CLARIFY MOTOR VEHICLE DEALER LAWS.

View NCGA Bill Details2017-2018 Session
Senate Bill 413 (Public) Filed Tuesday, March 28, 2017
AN ACT TO CLARIFY MOTOR VEHICLE DEALERS AND MANUFACTURERS LICENSING LAWS.
Intro. by B. Jackson.

Status: Ch. SL 2017-148 (Senate Action) (Jul 20 2017)

SOG comments (1):

Identical bill

Substantively identical to H 619, filed 4/5/17.

Bill History:

S 413/S.L. 2017-148

Bill Summaries:

  • Summary date: Jul 25 2017 - More information

    AN ACT TO CLARIFY MOTOR VEHICLE DEALERS AND MANUFACTURERS LICENSING LAWS. Enacted July 20, 2017. Section 5 is effective January 1, 2018. The remainder is effective July 20, 2017.


  • Summary date: Jun 20 2017 - More information

    House committee substitute makes the following changes to the 2nd edition.

    Amends GS 20-305. Amends the prohibition against motor vehicle manufacturers, factory branches, distributors, or distributor branches, or any field representatives, officers, agents, or any representatives whatsoever of any of them, varying the price charged to any of its franchised new motor vehicle dealers in the State for new motor vehicles based on listed actions by the dealer, allowing the manufacturers whose programs violate that prohibition, but were grandfathered in under the two listed exceptions, to continue their programs in effect until June 30, 2022 (was, June 30, 2018).

    Amends GS 20-305.1. Amends requirement that motor vehicle manufacturers, factory branches, distributors, or distributor branches perform their warranty obligations with respect to motor vehicles, except for parts used to repair the living facilities of recreational vehicles, to include motor homes, travel trailers, fifth-wheel trailers, camping trailers, and truck campers within that exception.

    Amends GS 20-305.5. Amends the caption to read Recreational vehicle manufacturer warranty recall obligations. Deletes all current text of the statute, and replaces it with the following:

    Subsection (a) requires manufacturers, factory branches, distributors, and distributor branches that manufacture or distribute recreational vehicles (RVs, as defined) to fully compensate their dealers in this State under this statute for warranty or recall work performed by the dealers related to the living facilities of the RV, including labor and parts as specified. Requires RV manufacturers, factory branches, distributors, or distributor branches to fully and timely compensate any of its franchised RV dealers in the State under this statute for all parts and labor used by the dealers in making warranty or recall repairs to such living facilities of RVs, including equipment, plumbing, appliances, and other options as specified, to the extent that individual components are not separately warranted by their manufacturers or distributors. Requireswarrantors (as defined) to fully and timely compensate any franchised RV dealer in the State under this statute for all parts and labor used in making warranty or recall repairs to any component parts of the living facilities of RVs manufactured or distributed by such warrantor, including equipment, plumbing, appliances, and other options included in the purchase price paid by the dealer for the RV.

    Subsection (b) requires warrantors, RV manufacturers, factory branch distributors, and distributor branches that sell or distribute RVs in the State to specify in writing to each RV dealer licensed in the State who sells products manufactured or distributed by the warrantor, RV manufacturer, factory branch distributor, or distributor branch, the RV dealer's obligations for preparation, delivery, and warranty and recall service on its products, the schedule of compensation to be paid such dealers for parts and work and service, and the time allowances for the performance of such work and service, including reasonable compensation for diagnostic work and associated administrative requirements, as well as repair service, labor, and transportation provided by the dealer to transport an RV to and from a location at which repairs can be made, subject to requirements regarding written authorization by the warrantor. Requires time allowances for the performance of warranty work and service to be reasonable and adequate for work to be performed. Requires compensation under this statute to be reasonable, and never less than the RV dealer's current retail labor rate for nonwarranty work of a like kind, so long as such amount is competitive with the retail rates charged for parts and labor by other franchised RV dealers within that dealer's market.

    Subsection (c) prohibits warrantors from requiring dealers to establish the rate customarily charged by the RV dealer for labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time consuming to provide.

    Subsection (d) requires a warrantor to reimburse a dealer the cost of a part, equipment, plumbing system or device, or appliance or option, plus a minimum 30% handling charge, and pay any cost of freight to return the part, equipment, appliance or option to the warrantor.

    Subsection (e) requires a warrantor that furnishes a part or component to a dealer to use in performing repairs under a warranty or recall repair to compensate the dealer for the part or component in the same manner as warranty parts compensation in this statute, by compensating the dealer on the basis of a 30% handling charge as listed in the warrantor's price schedule less the cost for the part or component.

    Subsection (f) requires all claims made by RV dealers under this statute for compensation for delivery, preparation, warranty and recall work, and transportation costs to be paid by the affected warrantor within 30 days after receipt of claim from the dealer. Provides notice requirements for the warrantor when disapproving a dealer's claim, with claims not specifically disapproved within 30 days of receipt being considered approved with payment due immediately. Prohibits charging an approved, paid claim back to the dealer unless the claim can be shown to be false or fraudulent, that the repairs were not properly made or were unnecessary, or the dealer failed to reasonably substantiate the claim. Prohibits warrantors from denying claims or reducing reimbursement amounts so long as the dealer has provided reasonably sufficient documentation that the dealer has made a good faith attempt to perform the work in compliance with written policies and procedures of the warrantor and has actually performed the work. Requires a warrantor to fully compensate a dealer for warranty or recall work or make any chargeback to the dealer's account, regardless of the dealer's failure to comply with the warrantor's claim documentation procedure, unless the dealer has failed to comply with the same specific procedure or procedures in the past 12 months, and the warrantor has mailed a written warning to the dealer, as specified, identifying the specific claim documentation procedure or procedures violated by the dealer.

    Subsection (g) requires RV manufacturers, factory branches, distributors, or distributor branches to designate at least one of their employees knowledgeable in warranty administration who shall be the designated warranty contact person with whom their franchised dealers licensed in the State can communicate to assist them in filing and getting paid on warranty claims related to all component parts of all RVs the manufacturer, factory branch, distributor, or distributor branch sells or distributes in the State. Requires written notice to all relevant franchised RV dealers, the Commissioner of Insurance, and the NC Automobile Dealers Association, Inc., of the identity and contact information of the designated warranty contact person, and any changes in this information.

    Subsection (h) prohibits warrantors or RV manufacturers, factory branches, distributors, or distributor branches from recovering or attempting to recover their costs for compensating RV dealers for warranty or recall parts and service, either by reduction in the amount due to the dealer, or by separate charge, surcharge, or other imposition.

    Subsection (i) prohibits RV manufacturers, factory branches, distributors, or distributor branches to fail to indemnify and hold harmless its franchised dealers licensed in the State against any judgments or settlements agreed to by the manufacturer, to the extent that the judgment or settlement relates to the alleged defective or negligent manufacture, assembly, or design of new RVs, parts, or accessories, or any other functions beyond the control of the dealer. Prohibits warrantors from failing to indemnify and hold harmless any RV dealer in the State who sold one or more products warranted by the warrantor against any judgments or settlements agreed to by the warrantor, to the extent that the judgment or settlement relates to the alleged defective or negligent manufacture, assembly, or design of a product warranted by the warrantor or other functions beyond the control of the dealer. Any audit for the warranty or recall parts or service compensation shall only be for the 12-month period immediately following the date of the payment of the claim by the manufacturer, factory branch, distributor, distributor branch, or warrantor. Any audit for sales incentives, service incentives, rebates, or other forms of incentive compensation shall only be for the 12-month period immediately following the date of payment of the claim by the manufacturer, factory branch, distributor, distributor branch, or warrantor. These limitations are not effective for cases of fraudulent claims.

    Subsection (j) prohibits warrantors or RV manufacturers, factory branches, distributors, or distributor branches from directing or encouraging owners or purchasers of RVs to have warranty or recall service work or other RV repairs made by any repair facility other than either the franchised dealer that sold the RV or the franchised dealer closest in proximity to such RV owner or purchaser, subject to the condition that such dealer has sufficiently trained personnel and necessary tools and equipment to make the required repairs, has not expressly stated in writing its desire to have repairs made elsewhere, and is willing to make the repairs within a reasonable period of time after necessary parts have been supplied.

    Subsection (k) provides for hearings before the Commissioner on disputes under this statute, at the request of either party to a dispute, with the decision of the Commissioner being binding on the parties, subject to judicial review. Does not give the Commissioner any authority as to the content of any warrantor's warranty. Stays chargebacks and payments during the pendency of the Commissioner's determination.

    Subsection (l) exempts manufacturers and dealers in mobile or manufactured type housing or who sell only non-motorized recreational trailers from GS 20-305(4) through (28) and GS 20-305.2 through GS 20-305.4. Unless specifically exempted, each of those provisions applies to all RV manufacturers, factory branches, distributors, or distributor branches who sell or distribute any motorized RVs in the state. GS 20-305.1 does not apply to manufacturers or dealers of mobile or manufactured type housing.

    Subsection (m) applies GS 20-305.1 to RV dealers and to RV manufacturers, factory branches, distributors, or distributor branches, to the extent not expressly inconsistent with this statute. Provides that the relationship between an RV manufacturer or distributor, and an RV dealer located in the state, under which the RV dealer purchases and resells new RVs from the RV manufacturer or distributor, is considered afranchise, as defined, under this statute and within GS Chapter 20, Article 12, whether or not the rights and responsibilities of the parties have been delineated in a written agreement or contract.

    Amends proposed GS 20-101.3. Adds that fees covered by that statute are not considered warranty expenses and are not subject to the compensation requirements of GS 20-305.1. Makes proposed GS 20-101.3 effective January 1, 2018, and applicable to fees charged on or after that date.

    Provides a severability clause.

    Except as provided otherwise, the act is effective when it becomes law.


  • Summary date: Apr 20 2017 - More information

    Senate committee substitute makes the following change to the 1st edition.

    Deletes proposed amendments to GS 20-305, GS 20-305.1, GS 20-305.5, GS 20-305.2, and GS 20-305.7(b). Deletes the severability clause. Makes conforming changes.


  • Summary date: Mar 28 2017 - More information

    Amends GS 20-288(a1)(2) to extend the licensing-course exemption for used motor vehicle dealer applicants who operate a new motor vehicle showroom to include all applicants whose new motor vehicle showroom is within 30 miles (currently, 20 miles) of the proposed used motor vehicle showroom.

    Amends GS 20-305 to prohibitmanufacturers, distributors, or their branches, from requiring, coercing, or attempting to coerce, any new motor vehicle dealer to change the location of its dealership, or to make any substantial alterations to their dealership premises or facilities, if the dealer has done so within the preceding 10 years at a cost of more than $100,000, and the change was made at the request of, or with the knowledge, acquiescence, or approval of, the manufacturer, distributor, or branch. Any dealer not covered by this provision is governed by specified existing subdivisions of this statute.

    Amends GS 20-305.1 to further require the motor vehicle manufacturers', distributors', and branches' written notice to their dealers to also include the dealers' obligations for recall service on the products, including service under listed preparation, delivery, and warranty agreements or contracts issued by the manufacturer, distributor, or branch, and the schedule for compensation and time allowances for the expanded list of required services. Makes conforming changes. Requires a manufacturer or distributor to further compensate a dealer for parts and components provided at reduced cost (currently only at no cost) for repairs under a recall, campaign service action, or warranty repair, as specified, and clarifies that the compensation is on the basis of the dealer's average markup on the cost for the part or component, less the cost for the part or component. Makes it further unlawful for manufacturers, distributors, and branches to fail to perform their recall obligations, or to fail to fully compensate their motor vehicle dealers for qualifying used vehicles or recall parts or to recover their costs for compensating their dealers for recall parts (currently only applies to warranty obligations and parts). Eliminates the provision exempting the living facilities of recreational vehicles from this prohibition, and specifies that the prohibition applies to the living facilities of recreational vehicles. Clarifies that claims by dealers concerning compensation for qualifying used motor vehicles under new GS 20-305.1(i) shall be paid by the manufacturer within 30 days. Makes conforming and technical changes. Clarifies that the chargebacks or payments required by a manufacturer from a dealer, which are stayed during a petition to the Commissioner, include compensation for services specified by the earlier amendments.

    Enacts new GS 20-305.1(i) and (j), requiring manufacturers, distributors, or branches to compensate a franchised motor vehicle dealer for any motor vehicle subject to a notice of recall and stop-sale or do-not-drive order issued by the manufacturer or the National Highway Traffic Safety Administration and whose parts to repair the underlying defect are not received by the dealer within 15 days of the notice of recall. Specifies the rate of monthly compensation (1.75% of the vehicle's value).

    Makes a conforming change to GS 20-305.5.

    Amends GS 20-305.2 to prohibit manufacturers, distributors, or branches with franchised motor vehicle dealers to own any interest in, operate, or control any entity that leases or rents motor vehicles to the general public in competition with any of their franchised dealers.

    Amends GS 20-305.7 to clarify that the limits in subsection (b) do not apply to customers that meet any of the listed exemption qualifications (currently does not specify whether a customer must satisfy any or all of the qualifications). Clarifies that the lists of third parties to which a manufacturer and so forth provide dealers' data must include each and every such third party. Further requires the list to specify what data was provided to each party and that the lists must be specific to each dealer. Requires the list to show third parties that actually received, not that may have received, data. Prohibits third parties from charging the dealer any fee for access to the dealer's data. Provides that the rights of subsection (b) are not waivable and may not be modified by contract.

    Enacts new GS 20-101.3 (Conspicuous disclosure of dealer shop and other service-related fees). Requires motor vehicle dealers to conspicuously display notices of shop fees for service work and other discretionary fees and disclose fees on a customer's invoice prior to charging such fees. Does not require dealers to charge a shop or other service-related fee. Effective January 1, 2018.

    Contains a severability clause.

    Except as otherwise specified, the act is effective when it becomes law, and applies to all current and future franchises and other agreements in existence between any new motor vehicle dealer in the State and a manufacturer or distributor as of the effective date of this act.


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