BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 759

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          759 (Linder)

          As Amended  September 4, 2015

          Majority vote

          |ASSEMBLY:  | 77-0 | (April 30,    |SENATE: |39-0  | (September 9,   |
          |           |      |2015)          |        |      |2015)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |

          Original Committee Reference:  TRANS.

          SUMMARY:  Expressly authorizes recreational vehicle (RV) dealers  
          to sell remaining inventory after a franchise agreement ends and  
          makes other technical amendments related to automobile and RV  
          franchise agreements and their oversight by the New Motor  
          Vehicle Board (Board).  

          The Senate amendments: 

          1)Add cross references to existing code sections with new code  
            sections created by this bill.

          2)Add provisions from AB 1178 (Achadjian) of the current  
            legislative session, to avoid chaptering out conflicts.


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          3)Make related, technical amendments.

          EXISTING LAW:  

          1)Charges the California Department of Motor Vehicles (DMV) with  
            licensing and regulating dealers, manufacturers, and  
            distributors of motor vehicles that conduct business in  
          2)Establishes the Board as a program within DMV, with oversight  
            provided by the California State Transportation Agency  

          3)Authorizes the Board to act in a quasi-judicial capacity to  
            resolve disputes between franchise dealers and  
            manufacturers/distributors of new motor vehicles, including  
            motorcycles and RVs.  

          4)Prescribes the Board's operational procedures.

          AS PASSED BY THE ASSEMBLY, this bill:

          1)Created separate and distinct code sections for Board  
            oversight procedures of automobile franchises and RV  

          2)Established operational requirements for the Board's oversight  
            of RV franchise agreements, similar to those currently used  
            for automobile franchises, including:

             a)   Established quorum standards; 

             b)   Established judicial review procedures; 


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             c)   Established protest hearing procedures; and,

             d)    Established document mailing procedures. 

          3)Expressly authorized RV dealers to sell remaining inventory  
            after a franchise agreement has been terminated, cancelled, or  
            is not renewed. 

          4)Made related clarifying and conforming changes. 

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

          COMMENTS:  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 Legislature  
          passed the California Automobile Franchise Act, which 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.  

          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.   Specifically, the author notes that  
          "One problem is that existing provisions in the auto[mobile]  
          sections sometimes reference RVs, and sometimes the RV sections  


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          contain references to motor vehicles."  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 clarifying and conforming amendments to the code,  
          this bill also contains a number of technical changes relating  
          to operations of the Board.  The author points out that these  
          changes were suggested by the Board to the sponsors and are  
          needed to improve operations. These changes include the addition  
          of quorum standards currently in place for motor vehicle dealer  
          franchise disputes, adding the requirement for use of certified  
          mail for judicial review proceedings, allowing the Board to hold  
          hearings on protests pertaining to RV franchises (identical to  
          those for automobile franchises), allowing the Board to make  
          decisions on protests pertaining to RV franchises (identical to  
          those for automobile franchises), establishing a judicial review  
          under RV franchise provisions (identical to those for automobile  
          franchises), and incorporating references to violations that  
          would enable the Board to revoke or suspend a manufacturer's  
          license (identical to those for automobile franchises).

          While the majority of this bill's provisions work to achieve  
          this consistency in the codes governing the Board's oversight,  
          there is one exception related to the new authority provided in  
          this bill to RV franchises with the respect to sale of inventory  
          after a franchise agreement is ended.  Specifically, the bill  
          provides authorization for an RV dealership to sell remaining  
          units in inventory after a franchise relationship has ended.   
          According the sponsors, this has been the existing practice for  
          some time, despite the fact that it is not expressly authorized.  
           They note that there are differences in the way automobiles and  
          RVs are held by their respective dealerships that necessitates  
          this authority.  Specifically, for automobiles, the dealer holds  
          the inventory but it is owned by the manufacturer.  Therefore,  
          when an automobile franchise agreement is ended, the vehicles  
          are simply returned to the manufacturer.  For RVs, however, the  


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          RV dealer purchases inventory outright from the manufacturer.   
          Therefore, when there is a 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.  The  
          provisions in this bill would codify the existing practice of RV  
          dealers being allowed to sell the remaining inventory after a  
          franchise agreement ends.  

          Please see the policy committee analysis for full discussion of  
          this bill.

          Analysis Prepared by:                                             
                          Victoria Alvarez / TRANS. / (916) 319-2093  FN: