2001 Legislation
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SENATE BILL NO. 1098 – MV dealers, salvage pools, purchase


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Daily Data Tracking History

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

Bill Text

  ||||              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
 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
  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:
  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
  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-
  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
  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 / Fiscal Impact

                      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

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

      Name:     Senator Cecil Ingram
        Phone: 332 1332