2000 Legislation
Print Friendly

SENATE BILL NO. 1308 – MV, new, dealers sell


View Daily Data Tracking History

View Bill Text

View Statement of Purpose / Fiscal Impact

Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Daily Data Tracking History

S1308.......................................by COMMERCE AND HUMAN RESOURCES
MOTOR VEHICLES - Amends existing law to make it unlawful for any
manufacturer or distributor to sell a new motor vehicle to an Idaho
consumer, except through a licensed new motor vehicle dealer holding a
franchise for the line make of the motor vehicle; and to provide
01/26    Senate intro - 1st rdg - to printing
01/27    Rpt prt - to Com/HuRes

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-fifth Legislature                  Second Regular Session - 2000
                                       IN THE SENATE
                                    SENATE BILL NO. 1308
  1                                        AN ACT
  7    Be It Enacted by the Legislature of the State of Idaho:
  8        SECTION  1.  That  Section 49-1613, Idaho Code, be, and the same is hereby
  9    amended to read as follows:
 10        49-1613.  UNLAWFUL ACTS BY LICENSEE. (1) It  shall  be  unlawful  for  the
 11    holder of any license issued under the provisions of this chapter to:
 12        (a)  Intentionally  publish or circulate any advertising which is mislead-
 13        ing or inaccurate in any material particular or which misrepresents any of
 14        the products sold or furnished by a licensed dealer;
 15        (b)  Violate any of the provisions of this chapter or any of the  applica-
 16        ble rules;
 17        (c)  Knowingly  purchase, sell or otherwise acquire or dispose of a stolen
 18        vehicle;
 19        (d)  Violate any law respecting commerce in vehicles or  any  lawful  rule
 20        respecting commerce in vehicles promulgated by any licensing or regulating
 21        authority now existing or hereafter created by the laws of the state;
 22        (e)  Engage  in  the  business for which the dealer is licensed without at
 23        all times maintaining a principal place of business;
 24        (f)  Engage in a type of business respecting the selling or exchanging  of
 25        vehicles for which he is not licensed;
 26        (g)  Knowingly  purchase a vehicle which has an altered or removed vehicle
 27        identification number plate or alter or remove  a  vehicle  identification
 28        number plate;
 29        (h)  Violate any provision of this title or any rules promulgated;
 30        (i)  Violate  any provision of the federal motor vehicle safety standards,
 31        federal odometer laws or regulations; or
 32        (j)  Display for sale, exchange, or sell any vehicle for which the vehicle
 33        dealer does not hold title or consignment agreement.
 34        (2)  It shall be unlawful for any manufacturer or distributor to offer  to
 35    sell  or  sell, directly or indirectly, any new motor vehicle to an Idaho con-
 36    sumer except through a new motor vehicle dealer holding a  franchise  for  the
 37    line  make  covering such motor vehicle and licensed pursuant to this chapter.
 38    This subsection shall not apply to sales to the federal government, charitable
 39    organizations or employees of the manufacturer.
 40        (3)  It shall be unlawful for any manufacturer licensed under this chapter
 41    to require, attempt to require, coerce, or attempt to coerce, any new  vehicle
 42    dealer in this state to:
 43        (a)  Order  or  accept  delivery  of  any  new vehicle, part or accessory,
  1        equipment or any other commodity not required by law which shall not  have
  2        been  voluntarily ordered by the new vehicle dealer. This paragraph is not
  3        intended to modify or supersede any terms or  provisions  of  a  franchise
  4        requiring  dealers  to  market a representative line of vehicles which the
  5        manufacturer or distributor is publicly advertising.
  6        (b)  Order or accept delivery of any new vehicle  with  special  features,
  7        accessories   or equipment not included in the list price of such vehicles
  8        as publicly advertised by the manufacturer or distributor.
  9        (c)  Participate monetarily in an advertising campaign or contest,  or  to
 10        purchase  any promotional materials, training materials, showroom or other
 11        display decorations or materials at the expense of the dealer.
 12        (d)  Enter into any agreement with the manufacturer or to do any other act
 13        prejudicial to the dealer by threatening to terminate or  cancel  a  fran-
 14        chise  or  any  contractual  agreement existing between the dealer and the
 15        manufacturer. This paragraph is not intended to preclude the  manufacturer
 16        or  distributor from insisting on compliance with reasonable terms or pro-
 17        visions of the franchise or other contractual  agreement,  and  notice  in
 18        good  faith to any dealer of the dealer's violation of those terms or pro-
 19        visions shall not constitute a violation of the provisions of  this  chap-
 20        ter.
 21        (e)  Change the capital structure of the dealer or the means by or through
 22        which  the  dealer finances the operation of the dealership, provided that
 23        the dealer at all times meets any reasonable capital standards  determined
 24        by  the  manufacturer  in  accordance  with uniformly applied criteria. No
 25        change in the capital structure shall cause a change in the principal man-
 26        agement or have the effect of a sale of the franchise without the  consent
 27        of  the  manufacturer  or  distributor.  Consent shall not be unreasonably
 28        withheld.
 29        (f)  Refrain from participation in the management of,  investment  in,  or
 30        the acquisition of any other line of new vehicle or related products. This
 31        paragraph  does not apply unless the dealer maintains a reasonable line of
 32        credit for each make or line of new vehicle, and  the  dealer  remains  in
 33        compliance  with  any  reasonable  facilities requirements of the manufac-
 34        turer, and no change is made in the principal management  of  the  dealer-
 35        ship.
 36        (g)  Prospectively  assent  to  a release, assignment, novation, waiver or
 37        estoppel which would relieve any person from liability to  be  imposed  by
 38        this chapter or to require any controversy between a dealer and a manufac-
 39        turer, distributor, or representatives, to be referred to any person other
 40        than  the duly constituted courts of the state or the United States, or to
 41        the director, if that referral would be binding upon the dealer.
 42        (h)  Either establish or maintain exclusive facilities, personnel, or dis-
 43        play space.
 44        (i)  Expand facilities without a written guarantee of a sufficient  supply
 45        of  new vehicles so as to justify an expansion, in light of the market and
 46        economic conditions.
 47        (j)  Make significant modifications to an existing dealership or  to  con-
 48        struct a new vehicle dealership facility without providing a written guar-
 49        antee of a sufficient supply of new vehicles so as to justify modification
 50        or construction, in light of the market and economic conditions.
 51        (34)  It  shall be unlawful for any manufacturer licensed under this chap-
 52    ter to:
 53        (a)  Delay, refuse, or fail to deliver new vehicles or new  vehicle  parts
 54        or  accessories  in a reasonable time, and in reasonable quantity relative
 55        to the dealer's facilities and sales potential in  the  dealer's  relevant
  1        market area, after acceptance of an order from a dealer having a franchise
  2        for the retail sale of any new vehicle sold or distributed by the manufac-
  3        turer,  any  new vehicle, parts or accessories to new vehicles as are cov-
  4        ered by the franchise, if the vehicle, parts, or accessories are  publicly
  5        advertised  as  being  available for delivery or actually being delivered.
  6        These provisions are not violated, however, if failure is caused  by  acts
  7        or causes beyond the control of the manufacturer.
  8        (b)  Refuse  to  disclose to any dealer handling the same line, the manner
  9        and  mode of distribution of that line within the relevant market area.
 10        (c)  Obtain money, goods, service, or any other  benefit  from  any  other
 11        person  with  whom the dealer does business, on account of, or in relation
 12        to, the transaction between the dealer and other person,  other  than  for
 13        compensation  for  services  rendered,  unless  the  benefit  is  promptly
 14        accounted for, and transmitted to the dealer.
 15        (d)  Increase prices of new vehicles which the dealer had ordered for con-
 16        sumers  prior  to  the  dealer's  receipt  of  the  written official price
 17        increase notification. A sales contract signed by a consumer shall consti-
 18        tute evidence of each such order, provided that the  vehicle  is  in  fact
 19        delivered  to that customer. In the event of manufacturer price reductions
 20        or cash rebates paid to the dealer, the amount of any reduction or  rebate
 21        received  by a dealer shall be passed on to the private retail consumer by
 22        the dealer. Price reductions shall apply to all vehicles in  the  dealer's
 23        inventory  which  were  subject  to the price reduction. Price differences
 24        applicable to new model or series shall not be considered a price increase
 25        or price decrease. Price changes caused by the addition to  a  vehicle  of
 26        required  or  optional equipment, or revaluation of the United States dol-
 27        lar, in the case of foreign-make vehicles or components, or an increase in
 28        transportation charges due to increased rates imposed by a carrier,  shall
 29        not be subject to the provisions of this subsection.
 30        (e)  Release  to  any outside party, except under subpoena or as otherwise
 31        required by law or in an administrative, judicial or arbitration  proceed-
 32        ing involving the manufacturer or dealer, any business, financial, or per-
 33        sonal information which may be provided from time to time by the dealer to
 34        the manufacturer without the express written consent of the dealer.
 35        (f)  Deny  any  dealer the right of free association with any other dealer
 36        for any lawful purpose.
 37        (g)  Unfairly compete with a dealer in the same line make, operating under
 38        an agreement or franchise from the  aforementioned  manufacturer,  in  the
 39        relevant  market  area. A manufacturer shall not, however, be deemed to be
 40        competing when operating a dealership either temporarily for a  reasonable
 41        period,  or in a retail operation which is for sale to any qualified inde-
 42        pendent person at a fair and reasonable price, or  in  a  relationship  in
 43        which  an  independent person has made a significant investment subject to
 44        loss in the dealership and can reasonably expect to acquire full ownership
 45        of that dealership on reasonable terms and conditions.
 46        (h)  Unfairly discriminate among its  dealers  with  respect  to  warranty
 47        reimbursement.
 48        (i)  Unreasonably  withhold  consent to the sale, transfer, or exchange of
 49        the franchise to a qualified buyer capable of being licensed as  a  dealer
 50        in this state.
 51        (j)  Fail  to  respond in writing to a request for consent as specified in
 52        subsection (i) of this section within sixty (60)  days  of  receipt  of  a
 53        written  request  on the forms, if any, generally utilized by the manufac-
 54        turer or distributor for those purposes and containing the required infor-
 55        mation. Failure to respond shall be deemed to be consent to the request.
  1        (k)  Prevent or attempt to prevent, by contract or otherwise,  any  dealer
  2        from  changing  the  executive management control of the dealership unless
  3        the manufacturer, having the burden of proof, can show that the change  of
  4        executive  management  will result in executive management or control by a
  5        person or persons who are not of good moral character or who do  not  meet
  6        reasonable,  preexisting  and,  with consideration  given to the volume of
  7        sales and service of the dealership, uniformly  applied  minimum  business
  8        experience  standards. Where the manufacturer rejects a proposed change in
  9        executive management control, the manufacturer shall give  written  notice
 10        of his reasons to the dealer within sixty (60) days of notice to the manu-
 11        facturer  by  the  dealer of the proposed change; otherwise, the change in
 12        the executive management of the dealership shall be presumptively  consid-
 13        ered approved.
 14        (l)  Terminate,  cancel  or  fail to renew any franchise solely because of
 15        the death or incapacity of an owner who is not listed in the franchise  as
 16        one on whose expertise and abilities the manufacturer relied in the grant-
 17        ing of the franchise.
 18        (m)  Prevent  or  attempt  to prevent the dealer, by written instrument or
 19        otherwise, from either receiving the fair market value of  the  dealership
 20        in  a sale transaction, or from transferring the dealership to a spouse or
 21        legal heir, as specified in this chapter.
 22        (n)  Engage in  any  predatory  practice  or  discrimination  against  any
 23        dealer.
 24        (o)  Resort to or to use any false or misleading advertisement in the con-
 25        ducting of his business as a manufacturer or distributor in this state.
 26        (p)  Make  any  false  or misleading statement, either directly or through
 27        any agent or employee, in order to induce any dealer  to  enter  into  any
 28        agreement or franchise, or to take any action which is prejudicial to that
 29        dealer or his business.
 30        (q)  Require  or coerce dealers to participate in local or national adver-
 31        tising campaigns or contests or to require or coerce dealers  to  purchase
 32        promotional or display materials.
 33        (45)  It  is unlawful for any manufacturer or any officer, agent or repre-
 34    sentative to coerce, or attempt to coerce, any dealer in this state  to  sell,
 35    assign  or  transfer  any  retail  installment sales contract, obtained by the
 36    dealer in connection with the sale by him in this state of new vehicles, manu-
 37    factured or sold by the manufacturer, to a specified finance company or  class
 38    of  such  companies,  or  to any other specified person, by any of the acts or
 39    means set forth, namely by:
 40        (a)  Any statement, suggestion, promise or threat  that  the  manufacturer
 41        will,  in any manner, benefit or injure the dealer, whether the statement,
 42        suggestion, threat or promise is express or implied or  made  directly  or
 43        indirectly;
 44        (b)  Any act that will benefit or injure the dealer;
 45        (c)  Any  contract,  or  any  express  or  implied offer of contract, made
 46        directly or indirectly to a dealer for handling new vehicles, on the  con-
 47        dition  that  the  dealer  sell, assign or transfer his retail installment
 48        sales contract in this state to a specified finance company  or  class  of
 49        such companies, or to any other specified person; or
 50        (d)  Any  express  or implied statement or representation made directly or
 51        indirectly that the dealer is under any  obligation  whatsoever  to  sell,
 52        assign  or  transfer  any of his retail sales contracts, in this state, on
 53        new vehicles manufactured or sold by that manufacturer to a  finance  com-
 54        pany  or  class  of  companies,  or other specified person, because of any
 55        relationship or affiliation between the manufacturer and a finance company
  1        or companies, or a specified person or persons.
  2        Any statement, threats, promises, acts, contracts or offers of  contracts,
  3    when  the effect may be to lessen or eliminate competition or tend to create a
  4    monopoly, are declared unfair trade practices and unfair methods  of  competi-
  5    tion, against the policy of this state, and are unlawful.
  6        (56)  It  is unlawful for any manufacturer or agent or employee of a manu-
  7    facturer to use a written instrument, agreement, or waiver to attempt to  nul-
  8    lify  any  of  the  provisions  of  this  section, and such agreement, written
  9    instrument or waiver shall be null and void.
 10        (67)  It shall be unlawful, directly or indirectly, to impose unreasonable
 11    restrictions on the dealer relative to the sale,  transfer,  right  to  renew,
 12    termination  discipline,  noncompetition  covenants,  site control (whether by
 13    sublease, collateral pledge of lease, or otherwise), right of first refusal to
 14    purchase, option to purchase, compliance with subjective standards and  asser-
 15    tion of legal or equitable rights.
 16        (78)  The  provisions of this chapter shall apply to all written franchise
 17    agreements between a manufacturer and a dealer, including the franchise offer-
 18    ing, the franchise agreement, sales of goods, services or advertising,  leases
 19    or  mortgages  of  real or personal property, promises to pay, security inter-
 20    ests, pledges,  insurance  contract,  advertising  contract,  construction  or
 21    installation  contract, servicing contracts and all other agreements where the
 22    manufacturer has any direct or indirect interest.
 23        SECTION 2.  This act shall be in full force and effect on and  after  July
 24    1, 2000.

Statement of Purpose / Fiscal Impact

                   STATEMENT OF PURPOSE

Relating to automobile dealers and manufacturers, this 
legislation requires that all sales of newmotor vehicles 
to Idaho customers must be made through a licensed Idaho 
dealer. Idaho law provides protections through the dealer 
franchise laws and consumer protection laws that may not 
be available in transactions that are not made through a 
licensed dealer. This legislation, by requiring that all 
sales of new vehicles must be made through a licensed dealer, 
assures that all Idaho state law protections apply to all 
purchases of new vehicles.

                           FISCAL NOTE 

In 1998, franchised automobile dealers had total new automobile 
sales of $1.196 billion, that resulted in the receipt of $6 
million in sales tax by the State cf Idaho. By assuring that 
the sales tax on new vehicles continues to be collected by a 
dealer, this legislation provides for the continued convenient 
and cost effective collection of the tax. There is no fiscal 
impact on local government as a result of this legislation.

CONTACT: Mike Brassey
Phone: 336-7930
Denise Brennan
Idaho Automobile Dealers Association
Phone: 853-4668

                                                   S 1308