. 3) Prohibits manufacturers from taking adverse action against a dealer, unless as specified, because the dealer sold or leased a vehicle to a customer who exported the vehicle to a foreign country or resold the vehicle in violation of an export or resale prohibition. 4) Prohibits a manufacturer from establishing or maintaining a performance standard or like program that may materially affect the dealer unless (a) it is reasonable in light of all existing circumstances, including such factors as demographics in the dealer's area of responsibility, and (b) within 30 days after a request by the dealer, the manufacturer provides a written summary of the methodology and all data used in establishing the performance standard. 5) Provides that a required facility alteration, expansion, or addition shall not be deemed reasonable if it requires that the dealer purchase goods or services from a specific SB 155 Page 2 vendor, except as specified. FISCAL EFFECT Any costs to the New Motor Vehicle Board (NMVB) would be absorbable with the board's normal operations. (NMVB is a program within DMV which operates in a quasi-judicial capacity to resolve disputes between franchise vehicle dealers and manufacturers/distributors of new motor vehicles and specified motorsports vehicles.) COMMENTS 1) Purpose . According to the author, "The sale and service of motor vehicles is important to California's economy. California motor vehicle franchises employ over 110,000 people and in 2011, motor vehicle sales and service resulted in over $60 billion in economic activity. To protect such an important industry, California, like every other state, has enacted motor vehicle franchise laws. "In addition to preserving a well-organized and cost-effective distribution system of motor vehicles, franchise laws seek to address the disparity in bargaining power between multi-national auto manufacturers and California's motor vehicle franchises that are primarily owned and operated as family businesses. "California's motor vehicle franchise protection laws however, did not anticipate certain punitive practices taken by automobile manufacturers, which have become a growing concern?[SB 155] would strengthen California's dealer franchise protection laws by implementing various provisions to protect California motor vehicle franchises from [such] actions." This bill is sponsored by the California New Car Dealers Association. 2) Prior Legislation . SB 642 (Padilla)/Chapter 342 of 2011, prohibited or restricted certain contracting terms between vehicle manufacturers and their franchised dealers, among other things. SB 424 (Padilla)/Chapter 12 of 2009, allowed a franchisee to SB 155 Page 3 house one or more vehicle franchise at the same location and allowed franchisees that have contracts terminated because of a manufacturer's or distributor's bankruptcy to continue to sell new cars in their inventory for up to six months, among other things. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081