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
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               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
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            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