BILL ANALYSIS �
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
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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
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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