BILL ANALYSIS Ó AB 759 Page 1 Date of Hearing: April 22, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 759 (Linder) - As Amended March 26, 2015 ----------------------------------------------------------------- |Policy |Transportation |Vote:|15 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill: AB 759 Page 2 1)Makes several, mostly technical changes to statutes regarding oversight of RV dealers by the New Motor Vehicle Board (Board), including creating separate and distinct code sections for Board oversight procedures of automobile franchises and RV franchises. 2)Authorizes RV dealers to sell remaining inventory after a franchise agreement ends. FISCAL EFFECT: Minor absorbable costs to the Board. COMMENTS: Background and Purpose. The Board was created in 1967 as the New Car Dealers Policy and Appeals Board. At the time of its inception, the Board's functions were limited to hearing appeals that arose from final decisions made by the DMV. In 1973, the California Automobile Franchise Act gave the Board its present name and tasked it with regulating and settling disputes in the new motor vehicle industry. The Board's current mission is to enhance relations between dealers and manufactures of automobiles, RV's, and motorcycles by resolving disputes in the industry in an efficient, fair, and cost-effective manner. AB 759 Page 3 According to the author, existing law contains extensive provisions relating to the Board's role in resolving franchise disputes between auto manufacturers and dealers. He notes that over time, provisions have been added and amendments have been made to include reference to RV's along with automobiles. The author notes, however, that inclusion of RV references have been "spotty" and inconsistent. The author, along with the sponsors, the Recreational Vehicle Industry Association (RVIA) and the California Recreational Vehicle Dealers Association (CalRVDA), contend that separating provisions relating to automobiles from those relating to RVs with respect to Board oversight is needed to provide clarity and consistency. In addition to the technical changes described above, the bill provides new authority to RV franchises with the respect to sale of inventory after a franchise agreement is ended. Unlike for automobiles-where the dealer holds the inventory but it is owned by the manufacturer, and when an automobile franchise agreement is ended, the vehicles are simply returned to the manufacturer-for RVs, the dealer purchases inventory outright from the manufacturer, thus with termination of a franchise agreement, the dealer owns the inventory and it is not possible for them to return unsold RVs to the manufacturer. Instead, the RV dealer must sell a new RV to recoup their costs. Without the express authorization, the RV dealer would be required to sell remaining inventory as "used" since they are technically listed as the owner. Since there is substantial depreciation on RVs, this would represent a significant loss to an RV dealer. This bill therefore codifies the existing practice of RV dealers being allowed to sell the remaining inventory after a franchise agreement ends. AB 759 Page 4 Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081