ARIZONA STATE SENATE
Phoenix, Arizona
motor vehicle
dealer franchises
Purpose
Makes numerous changes to the Arizona motor vehicle franchise law.
Background
Laws 2000, Chapter 102 made various changes to Arizona’s motor vehicle franchise laws which governs the relationship between motor vehicle manufacturers, franchisers, distributors and importers (factories) and individual motor vehicle dealerships (dealers). The legislation prohibits factories from engaging in direct or indirect competition or unfair discrimination among its dealers and outlines the practices that constitute competition or unfair discrimination.
Prior to the effective date of the legislation, the Alliance of Automobile Manufacturers (AAM) and the Association of International Automobile Manufacturers (AIAM) filed suit against the State, challenging the constitutionality of some of the provisions. The State was assisted by the Arizona Automobile Dealers’ Association (AADA) in the defense of the legislation enacted in 2000. H.B. 2279 is the result of more than a year of litigation and negotiations by the parties and serves as the settlement agreement. This legislation makes numerous changes regarding motor vehicle manufacturers’ interactions with individual dealerships and the types of incidences that are considered to be competition or unfair discrimination.
There is no anticipated fiscal impact to the state general fund associated with this measure.
Provisions
1. Prohibits a manufacturer from releasing confidential information or average or composite prices based on such information of a dealer without written consent and outlines the exceptions.
2. Allows a factory to arrange or provide emergency roadside assistance.
3. Allows a factory to offer factory-sponsored extended service contracts to new vehicle purchasers if offers are not made less than 90 days after the retail consumer takes delivery of the vehicle and are made only at the manufacturer’s suggested retail price.
4. Allows a factory to sell a lease vehicle to the original lessee under a purchase option set forth in the lease.
5. Allows a factory to extend a lease at the request of a lessee.
6. Allows a factory to offer and approve consumer credit applications for financing or leasing of a vehicle if the final transaction takes place through a dealer and the factory does not establish or quote an interest rate, finance rate or lease rate relation to the credit application.
7. Allows the factory to renew or charge subscription or connection fees for in-vehicle electronic wireless communication, information or entertainment services.
8. Increases, from 30 to 45 days, the amount of time a dealer may withdraw written consent given to a factory without retribution or threat of retribution to control aspects of the final sales or lease price of a vehicle, product, service or trade-in in a dealer’s area of responsibility.
9. Allows the factory to establish a factory’s suggested retail price for parts or services.
10. Clarifies that programs up to one year are presumed to be reasonable and limited for reasonable sale, lease or financing promotions of reasonable and limited duration.
11. Allows the factory to link its internet site to sites maintained by its dealers or third parties, provided the factory does not dictate, limit, establish, set or endorse, as a basis for retail transaction, any price other than the manufacturer’s suggested retail price.
12. Allows the factory to establish a price at which the lessee may purchase or re-lease a vehicle on expiration or termination of the lessee’s lease.
13. Allows a factory to operate or facilitate a program or system for individual dealers to provide quotes or offers to individual consumers.
14. Prohibits a factory from refusing to provide to its same line-make dealers all editions of new vehicles that are advertised in the state unless unable to do so due to lack of manufacturing capacity, labor strike, materials shortage, trade embargo or other conditions beyond the factory’s control.
15. Removes the requirement that factories provide the models, series or editions of new vehicles at prices no greater than any other dealer in the United States would pay for a same model, similarly equipped vehicle.
16. Excludes a factory providing or directing less than all leads of prospective consumers of vehicles, products, services or financing from an incidence of competition or discrimination.
17. Expands the incidences of competition or unfair discrimination to include the following:
a) Denying a dealer any price reduction, rebate, incentive payment or other pricing device relating to a vehicle sale or offer when the dealer cannot qualify or receive the benefits of the program for reasons other than the dealer’s failure to use reasonable effort to qualify and the terms of the program are such that a failure to qualify would lead to termination of the dealer.
b) Failing to direct or provide a lead relating to a particular line-make to the dealer with whom the lead has a preexisting relationship, the dealer located closest to the lead, or the dealer voluntarily selected by the lead.
18. States that a factory is not required to provide or direct a lead to a dealer who does not sell the vehicle, product, service or financing that the lead is interested in purchasing.
19. States that a factory is only responsible for providing to the dealer information that it possesses concerning the lead.
20. Allows a factory to provide or direct leads to other dealers of the same line make.
21. Requires the factory to provide or direct the leads in a nondiscriminatory timely manner without a fee.
22. Allows for factory-sponsored internet-based programs designed to provide consumers with access to dealer quotes on vehicles, products, financing or services if fees for the program are reasonable and consistent with industry and dealer participation is not conditioned on participation in any other programs or on ratings from customer surveys.
23. Defines “service,” and redefines, clarifies or modifies existing terms in the motor vehicle franchise law.
24. Makes technical and conforming changes.
25. Provides for a general effective date.
CED 2/04/02 DP 8-0-0-2
3rd Read 2/12/02 59-0-1-0
Prepared by Senate Staff
March 22, 2002