Identical to S 356, filed 3/22/23.

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 two 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.

GS 20-305(53)(b) specifies that it is unlawful for a person to fail or refuse to allow consumers located in this State the ability to directly purchase from any of its franchised dealers in this State, either at the dealer's dealership or online, all makes and models of new vehicles the dealer is authorized to sell. It also makes 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 that are located in this State. Finally, it is unlawful for a person to fail or refuse to require that all of the new vehicles manufactured or distributed by the manufacturer or distributor that are sold or leased to purchasers or lessees located in this State be physically delivered to the ultimate purchaser or lessee by the same line-make franchised dealer selected by the purchaser or lessee, or in the absence of such selection, by the same line-make dealer from whom the vehicle was purchased or leased, or by the same line-make dealer that is located in closest proximity to the purchaser or lessee.

GS 20-305(53)(c) 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 the following six things: (1) 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 when material shortages not caused by acts beyond the control of the manufacturer or distributor); (2) have the right to store new and used batteries at a safe and secure location 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, or 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; (3) 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; (4) 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; (5) have 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; and (6) 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.

GS 20-305(53)(d) makes it unlawful for a person to engage in any of the following five things pertaining to the sale and negotiation of all motor vehicles in the State: (1) 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; (2) retain ownership of new motor vehicles until they are sold to end users located in this State; (3) consign new motor vehicles to its franchised dealers in this State for dealer inventory or for sale to end users located in this State; (4) reserve the right to negotiate binding terms of sale directly with buyers of new motor vehicles located in this State; (5) 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 directly with end users located in this State.

GS 20-305(53)(d) also makes it unlawful for a person to unreasonably impede or interfere with the ability of its rural and other franchised dealers located in the State to obtain from that manufacturer or distributor and sell or lease any series or models of technologically advanced vehicles (TAV) that the manufacturer or distributor makes available for sale or lease in this State by or through its same line-make dealers. Defines TAV and electronic vehicle (EV). Sets forth three non-exhaustive instances of what "unreasonably impede or interfere with" includes.  

GS 20-305(53)(e) makes it unlawful to withhold all or any portion of any incentive payment from any of its dealers located in this State on the basis of a dealer's failure to comply with any condition or requirement that is unlawful, prohibited, contrary, or inconsistent with any of the provisions of GS 20-305(53).

Specifies that the provisions of GS 20-305(53) clarifying the subsection does not require manufacturers or distributors to do certain things only applies to GS 20-305(53)(a).

Makes organizational changes.

Amends GS 20-305(44), to add 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. Makes organizational changes.

Enacts GS 20-305(55) which makes it 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.

Section 2

Further amends GS 20-305, as amended by the act, to enact GS 20-305(56), which sets 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. Defines both single location dealer website and dealer group website. Specifies that unreasonable interferences includes but is not limited to any contractual prohibition or any policy or any bonus or incentive program created or sponsored by a manufacturer or distributor that includes six non-exhaustive instances.

Section 3

Amends GS 20-305.2 by making it illegal for a 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 solely or primarily electric or hydrogen vehicles or that use technology not available for purchase by all of its in-state franchised dealers. Specifies 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. Requires the denial of any new or renewal application for a manufacturer or distributor license or revocation of a previously issued license for violations of this provision.

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 a bona fide sold retail customer order (was, 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. Adds the requirement 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. Requires the orders to be filled before the manufacturer or distributor allocates vehicles that are 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. Adds the following new requirements for the allocation of products by a manufacturer, factory branch, distributor, or distributor branch. New sub-subdivision b1 requires vehicles to be allocated to each of its dealers that are configured in a way that includes options that take into consideration the dealer’s historical experience and success in selling vehicles that are similarly configured and have similar options. New sub-subdivision g provides that if, during the immediately preceding 12 calendar months, a new motor vehicle dealer in the state sold 250 or fewer new vehicles manufactured or distributed by a particular manufacturer or distributor, that manufacturer or distributor must timely allocate and deliver to the dealer monthly and on a model-by-model or series basis, no fewer than the number of new motor vehicles of each such model or series that dealer sold at retail during the immediately previous calendar month, capped at 20 vehicles per month of any given model. Sets out requirements for filling the dealer's minimum vehicle allocation rights. Adds that if there are temporary shortages caused by factors and events beyond the manufacturer’s control, manufacturers or distributors are required to allocate and distribute all available new motor vehicles to its franchised dealers in the state according to the allocation priorities and in a fair, equitable, and nondiscriminatory manner.

Section 5

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 establish a motor vehicle allocation or distribution system or implement a system of allocation or distribution of motor vehicles to one or more of its franchised motor vehicle dealers which reduces or alters allocations or supplies of new motor vehicles to the dealer to achieve a purpose prohibited by this Article; or which reserves a specific motor vehicle for a specifically named person; or which requires or incentivizes motor vehicle dealers to sell or lease, or to negotiate the sale or lease of, a specific motor vehicle to a specifically named person; or which requires or incentivizes motor vehicle dealers to sell or lease a motor vehicle at a specified price or profit margin; or which otherwise is unfair (as defined), inequitable, unreasonably discriminatory, or not supportable by reason and good cause. Sets out related record keeping requirements.

Section 6

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, to sell any model, type, or series of vehicle or other products or services, or to take or refuse to take any action or to engage in or refuse to engage in any conduct. Entitles each of the manufacturer's or distributor's in-state franchised dealers to the maximum rebate, credit, incentive payment, or other consideration the manufacturer or distributor is offering under its program or policy, or to sell or receive any model, type, or series of vehicle or other products or services offered by or through the manufacturer or distributor, whether or not the dealer has complied with any or all of the conditions or requirements of the manufacturer's program or policy. Specifies that this does not prohibit a manufacturer or distributor from establishing for each dealer reasonable requirements for training, facilities, parts, and equipment necessary to sell and service any model, type, or series of vehicle or other products or services offered by or through the manufacturer or distributor, if the requirements take into consideration that dealer's reasonably anticipated sales volumes of these products or services over the following three-year period.

Section 7

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, which is defined as: taking deposits or receiving payment for the purchase, lease, exchange, subscription, or use of a motor vehicle; accepting a reservation for a specific motor vehicle identified by Vehicle Identification Number or other product identifier from a retail consumer; setting the retail price for the purchase, lease, or exchange of a motor vehicle; offering or negotiating terms for the purchase, lease, finance, or exchange of a motor vehicle with a retail consumer; negotiating directly with a retail consumer the value of a motor vehicle being traded in as part of the purchase, lease, exchange, subscription, or use of a motor vehicle; offering or negotiating directly with a retail consumer any service contract, extended warranty, vehicle maintenance contract, guaranteed asset protection agreement, or any other vehicle-related products and services in connection with the purchase, lease, or exchange of a motor vehicle; any transaction where the title of a motor vehicle or a used motor vehicle is transferred to a retail consumer; and also any retail lease transaction where a retail customer leases a vehicle for a period of at least 12 months. Specifies that the following terms are synonymous: "sell," "selling," "sold," "exchange," "retail sales," "selling activities," and "leases."

Section 8

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 (1) engage in this State in any of the activities of a motor vehicle dealer, except as expressly permitted by GS 20-305.2 (unfair methods of competition; protection of car-buying public), or to compete with any of its same line-make dealers in this State with respect to the sale of any products or services that the dealer is authorized to sell pursuant to its franchise, by the manufacturer's or distributor's remote electronic transmission to the end user of any motor vehicle accessory, option, add-on, feature, improvement, or upgrade and (2) sell or lease any motor vehicle of a line-make for which it has any in-state franchised dealers directly to an in-state end user or to activate for a fee any vehicle accessory, option, add-on, feature, improvement, or upgrade, on or to any vehicle owned or leased by an in-state end user, in a manner other than through a same line-make dealer.

Amends GS 20-305.2 by adding that if the new motor vehicle dealers of the line-make located in this State are allowed to sell end users the same motor vehicle accessory, option, add-on, feature,  improvement, or upgrade for a motor vehicle of the line-make manufactured, imported, or distributed by the manufacturer or distributor, then a manufacturer or distributor may, on the same terms offered to the dealer, also sell to the end user or activate for a fee a 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. Sets out conditions under which the manufacturer must pay the franchised new motor vehicle dealer at least 25% of the gross revenue received by the manufacturer agent or common entity for the sale or activation.

Section 9

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). Makes changes to the way in which the presumption can be rebutted by the manufacturer or dealer. Removes the provision requiring the manufacturer or dealer, if the declared rate is rebutted, to propose an adjustment within the specified time frame. Under current law, a dealer that does not agree with the proposed average percentage markup may file a protest and a hearing must be held. Places upon the manufacturer or distributor the burden of proving at the hearing that the rate declared by the dealer was inaccurate (was, unreasonable) and that the proposed adjustment of the average percentage markup is correct (was, reasonable). Excludes work on transmission assemblies from the calculation of the retail rate customarily charged by the dealer for parts and labor.

Section 10

Includes a severability clause.