BILL ANALYSIS
AB 2597
Page 1
Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2597 (Bill Berryhill) - As Amended: April 8, 2010
Policy Committee:
TransportationVote:10-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill prohibits a manufacturer of motorcycles, all-terrain
vehicles (ATVs), snowmobiles, and other motorsports vehicles
from compelling a dealer to buy and store a minimum number of
vehicles in order to quality for an incentive, to unfairly
discriminate in favor of dealers who abide by these vehicle
purchase and inventory practices, or to require a dealer to
maintain a vehicle inventory greater than a 60-day supply based
on the dealer's recent sales performance.
FISCAL EFFECT
Minor costs, if any, to the DMV to modify its regulatory
structure governing vehicle dealers and manufacturers. (New
Motor Vehicle Board (NMVB) Account.)
COMMENTS
1)Rationale . The sponsors of this bill claim it is intended to
prohibit manufacturers of motorcycles, ATVs, snowmobiles and
other motorsports vehicles from using strong-handed and unfair
practices to compel retail dealers to buy and inventory
vehicles in numbers that far exceed what is reasonably needed
to maintain a readily-available dealer inventory. According
to the sponsor of the bill, the California Motorcycle Dealers
Association (CMDA), these practices include selective
financial incentives for dealers who agree to these minimum
purchases from the manufacture, and favorable parts and
accessory availability and pricing to those dealers who accept
the manufacturer's vehicle purchase and inventory
requirements.
AB 2597
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2)Opponents of this bill (including Harley-Davidson) claim it is
unnecessary. They contend that the bill would insulate
dealers from the business risks common to other businesses and
note that manufacturers are already subject to
dealer/manufacturer requirements in the Vehicle Code that
apply to the distribution of passenger vehicles. Further,
they assert that "this legislation will lead to fewer choices
for customers, higher operation costs and increased litigation
costs for OEMs." They also cite a somewhat Montana statute
governing dealer/manufacturer wholesale order arrangements
that was found to violate the Contract Clause of the U.S.
Constitution.
3)Prior Legislation . This bill is similar to AB 2976 (Keene)
from 2008, a bill that passed the Assembly unanimously, but
was held on the Senate floor in anticipation of a
nonlegislative solution, to be negotiated between motorcycle
manufacturers and dealers. Those negotiations, from the point
of view of the dealers, have resulted in little or no effort
by the manufacturers to reach a settlement. The dealers have
therefore introduced this bill.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081