Bill Summary for S 438 (2011-2012)

Summary date: 

Mar 28 2011

Bill Information:

View NCGA Bill Details2011-2012 Session
Senate Bill 438 (Public) Filed Monday, March 28, 2011
TO CLARIFY MOTOR VEHICLE DEALERS AND MANUFACTURERS LICENSING LAW.
Intro. by Apodaca.

View: All Summaries for BillTracking:

Bill summary

Amends GS 20-288(a1) to delete language exempting an applicant holding a new motor vehicle dealer license and operating an established showroom one mile or less from the showroom for which the applicant seeks a used motor vehicle license from the licensing requirement, and instead exempts an applicant holding a new motor vehicle dealer license, as defined. Also deletes language allowing an applicant who also holds a new motor vehicle dealer license from designating a representative to complete the required licensing course. Enacts new subsection (b1) to GS 20-288, directing the Division of Motor Vehicles to require certification that the applicant is familiar with and will comply with the NC Motor Vehicle Dealers and Manufacturers Licensing Law and with other applicable NC laws within each license and renewal license application. Enacts new subsection (g) to GS 20-301, authorizing any franchised new motor vehicle dealer to file a petition with the Commissioner of Vehicles (Commissioner) for resolution of any dispute arising with respect to the dealer’s rights or obligations related to franchise or franchise-related form agreement. Specifies the Commissioner’s authority, with appeal under the Administrative Procedure Act.
Amends GS 20-301.1(a), clarifying that it is unlawful for any manufacturer, factory branch, distributor, or distributor branch to charge or assess one of its NC franchised motor vehicle dealers for merchandise, tools, or equipment, or other charges or amounts which individually or collectively total more than $250, as detailed. Directs the required prior written notice to include any charges or amounts that total over $250. Allows a franchised new motor vehicle dealer to dispute all or any portion of an actual or proposed charge or debit to the dealer’s account, as detailed. Makes conforming and clarifying changes. Amends GS 20-305(4), adding that it is unlawful for any manufacturer, factory branch, distributor, or distributor branch to prevent or refuse to approve the change in use of an existing facility to provide for the sales or service of one or more additional line-makes of new motor vehicles. Specifies that the sole issue for determination by the Commissioner, with respect to the proposed change in use of the dealership facility, is whether the new motor vehicle dealer has a reasonable line of credit for each make or line of motor vehicle and complies with applicable requirements, as detailed. Makes conforming changes.
Amends GS 20-305(6)d.3. to make the manufacturer or distributor liable to the dealer for an amount at least equivalent to the fair market value of the franchise on the day 3 years (currently, 12 months) prior to the date on which the notice of termination, cancellation, or nonrenewal, as defined, is issued, or on one of the other dates existing under current law, whichever is higher. Amends GS 20-305(14), clarifying that except as required by any consent decree or other order of the Commissioner or order of a court of competent jurisdiction, each manufacturer, factory branch, distributor, and distributor branch must allocate its products based on each dealer’s specific allocation needs and historical selling patterns to provide each dealer an adequate supply of vehicles to remain economically viable, and cannot discriminate against a dealer because the dealer fails to relocate, update, or renovate the dealer’s existing facility. Reorganizes and retains the additional conditions for product allocation. Further clarifies that the statute is not violated if a failure is caused solely by the occurrence of product shortages resulting from natural disasters, unavailability of parts, labor strikes, product recalls, and other factors and events beyond the manufacturer’s control. Makes it an unfair and deceptive trade practice to use a vehicle allocation process that forces or coerces a NC dealer to close or sell the franchise, causes the dealer financial distress, or causes the dealer to relocate, update, or renovate the existing facility. Makes conforming changes.
Amends GS 20-305 3(9), which concerns unreasonable or unlawful signage, to add that any requirement by a manufacturer or distributor that a new motor vehicle dealer purchase or lease a sign in violation of GS 20-305 3(9) as a condition of an incentive program, as detailed, is deemed null and void and without force and effect. Makes the requirement that the dealer replace a sign or purchase or lease an additional sign unreasonable and onerous, when the dealer has purchased or leased such a sign within the previous 10 years. Enacts new subdivision (43) to GS 20-305, making it unlawful to require, coerce, or attempt to coerce any new motor vehicle dealer to change dealership location or make substantial alterations, as specified. Enacts new subdivision (44) to GS 20-305 to make it unlawful to require, coerce, or attempt to coerce any franchised motor vehicle dealer to change the principal operator, general manager, or other manager or supervisor, as specified.
Enacts new subsections (a1), (a2), (a3), (a4), and (a5) to GS 20-305.1, which concerns automobile dealer warranty obligations, to add provisions relating to retail rates charged for parts and labor and warranty parts compensation. Amends GS 20-305.1(b), making any audit for warranty parts or service compensation only for the 6 month (currently, 12 month) period immediately following the date of the payment of the claim. Also makes any audit for sales incentives, services incentives, rebates, or other incentive compensation only for the 6 month (currently, 12 month) period immediately following the date of the payment of the claim. Amends GS 20-305.1(b1), forbidding a manufacturer from failing to fully compensate a dealer for warranty or recall work or make any chargeback to the dealer’s account based on the dealer’s failure to comply with the manufacturer’s claim documentation procedure unless both of the following requirements are met: (1) the dealer has, within the previous 6 months (currently, 12 months), failed to comply with the same claim documentation procedure, and (2) the manufacturer has, within the previous 6 months (currently, 12 months), provided a written warning to the dealer, as specified. Enacts new subsection (h) to GS 20-305.1 to make it unlawful for any motor vehicle manufacturer, factory branch, distributor, or distributor branch to deny a franchised new motor vehicle dealer the right to return any part or accessory that the dealer has not sold within 12 months, provided certain conditions are met.
Amends GS 20-305.7(a), adding that all customer and consumer data and other information collected by a new motor vehicle dealer are the sole and exclusive property of the dealer. Details additional information related to customer information, and prohibits manufacturers, factory branches, distributors, and distributor branches from requiring a dealer to provide such information, except in accordance with law. Enacts new subsections (h) and (i) to GS 20-305.7, to address the provision of customer data to requesting parties, and to fully indemnify and hold harmless any dealer providing such data. Clarifies the definitions for dealer management computer system and security breach in GS 20-305.7(f). Makes a clarifying change.
Includes a severability clause. Applies to all current and future franchises and other agreements in existence between any new motor vehicle dealer in NC and a manufacturer or distributor, as of the effective date of the act.

© 2022 School of Government The University of North Carolina at Chapel Hill

This work is copyrighted and subject to "fair use" as permitted by federal copyright law. No portion of this publication may be reproduced or transmitted in any form or by any means without the express written permission of the publisher. Distribution by third parties is prohibited. Prohibited distribution includes, but is not limited to, posting, e-mailing, faxing, archiving in a public database, installing on intranets or servers, and redistributing via a computer network or in printed form. Unauthorized use or reproduction may result in legal action against the unauthorized user.

Printer-friendly: Click to view