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S1098.....................................................by TRANSPORTATION
MOTOR VEHICLES - Amends existing law to provide that a licensed motor
vehicle dealer and a full-time licensed motor vehicle salesman employed by
a licensed dealer shall be permitted to purchase vehicles at salvage pools;
and to provide that it is illegal for a licensee to sell vehicles at a
salvage pool to anyone not in possession of an Idaho vehicle dealer's
license or a license issued to a full-time salesperson employed by an Idaho
licensed dealer, or to individuals from another state unless licensed in
that state and authorized to do business in this state.
02/09 Senate intro - 1st rdg - to printing
02/12 Rpt prt - to Transp
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE SENATE
SENATE BILL NO. 1098
BY TRANSPORTATION COMMITTEE
1 AN ACT
2 RELATING TO LICENSING OF MOTOR VEHICLE DEALERS AND SALESMEN; AMENDING SECTION
3 49-1606, IDAHO CODE, TO PROVIDE THAT A LICENSED DEALER AND A FULL-TIME
4 LICENSED SALESMAN EMPLOYED BY A LICENSED DEALER SHALL BE PERMITTED TO PUR-
5 CHASE VEHICLES AT SALVAGE POOLS; AND AMENDING SECTION 49-1613, IDAHO CODE,
6 TO PROVIDE THAT IT IS ILLEGAL FOR A LICENSEE TO SELL VEHICLES AT A SALVAGE
7 POOL TO ANYONE NOT IN POSSESSION OF AN IDAHO VEHICLE DEALER'S LICENSE OR A
8 LICENSE ISSUED TO A FULL-TIME SALESPERSON EMPLOYED BY AN IDAHO LICENSED
9 DEALER, OR TO INDIVIDUALS FROM ANOTHER STATE UNLESS LICENSED IN THAT STATE
10 AND AUTHORIZED TO DO BUSINESS IN THIS STATE.
11 Be It Enacted by the Legislature of the State of Idaho:
12 SECTION 1. That Section 49-1606, Idaho Code, be, and the same is hereby
13 amended to read as follows:
14 49-1606. CLASSES OF LICENSES -- NONRESIDENT DEALERS. Licenses issued
15 under the provisions of this chapter shall be as follows:
16 (1) A dealer's license shall permit the licensee to engage in the busi-
17 ness of selling or exchanging new and used vehicles, new and used motorcycles
18 and motor scooters, new and used all-terrain vehicles, snow machines and
19 travel trailers, and new and used motor homes, and shall permit the licensee
20 to purchase vehicles at salvage pools. This form of license shall permit
21 licensees who are owners or part owners of the business of the licensee to act
22 as vehicle salesmen.
23 (2) A vehicle salesman's license shall permit the licensee to engage in
24 the activities of a vehicle salesman, and to purchase vehicles at salvage
25 pools provided the licensee is a full-time employee of a dealership with a
26 current Idaho dealer's license.
27 (3) A wholesale dealer's license shall permit the licensee to engage in
28 the business of wholesaling used vehicles to Idaho vehicle dealers. The holder
29 of this license must meet all the requirements for a principal place of busi-
30 ness, except for the requirement of display area and adequate room to repair
31 vehicles.
32 (4) A vehicle manufacturer's license shall permit the licensee to engage
33 in the business of constructing or assembling vehicles, of the type subject to
34 registration under this title at an established place of business within
35 Idaho.
36 (5) A distributor, factory branch, or distributor branch license shall
37 permit the licensee to engage in the business of selling and distributing
38 vehicles, parts, and accessories to their franchised dealers.
39 (6) A representative (factory branch or distributor, etc.) license shall
40 permit the licensee to engage in the business of contacting his respective
41 authorized dealers, for the purpose of making or promoting the sale of his,
42 its, or their vehicles, parts, and accessories.
43 (7) Pending the satisfaction of the department that the applicant has met
2
1 the requirements for licensure, it may issue a temporary permit to any appli-
2 cant for a license. A temporary permit shall not exceed a period of ninety
3 (90) days while the department is completing its investigation and determina-
4 tion of facts relative to the qualifications of the applicant for a license. A
5 temporary permit shall terminate when the applicant's license has been issued
6 or refused.
7 (8) The department may issue a probationary vehicle salesman's license,
8 subject to conditions to be observed in the exercise of the privilege granted
9 either upon application for issuance of a license or upon application for
10 renewal of a license. The conditions to be attached to the exercise of the
11 privilege shall not appear on the face of the license but shall, in the judg-
12 ment of the department, be in the public interest and suitable to the qualifi-
13 cations of the applicant as disclosed by the application and investigation by
14 the department.
15 (9) A nonresident dealer who is currently authorized to do business as,
16 and has an established place of business as a vehicle dealer in another state,
17 is not subject to licensure under the provisions of this chapter as long as
18 the sales are limited to the exportation of vehicles for sale to, and the
19 importation of vehicles purchased from, licensed Idaho vehicle dealers.
20 SECTION 2. That Section 49-1613, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 49-1613. UNLAWFUL ACTS BY LICENSEE. (1) It shall be unlawful for the
23 holder of any license issued under the provisions of this chapter to:
24 (a) Intentionally publish or circulate any advertising which is mislead-
25 ing or inaccurate in any material particular or which misrepresents any of
26 the products sold or furnished by a licensed dealer;
27 (b) Violate any of the provisions of this chapter or any of the applica-
28 ble rules;
29 (c) Knowingly purchase, sell or otherwise acquire or dispose of a stolen
30 vehicle;
31 (d) Violate any law respecting commerce in vehicles or any lawful rule
32 respecting commerce in vehicles promulgated by any licensing or regulating
33 authority now existing or hereafter created by the laws of the state;
34 (e) Engage in the business for which the dealer is licensed without at
35 all times maintaining a principal place of business;
36 (f) Engage in a type of business respecting the selling or exchanging of
37 vehicles for which he is not licensed;
38 (g) Knowingly purchase a vehicle which has an altered or removed vehicle
39 identification number plate or alter or remove a vehicle identification
40 number plate;
41 (h) Violate any provision of this title or any rules promulgated;
42 (i) Violate any provision of the federal motor vehicle safety standards,
43 federal odometer laws or regulations; or
44 (j) Display for sale, exchange, or sell any vehicle for which the vehicle
45 dealer does not hold title or consignment agreement; or
46 (k) Sell vehicles at a salvage pool to anyone not in possession of an
47 Idaho vehicle dealer's license or a license issued to a full-time
48 salesperson employed by an Idaho licensed dealer, or to individuals from
49 another state unless licensed in that state and authorized to do business
50 in this state.
51 (2) It shall be unlawful for any manufacturer licensed under this chapter
52 to require, attempt to require, coerce, or attempt to coerce, any new vehicle
53 dealer in this state to:
3
1 (a) Order or accept delivery of any new vehicle, part or accessory,
2 equipment or any other commodity not required by law which shall not have
3 been voluntarily ordered by the new vehicle dealer. This paragraph is not
4 intended to modify or supersede any terms or provisions of a franchise
5 requiring dealers to market a representative line of vehicles which the
6 manufacturer or distributor is publicly advertising.
7 (b) Order or accept delivery of any new vehicle with special features,
8 accessories or equipment not included in the list price of such vehicles
9 as publicly advertised by the manufacturer or distributor.
10 (c) Participate monetarily in an advertising campaign or contest, or to
11 purchase any promotional materials, training materials, showroom or other
12 display decorations or materials at the expense of the dealer.
13 (d) Enter into any agreement with the manufacturer or to do any other act
14 prejudicial to the dealer by threatening to terminate or cancel a fran-
15 chise or any contractual agreement existing between the dealer and the
16 manufacturer. This paragraph is not intended to preclude the manufacturer
17 or distributor from insisting on compliance with reasonable terms or pro-
18 visions of the franchise or other contractual agreement, and notice in
19 good faith to any dealer of the dealer's violation of those terms or pro-
20 visions shall not constitute a violation of the provisions of this chap-
21 ter.
22 (e) Change the capital structure of the dealer or the means by or through
23 which the dealer finances the operation of the dealership, provided that
24 the dealer at all times meets any reasonable capital standards determined
25 by the manufacturer in accordance with uniformly applied criteria. No
26 change in the capital structure shall cause a change in the principal man-
27 agement or have the effect of a sale of the franchise without the consent
28 of the manufacturer or distributor. Consent shall not be unreasonably
29 withheld.
30 (f) Refrain from participation in the management of, investment in, or
31 the acquisition of any other line of new vehicle or related products. This
32 paragraph does not apply unless the dealer maintains a reasonable line of
33 credit for each make or line of new vehicle, and the dealer remains in
34 compliance with any reasonable facilities requirements of the manufac-
35 turer, and no change is made in the principal management of the dealer-
36 ship.
37 (g) Prospectively assent to a release, assignment, novation, waiver or
38 estoppel which would relieve any person from liability to be imposed by
39 this chapter or to require any controversy between a dealer and a manufac-
40 turer, distributor, or representatives, to be referred to any person other
41 than the duly constituted courts of the state or the United States, or to
42 the director, if that referral would be binding upon the dealer.
43 (h) Either establish or maintain exclusive facilities, personnel, or dis-
44 play space.
45 (i) Expand facilities without a written guarantee of a sufficient supply
46 of new vehicles so as to justify an expansion, in light of the market and
47 economic conditions.
48 (j) Make significant modifications to an existing dealership or to con-
49 struct a new vehicle dealership facility without providing a written guar-
50 antee of a sufficient supply of new vehicles so as to justify modification
51 or construction, in light of the market and economic conditions.
52 (3) It shall be unlawful for any manufacturer licensed under this chapter
53 to:
54 (a) Delay, refuse, or fail to deliver new vehicles or new vehicle parts
55 or accessories in a reasonable time, and in reasonable quantity relative
4
1 to the dealer's facilities and sales potential in the dealer's relevant
2 market area, after acceptance of an order from a dealer having a franchise
3 for the retail sale of any new vehicle sold or distributed by the manufac-
4 turer, any new vehicle, parts or accessories to new vehicles as are cov-
5 ered by the franchise, if the vehicle, parts, or accessories are publicly
6 advertised as being available for delivery or actually being delivered.
7 These provisions are not violated, however, if failure is caused by acts
8 or causes beyond the control of the manufacturer.
9 (b) Refuse to disclose to any dealer handling the same line, the manner
10 and mode of distribution of that line within the relevant market area.
11 (c) Obtain money, goods, service, or any other benefit from any other
12 person with whom the dealer does business, on account of, or in relation
13 to, the transaction between the dealer and other person, other than for
14 compensation for services rendered, unless the benefit is promptly
15 accounted for, and transmitted to the dealer.
16 (d) Increase prices of new vehicles which the dealer had ordered for con-
17 sumers prior to the dealer's receipt of the written official price
18 increase notification. A sales contract signed by a consumer shall consti-
19 tute evidence of each such order, provided that the vehicle is in fact
20 delivered to that customer. In the event of manufacturer price reductions
21 or cash rebates paid to the dealer, the amount of any reduction or rebate
22 received by a dealer shall be passed on to the private retail consumer by
23 the dealer. Price reductions shall apply to all vehicles in the dealer's
24 inventory which were subject to the price reduction. Price differences
25 applicable to new model or series shall not be considered a price increase
26 or price decrease. Price changes caused by the addition to a vehicle of
27 required or optional equipment, or revaluation of the United States dol-
28 lar, in the case of foreign-make vehicles or components, or an increase in
29 transportation charges due to increased rates imposed by a carrier, shall
30 not be subject to the provisions of this subsection.
31 (e) Release to any outside party, except under subpoena or as otherwise
32 required by law or in an administrative, judicial or arbitration proceed-
33 ing involving the manufacturer or dealer, any business, financial, or per-
34 sonal information which may be provided from time to time by the dealer to
35 the manufacturer without the express written consent of the dealer.
36 (f) Deny any dealer the right of free association with any other dealer
37 for any lawful purpose.
38 (g) Unfairly compete with a dealer in the same line make, operating under
39 an agreement or franchise from the aforementioned manufacturer, in the
40 relevant market area. A manufacturer shall not, however, be deemed to be
41 competing when operating a dealership either temporarily for a reasonable
42 period, or in a retail operation which is for sale to any qualified inde-
43 pendent person at a fair and reasonable price, or in a relationship in
44 which an independent person has made a significant investment subject to
45 loss in the dealership and can reasonably expect to acquire full ownership
46 of that dealership on reasonable terms and conditions.
47 (h) Unfairly discriminate among its dealers with respect to warranty
48 reimbursement.
49 (i) Unreasonably withhold consent to the sale, transfer, or exchange of
50 the franchise to a qualified buyer capable of being licensed as a dealer
51 in this state.
52 (j) Fail to respond in writing to a request for consent as specified in
53 subsection (i) of this section within sixty (60) days of receipt of a
54 written request on the forms, if any, generally utilized by the manufac-
55 turer or distributor for those purposes and containing the required infor-
5
1 mation. Failure to respond shall be deemed to be consent to the request.
2 (k) Prevent or attempt to prevent, by contract or otherwise, any dealer
3 from changing the executive management control of the dealership unless
4 the manufacturer, having the burden of proof, can show that the change of
5 executive management will result in executive management or control by a
6 person or persons who are not of good moral character or who do not meet
7 reasonable, preexisting and, with consideration given to the volume of
8 sales and service of the dealership, uniformly applied minimum business
9 experience standards. Where the manufacturer rejects a proposed change in
10 executive management control, the manufacturer shall give written notice
11 of his reasons to the dealer within sixty (60) days of notice to the manu-
12 facturer by the dealer of the proposed change; otherwise, the change in
13 the executive management of the dealership shall be presumptively consid-
14 ered approved.
15 (l) Terminate, cancel or fail to renew any franchise solely because of
16 the death or incapacity of an owner who is not listed in the franchise as
17 one on whose expertise and abilities the manufacturer relied in the grant-
18 ing of the franchise.
19 (m) Prevent or attempt to prevent the dealer, by written instrument or
20 otherwise, from either receiving the fair market value of the dealership
21 in a sale transaction, or from transferring the dealership to a spouse or
22 legal heir, as specified in this chapter.
23 (n) Engage in any predatory practice or discrimination against any
24 dealer.
25 (o) Resort to or to use any false or misleading advertisement in the con-
26 ducting of his business as a manufacturer or distributor in this state.
27 (p) Make any false or misleading statement, either directly or through
28 any agent or employee, in order to induce any dealer to enter into any
29 agreement or franchise, or to take any action which is prejudicial to that
30 dealer or his business.
31 (q) Require or coerce dealers to participate in local or national adver-
32 tising campaigns or contests or to require or coerce dealers to purchase
33 promotional or display materials.
34 (4) It is unlawful for any manufacturer or any officer, agent or repre-
35 sentative to coerce, or attempt to coerce, any dealer in this state to sell,
36 assign or transfer any retail installment sales contract, obtained by the
37 dealer in connection with the sale by him in this state of new vehicles, manu-
38 factured or sold by the manufacturer, to a specified finance company or class
39 of such companies, or to any other specified person, by any of the acts or
40 means set forth, namely by:
41 (a) Any statement, suggestion, promise or threat that the manufacturer
42 will, in any manner, benefit or injure the dealer, whether the statement,
43 suggestion, threat or promise is express or implied or made directly or
44 indirectly;
45 (b) Any act that will benefit or injure the dealer;
46 (c) Any contract, or any express or implied offer of contract, made
47 directly or indirectly to a dealer for handling new vehicles, on the con-
48 dition that the dealer sell, assign or transfer his retail installment
49 sales contract in this state to a specified finance company or class of
50 such companies, or to any other specified person; or
51 (d) Any express or implied statement or representation made directly or
52 indirectly that the dealer is under any obligation whatsoever to sell,
53 assign or transfer any of his retail sales contracts, in this state, on
54 new vehicles manufactured or sold by that manufacturer to a finance com-
55 pany or class of companies, or other specified person, because of any
6
1 relationship or affiliation between the manufacturer and a finance company
2 or companies, or a specified person or persons.
3 Any statement, threats, promises, acts, contracts or offers of contracts,
4 when the effect may be to lessen or eliminate competition or tend to create a
5 monopoly, are declared unfair trade practices and unfair methods of competi-
6 tion, against the policy of this state, and are unlawful.
7 (5) It is unlawful for any manufacturer or agent or employee of a manu-
8 facturer to use a written instrument, agreement, or waiver to attempt to nul-
9 lify any of the provisions of this section, and such agreement, written
10 instrument or waiver shall be null and void.
11 (6) It shall be unlawful, directly or indirectly, to impose unreasonable
12 restrictions on the dealer relative to the sale, transfer, right to renew,
13 termination discipline, noncompetition covenants, site control (whether by
14 sublease, collateral pledge of lease, or otherwise), right of first refusal to
15 purchase, option to purchase, compliance with subjective standards and asser-
16 tion of legal or equitable rights.
17 (7) The provisions of this chapter shall apply to all written franchise
18 agreements between a manufacturer and a dealer, including the franchise offer-
19 ing, the franchise agreement, sales of goods, services or advertising, leases
20 or mortgages of real or personal property, promises to pay, security inter-
21 ests, pledges, insurance contract, advertising contract, construction or
22 installation contract, servicing contracts and all other agreements where the
23 manufacturer has any direct or indirect interest.
STATEMENT OF PURPOSE
RS 10965
The purpose of this legislation is to restrict buyers at salvage pools
to licensed vehicle dealers and full time salespersons employed by a licensed
vehicle dealer.
At the present time anyone can purchase vehicles from salvage pools
regardless of the persons mechanical or auto body skills, regard for the
environment, having a place to do the needed repairs, or concerns of
consumers.
Most of these vehicles are repaired and resold to Idaho consumers.
Limiting the sale of salvage vehicles to dealers and full time
salespersons would eliminate problems generated when these vehicles are
repaired by a backyard mechanic and sold to an Idaho Consumer from a parking
lot or from the many illegal used car lots that exist across the state. The
repair and sale of salvage vehicles by a dealer would give consumers needed
protection. Dealers are bonded, licensed, are subject to inspection from the
Department of Environmental Quality, have a known place of business, can be
held liable for rolled back odometers, and are subject to inspections by the
Department of Motor Vehicles. Dealers pay the full amount of state and
federal tax generated from the sale of a vehicle.
FISCAL IMPACT
No fiscal impact to the general fund
Contact
Name: Senator Cecil Ingram
Phone: 332 1332
STATEMENT OF PURPOSE/FISCAL NOTE S 109