Regarding the sale of off-factory service contracts, Maas told THE CNCDA last August that the state prohibits manufacturers from discriminating against a franchised dealer for selling F&I products that are not supported by the manufacturer. However, the law does not prohibit a franchisor from requiring its dealers to disclose to customers whether or not a service contract is supported by the manufacturer. However, ab 2107 requires distributors to maintain the existing legal disclosure that dealers must give to customers when an R&I product not supported by OEMs is sold, preventing OEMs from introducing their own disclosure form, as GM did last summer. At NADAê`s request, GM provided a version of the agreement showing the changes to the standard terms. To access the comparison of 2010 and 2015 dealer contracts, GM dealers must log in to GlobalConnect, access departments, and then the business office reference library. Previous cases in other states have ruled in favor of dealers facing termination via RSI and other measures that do not take into account the nuances of the market, particularly the case of Beck Chevrolet in New York in 2016. But the Folsom Chevrolet case is the first in California to characterize the use of such measures as a violation of that state`s vehicle code. Jim Moors, senior attorney for the National Automobile Dealers Association, said in an Aug. 17 letter to NADA members that some states prevent manufacturers from requiring dealers to sell or favor the automaker`s service contract or parts. “It seems to follow a GM model. I don`t know what`s going on at the Renaissance Center in Detroit,” he said last August, shortly after GM released its new disclosure policy.
“I`m confused by why they`re announcing all these guidelines that seem to make the relationship with their dealers more difficult.” In addition, the bill contains additional clarifications regarding the reimbursement of warranty services by the retail trade and the payment of customers in the retail sector. expands the types of protests dealers can file with the state`s New Motor Vehicle Board regarding manufacturer interference; the obligation to retrofit the facility would be considered inappropriate if the distributor has changed facilities within the last 15 years; and builds on existing laws that require all performance standards to be tailored to the demographics, market characteristics, allocation, local and state economic circumstances, and historical performance of a merchant`s line brand. Overall, the bill includes provisions that cover 10 specific areas of the franchise-dealer-manufacturer relationship. “The retail sales index is currently calculated in California and elsewhere and is one of many measures and other sources of information that GM considers when assessing its distributors` compliance with their obligations,” Cain said in a statement. “Currently, there are no plans to revise the roi calculation for California traders.” General Motors dealers could face hefty penalties, or even termination, if they don`t use a new disclosure form for customers who purchase non-GM service contracts, a new or used vehicle with non-GM accessories or used vehicles with non-GM parts, the automaker told dealers last month. GM says the decision is in part intended to make consumers understand the limits of its liability for non-genetically modified products. But opponents see it as an attempt to promote genetically modified products at the expense of competition. Given the size of the markets for accessories, parts and service contracts, the stakes are high. General Motors has announced its new five-year dealership agreement, which includes changes that most dealers likely won`t perceive as significant, but are still significant. “Restoring balance in the relationship between manufacturers and distributors is the primary goal of AB 2107,” said dealer Taz Harvey, President of CNCDA.
“The bill will also allow new car dealers to supply vehicles requested by consumers while improving the resolution of warranty, recall and repair issues. The board ruled against GM`s use of a Retail Sales Index (RSI) as the basis for terminating Folsom Chevrolet`s franchise agreement, noting that the automaker`s reliance on measuring sales efficiency violated state law because it did not take into account a number of circumstances in the dealership`s market. The law firm representing the dealership, Scali Rasmussen, said the decision informed GM and all other manufacturers. The disclosure form clearly states to customers that GM “has no obligation to the customer under a non-GM service agreement” and that “GM is not responsible for the consequences of installing non-GM parts, equipment or accessories on the vehicle,” the letter states. But by applying the new disclosure process and draconian sanctions, GM itself could violate its franchise agreement, lawyers and dealer associations said, resisting the automaker`s advice. Bellavia doubts that the new disclosure form and the consequences of its contempt will be implemented, but when they come into effect, traders are unlikely to change the way they do business, he predicted. The law states that manufacturers must notify distributors in writing of any material adverse changes to their “agreements” at least 60 days before the change takes effect. During this 60-day period, the professional can file a complaint with the competent state authorities and request a hearing to determine if there is a “good reason” for the changes. At the hearing, the manufacturer must demonstrate that he has a “good reason” for the changes, including explaining the reasons for it.
The trader must show how the changes will materially and negatively affect the trader`s rights, investment or return on investment. On the other hand, GM`s new agreement also brings some changes that could be detrimental to dealers, including: General Motors has released the 2015 Dealer Distribution and Service Agreement on GM`s GlobalConnect, which dealers can review and sign. Vancavage added that the purpose of the disclosure form appears to be to “convince GM dealers to sell exclusively GM parts, service contracts and accessories, among other things,” adding, “Such a requirement would harm the monetary interests of a GM dealer and, in turn, would only benefit GM.” Taking brand bias into account by controlling for demographic variables of age, income, education level and population density, as well as whether the concessionaire is located in the five-county region, results in a reduction in the rsi requirement for Folsom by about 30 percent, the board noted in its decision. “These laws may be applicable to GM in this situation,” he said. “While NADA cannot provide legal advice to traders, we strongly recommend that you do not take any action indicating approval of the new requirements without consulting your legal counsel,” he added. August 24 letter from Steve Hill, GM`s vice president, sales, service and marketing Dealers whose stores ignore the new disclosure form could have to pay $500 per incident. You may no longer be eligible to purchase other GM dealers or to benefit from GM incentive programs, including the Brand Essentials program. Ultimately, the merchant could be faced with a possible franchise termination. “California`s new auto franchise system was established to protect dealers and their customers from the onerous and ongoing demands of manufacturers,” Harvey explained in the association`s press release. “The CNCDA and our members across the state look forward to working with the author and stakeholders on this bill, and we are committed to a new, stronger and fairer auto franchise system.” The legislation, approved by Rep. Eloise Reyes (D-San Bernardino, California), also aims to adjust recent measures in other states.
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