Bill Summary for H 447 (2023-2024)
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View NCGA Bill Details | 2023-2024 Session |
AN ACT TO CLARIFY VARIOUS MOTOR VEHICLE DEALER LAWS.Intro. by B. Jones, Ross, Wray.
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Bill summary
House committee substitute to the 1st edition makes the following changes.
Section 1
Amends GS 20-305, which lists certain conduct that is unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative whatsoever of any of them (collectively, a “person”), as follows. Reorganizes GS 20-305(53) into subparts: subpart (a), which pertains to certain unlawful acts if a motor vehicle dealer with franchised dealers in the State and it permits a retail customer to reserve or request to purchase or lease a vehicle directly from the manufacturer; and new subparts (b)-(d), as follows.
Deletes provisions of GS 20-305(53)(b) that made it unlawful for a person to fail or refuse to give equal reference and prominence on any website owned, operated, or controlled by the manufacturer or distributor on which consumers are permitted to order, purchase, or lease vehicles, to all of the manufacturer's or distributor's franchised dealers located in this State.
Amends GS 20-305(53)(c), which specifies that it is unlawful for a person to fail or refuse to allow all of its franchised dealers located in the State to do any of six listed things, as specified. Deletes GS 20-305(53)(c)(6), which specified that it is unlawful for a person to fail or refuse to allow all of its franchised dealers to have the ability to use any digital platform or digital retailing tool selected by the dealer as long as it is capable of performing the essential functions required by the manufacturer or distributor.
Amends GS 20-305(53)(c)(1) now specifies that it is unlawful for a person to fail or refuse to allow all of its franchised dealers, subject to availability, have the ability to maintain on the ground and in the dealer's stock a reasonable supply of all makes and models of new vehicles the dealer is authorized to sell (only applies to the extent material shortages not caused by other factors and events beyond the control of the manufacturer or distributor, now including unavailability of parts and recalls) (previous version did not have subject to availability language and only listed Acts of God and labor strikes as events).
GS 20-305(53)(c)(2) now specifies that it is unlawful for a person to fail or refuse to allow all of its franchised dealers to have the right to store new and used batteries at a safe and secure location selected and paid for by the dealer (was, just selected by the dealer) that is separate from the dealership premises, fail or refuse to compensate dealers for the full cost of storing used batteries more than 30 days after the manufacturer or distributor has been notified by the dealer of their availability to be picked up (prior version also made it unlawful for any person to fail or refuse to compensate and indemnify dealers for all loss and damage caused by vehicle batteries supplied by or through the manufacturer or distributor).
GS 20-305(53)(c)(3) now specifies that it is unlawful for a person to fail or refuse to allow all of its franchised dealers to have the same opportunity to purchase used vehicle inventory distributed or made available by that manufacturer or distributor without imposing any additional conditions or requirements on their dealers; provided that a manufacturer or distributor may uniformly restrict dealers to purchase through such program only used vehicles for which the dealer holds a franchise (prior version did not have uniform restrictions).
GS 20-305(53)(c)(4) now specifies that it is unlawful for a person to fail or refuse to allow all of its franchised dealers to have the opportunity to order from or through the manufacturer or distributor, receive and maintain in stock a reasonable supply of parts required for service and repair of the manufacturer's or distributor's vehicles based on the volume of service work performed by the dealer; provided that this sub-sub-subdivision is not violated to the extent that the failure of the manufacturer or distributor to provide parts is caused by the occurrence of product shortages resulting from natural disasters, unavailability of parts, labor strikes, or product recalls beyond the control of the manufacturer or distributor (prior version did not have language relating to acts beyond the control of the manufacturer or distributor).
GS 20-305(53)(c)(5) now specifies that it is unlawful for a person to fail or refuse to allow all of its franchised dealers to have, if the manufacturer or distributor has not contributed money or content towards the dealer's advertising, the right to independently determine the types of physical and digital advertising media the dealer chooses to advertise, including content and format, so long as it does not interfere with intellectual property rights of manufacturers and distributers (prior version did not contain exemption for when manufacturer or dealer contributes money towards dealer’s advertising); provided that nothing in this sub-sub-subdivision allows a dealer to advertise the products offered by the manufacturer or distributor in a manner that disparages or violates the reasonable brand image requirements of the manufacturer or distributor (prior version did not contain language pertaining to brand image).
Amends GS 20-305(53)(d), which makes it unlawful for a person to engage in any of the following things pertaining to the sale and negotiation of all motor vehicles in the State, as follows. Deletes provision making it unlawful for a person to maintain a website or other electronic or digital means of communication for negotiating prices or other binding terms of sale of new vehicles directly between the manufacturer or distributor and end users located in this State, including, but not limited to, agreements between the manufacturer or distributor and the end user on prices or other substantive terms of sale or leasing of new vehicles. Now makes it unlawful for a person to retain ownership of new motor vehicles until they are sold to end users located in this State except for fleet sales to a fleet customer that has a designation as such by the manufacturer or distributor (exception not in prior version). Now makes it unlawful for a person to consign new motor vehicles to its franchised dealers in this State for dealer inventory or for sale or lease to retail customers (was, just sale to end users) located in this State except for the sale or lease of a vehicle in connection with a repurchase under Article 15A of GS Chapter 20.
Now makes it unlawful for a person to reserve the right to negotiate binding terms of sale or lease (was, just sale) directly with retail customers purchasing or leasing new motor vehicles (was just buyers of new motor vehicles located in this State); provided that displaying a manufacturer's or distributor's retail price on a manufacturer or distributor-owned or controlled website or other electronic or digital means of communication shall not be considered negotiating binding terms of sale or lease in violation of this sub-sub-subdivision. Now makes it unlawful for a person to designate its franchised dealers in this State to be only delivery agents for new motor vehicles and service and parts outlets, reserving for the respective manufacturer or distributor the right to establish the binding terms of vehicle sales or the right to negotiate the binding terms of sale or lease directly with retail customers located in this State (was, just sale to end users); provided that a manufacturer or distributor may engage in fleet sales with a fleet customer that has a designation as such by the manufacturer or distributor (prior version did not have exception for fleet sales). Now specifies that nothing in GS 20-305(53)(d) prohibits a manufacturer or distributor from setting or advertising a suggested retail price or a minimum advertised price. Amends the three non-exhaustive instances of what "unreasonably impede or interfere with" includes under GS 20-305(53)(d)’s provisions pertaining to rural and other franchised dealers’ ability to obtain technologically advanced vehicles (TAV). Now makes it unlawful for a person to require, coerce, or attempt to coerce a dealer to make expenditures related to achieving CO2 reductions or neutrality at the dealer's facility at the expense of the dealer. Makes organizational changes.
Amends GS 20-305(44), amending new subsection GS 20-305(44)b, which makes it unlawful for a person to require, coerce, or attempt to coerce any new motor vehicle dealer located in this State to refrain from using all or part of the name of a dealer's founder, owner, existing trade name, or dealer principal in the dealer's trade name; provided the name the dealer proposes to use for its trade name would not disparage the manufacturer's or distributor's brand or be confusing to the consuming public (prior version did not have disparagement/confusion language).
Amends new GS 20-305(55) (unlawful for a person to interfere with the independence and governance of a dealer or dealer applicant having multiple owners by requiring, coercing, or attempting to coerce the dealer or dealer applicant to enact specified measures that would alter its governance, facilities, and finances) to specify that it does not prohibit a manufacturer or distributor from requiring the dealer or dealer applicant to designate a single natural person that the manufacturer or distributor may contact and who will be responsible for all business communications and day-to-day business decisions with the manufacturer or distributor, or from requiring that the designated person own a minimum percentage of ownership reasonably determined by the manufacturer or distributor.
Section 2
Makes organizational changes to GS 20-305(56) (setting forth conduct that constitutes the unreasonable interference of the establishment, maintenance, operation, or control of either a single location dealer website or dealer group website). Amends definition of dealer group website. Amends list of six non-exhaustive instances of unreasonable interference. Now specifies in GS 20-305(56)(b), pertaining to manufacturer websites, it is unlawful for any manufacturer or distributor to do either of the following: (1) fail to give, to the extent technologically feasible, substantially equivalent visibility to all of the manufacturer's or distributor's franchised dealers located in this State, on any website owned, operated, or controlled by the manufacturer or distributor on which customers are permitted to order or reserve vehicles for purchase or lease and (2) maintain a website or other electronic or digital means of communication for negotiating or otherwise establishing prices or other binding terms of sale or lease of new vehicles directly between the manufacturer or distributor and retail customers located in this State, provided that a manufacturer, factory branch, distributor, or distributor branch may maintain a website or other electronic or digital means of communication if the final selling or lease price of the new vehicles is determined by eligible dealers, and provided further that a dealer may not be required to set a non-negotiable price as a condition for the dealer's inclusion on any website owned, controlled, or maintained by a manufacturer or distributor.
Section 3
Amends GS 20-305.2 as follows. Now makes it unlawful for any manufacturer or distributor that has any franchised dealers in this State to sell, lease, or otherwise distribute one or more models, brands, or series of motor vehicles in this State that are propelled solely or primarily by electric or hydrogen, or vehicles that utilize autonomous self-driving technology rated at Level 3, 4, or 5 by the Society of Automotive Engineers (was, just electric or hydrogen vehicles), without making some vehicles utilizing the same or substantially similar advanced technology functionally available for purchase by all of its franchised dealers located in this State within 12 months of the date vehicles possessing such advanced technology are first delivered to any of the manufacturer's or distributor's dealers in this State or at such time as the manufacturer or distributor has sold at least 2,500 vehicles utilizing such advanced technology in this State, whichever date occurs first. Now requires the Commissioner to promptly investigate any complaint brought by a franchised dealer that a manufacturer or distributor with whom the dealer holds a franchise or any affiliated entity has violated this subsection, and, if the Commissioner determines that this subsection has been violated, the Commissioner must take appropriate action against the subject manufacturer or distributor. Deletes language specifying that it is not a violation if the manufacturer or distributor: (1) makes a reasonable quantity of vehicles using the same electric, hydrogen, or other new technology available on some models, brands, or series of vehicles available for all of its existing franchised dealers located within this State to purchase at no additional charge other than the minimum costs necessary for these dealers to sell and service the electric, hydrogen, or other new technology vehicles or (2) is selling, leasing, or otherwise distributing new electric, hydrogen, or other new technology vehicles in this State as part of a trial or introductory program where fewer than 2,000 of the vehicles are sold, leased, or distributed in this State during any 12-month period.
Section 4
Amends GS 20-305(14), which makes it illegal for any manufacturer, factory branch, distributor, or distributor branch; or any field representative, officer, agent, or representatives of these entities, to delay, refuse, or fail to deliver motor vehicles or motor vehicle parts or accessories in reasonable quantities relative to the new motor vehicle dealer's facilities and sales potential in the new motor vehicle dealer's market area, or within a reasonable time, after receipt of an order (was, bona fine sold retail customer order) from a dealer that has a franchise for the retail sale of any new motor vehicle sold or distributed by the manufacturer or distributor, any new vehicle, parts or accessories to new vehicles as are covered by such franchise, and such vehicles, parts or accessories as are publicly advertised as being available or actually being delivered. Deletes requirements that the manufacturer or distributor fill each bona fide retail customer order from one of its in-state franchised dealers in the chronological sequence in which the order is received without regard for or consideration of the dealer’s previously earned allocation of vehicles and requires the orders to be filled before the manufacturer or distributor allocates vehicles similarly configured and have similar options to dealers based on any other allocation system, program, policy, or criteria, except for those allocated in new sub-subdivision g, and be filled from the entire allocation of all new motor vehicles that has been designated for distribution in the state.
Amends GS 20-305(14)’s requirement that any sales objectives which a manufacturer, factory branch, distributor, or distributor branch establishes for any of its franchised dealers in this State must be reasonable, and every manufacturer, factory branch, distributor, or distributor branch must allocate its products within this State in a manner that, in addition to other listed requirements, also discloses to all of its franchised dealers handling the same line-make both its system of allocation and the actual new vehicle allocation that occurred during the previous calendar month and during the previous calendar months, including, but not limited to: a complete breakdown by model, color, equipment, and other items or terms; a concise listing of same line-make dealerships broken down by same line-make dealers within each dealer's area of responsibility, district, region, and the State; and an explanation of the derivation of the allocation system, including its mathematical formula or formulae, in a clear and comprehensible form. The data provided by the manufacturer or distributor is required to reflect all new vehicles allocated to its franchised dealers in this State pursuant to a mathematical formula or on a discretionary basis. All of the allocation data that a manufacturer or distributor is required to provide to each of its same line-make dealers in this State pursuant to this sub-subdivision shall either be made available for its dealers to review online at their discretion or be provided to dealers regularly, at least on a quarterly basis, as well as promptly upon the email, online, or other written request of a dealer or in the event a manufacturer or distributor has changed its allocation formula, process, or policies. Exempts any model or series of vehicle for which a manufacturer or distributor has sold fewer than 1,000 units in this State within the previous 12 months from the minimum vehicle allocation rights of dealers under GS 20-305(14)(h) (was, GS 20-305(14)(g)). Makes organizational changes.
Section 5
Deletes proposed amendments to GS 20-305(14a) that were in Section 5. Makes organizational changes to act to account for deleted section text.
Further amends GS 20-305 by making it illegal for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any of those entity’s representatives to use economic coercion (as defined) to influence a dealer to participate in or comply with any program or policy sponsored, endorsed, or supported by the manufacturer or distributor, in order to sell any model, type, or series of vehicle or other products or services (prior version did not have “in order”), in addition to other listed prohibited conduct. Now specifies that for purposes of GS Chapter 20 the terms economic coercion, coerce, and attempt to coerce include the manufacturer's or distributor's use of rebates, credits, incentive payments, or other consideration that has the effect of causing a variance in the price of new motor vehicles offered to its franchised dealers located in the State or that offers participating or compliant dealers the ability to sell or receive any model, type, or series of vehicle or other products or services offered by or through the manufacturer or distributor (previously, just applied to the subdivision).
Section 6
Amends GS 20-286 by adding to the definitions that apply in Article 12, Motor Vehicle Dealers and Manufacturers Licensing Law, of GS Chapter 20, the term sell or selling, to specify that it applies to retail customers and transactions. Makes technical changes.
Section 7
Amends GS 20-305(58) by replacing references to "end user" with "retail customer." Amends GS 20-305(59) by adding requirement that the specified illegal sales to an end user occur within a five-year period subsequent to the sale or lease of the vehicle to the retail customer.
Amends GS 20-305.2 by changing references to the end user to the retail customer. Now permits the manufacturer or distributor to, on the same terms offered to the dealer, also sell to the retail customer or activate for a fee a permanent or temporary motor vehicle accessory, option, add-on, feature, improvement, or upgrade for a motor vehicle of a line-make manufactured, imported, or distributed by the manufacturer or distributor (was just imported or distributed by the manufacturer). Makes conforming changes to also refer to the distributor in reference to the manufacturer’s obligations to certain dealers. Makes technical change. Specifies that when providing a new motor vehicle to a dealer for offer or sale to the public, it is unlawful for the manufacturer or distributor to fail to provide to the dealer a written disclosure that may be provided to a potential buyer of the new motor vehicle of each accessory or function of the vehicle that may be initiated, updated, changed, or maintained by the manufacturer or distributor through over the air or remote means, and the charge to the customer for initiation, update, change, or maintenance. Specifies that a manufacturer or distributor may comply with this subdivision by notifying the dealer that the information is available on a website or by other digital means.
Section 8
Amends GS 20-305.1, which allows the retail rate a motor vehicle dealer customarily charges for parts and labor to be established at the dealer’s election by submitting to the manufacturer or distributor 100 sequential non-warranty customer-paid service repair orders containing warranty-like parts, or 60 consecutive days of non-warranty customer-paid service repair orders which contain warranty-like parts, whichever is less, covering repairs made no more than 180 days before the submission and declaring the average percentage markup. Amends the presumption related to the average of the parts makeup rate and the average labor rates, so that they are now both presumed to be accurate (was, reasonable). Now specifies that the presumption can be rebutted by reasonably substantiating that that the rate requested is either: (1) not supported by the submission and by declaring the accurate rate based upon the submission repair orders or (2) fraudulent. Now provides that if the manufacturer or distributor believes the dealer's submission is fraudulent, the manufacturer or distributor may file a protest with the Commissioner not later than 30 days following the dealer's rejection of the rebuttal rate. Makes conforming changes.
Section 9
Amends GS 20-305(30) to extend the period for manufacturers operating a program as of October 1, 1999, that varied the price charged to its franchised dealers in this State in a manner that would violate this subdivision, or had in effect a documented policy that had been conveyed to its franchised dealers in this State and that varied the price charged to its franchised dealers in this State in a manner that would violate this subdivision, it is lawful for that program or policy, including amendments to that program or policy that are consistent with the purpose and provisions of the existing program or policy, or a program or policy similar thereto implemented after October 1, 1999, to continue in effect as to the manufacturer's franchised dealers located in this State from June 30, 2025 to June 30, 2028. Similarly extends the period for manufacturers operating as of June 30, 2001, from June 30, 2025, to June 30, 2028.