BILL ANALYSIS Ó
AB 1178
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Date of Hearing: April 27, 2015
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
AB 1178
(Achadjian) - As Amended March 26, 2015
SUBJECT: Vehicles: manufacturers and distributors
SUMMARY: Provides that a vehicle manufacturer, manufacturer
branch, distributor, or distributor branch cannot take any
adverse action against a dealer relative to an export or
sale-for-resale prohibition if the dealer causes the vehicle to
be registered in a state and collects or causes to be collected
any applicable sale or use tax due to the state, as specified.
EXISTING LAW:
1)Charges the Department of Motor Vehicles (DMV) with licensing
and regulating dealers, manufacturers, and distributors of
motor vehicles who conduct business in California.
2)Makes it unlawful for a vehicle manufacturer or distributor to
take specified actions against a vehicle dealer or franchisee.
FISCAL EFFECT: Unknown
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COMMENTS: SB 155 (Padilla), Chapter 512, Statutes of 2013, made
a number of changes to the statutory framework regulating the
relationship between vehicle manufacturers and dealers including
changes to their claims and appeals process, performance
standards, and vehicle export polices. Specifically, SB 155
added provisions that prohibited a vehicle manufacturer or
distributor from taking or threatening to take any adverse
action against a dealer who sold a vehicle to a buyer who then
either exported the vehicle to another country or resold the
vehicle unless the manufacturer's export or sale-for-resale
prohibition policy was provided to the dealer in writing prior
to the sale or lease and the dealer knew or reasonably should
have known of the customer's intent to export or resell the
vehicle. SB 155 further specified that the dealer processing a
vehicle's registration or collecting taxes on the sold vehicle
creates a rebuttable presumption that the dealer did not have
reason to know of the consumer's intent.
According to the sponsor, last year a specific manufacturer
adopted several export-dealer policies and sent updated
notifications to franchise dealers of those policy changes.
Both policies established strict liability provisions for
dealers who sold these particular types of vehicles that were
ultimately exported. Additionally these policies excluded the
rebuttable presumption provisions established under SB 155.
Thus, these franchise dealers could be subject to penalties if a
vehicle was exported even if the franchise dealer processed the
vehicle's registration and collected relevant taxes.
AB 1178 is the latest attempt to address issues between vehicle
manufacturers and franchise dealers related to vehicle export
and resale policies by clarifying that a vehicle manufacturer is
prohibited from taking any adverse action against a dealer once
the vehicle's registration and relevant taxes are processed.
The author notes that AB 1178 will "strengthen California's law
by prohibiting manufacturers from taking negative actions
AB 1178
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against a dealer when a vehicle is exported or resold if the
dealer collects sales tax and registers the vehicle in
California." Thus, AB 1178 appears to be a reasonable attempt
to provide clarity to existing export and resale policies as
they relate to vehicle manufacturers and franchise dealers.
Previous legislation: SB 155 (Padilla), Chapter 512, Statutes
of 2013, modified the relationship between motor vehicle dealers
and manufacturers by, among other things, making changes
regarding the use of flat-rate time schedules for warranty
reimbursement, warranty and incentive claims, audits, protest
rights, export policies, performance standards, and facility
improvements.
REGISTERED SUPPORT / OPPOSITION:
Support
California New Car Dealers Association (Sponsor)
Opposition
The Association of Global Automakers
Analysis Prepared by:Manny Leon / TRANS. / (916) 319-2093
AB 1178
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