BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1178


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          Date of Hearing:   April 27, 2015


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 1178  
          (Achadjian) - As Amended March 26, 2015


          SUBJECT:  Vehicles:  manufacturers and distributors


          SUMMARY:  Provides that a vehicle manufacturer, manufacturer  
          branch, distributor, or distributor branch cannot take any  
          adverse action against a dealer relative to an export or  
          sale-for-resale prohibition if the dealer causes the vehicle to  
          be registered in a state and collects or causes to be collected  
          any applicable sale or use tax due to the state, as specified.


          EXISTING LAW:  


          1)Charges the Department of Motor Vehicles (DMV) with licensing  
            and regulating dealers, manufacturers, and distributors of  
            motor vehicles who conduct business in California. 


          2)Makes it unlawful for a vehicle manufacturer or distributor to  
            take specified actions against a vehicle dealer or franchisee.  
              


          FISCAL EFFECT:  Unknown









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          COMMENTS:  SB 155 (Padilla), Chapter 512, Statutes of 2013, made  
          a number of changes to the statutory framework regulating the  
          relationship between vehicle manufacturers and dealers including  
          changes to their claims and appeals process, performance  
          standards, and vehicle export polices. Specifically, SB 155  
          added provisions that prohibited a vehicle manufacturer or  
          distributor from taking or threatening to take any adverse  
          action against a dealer who sold a vehicle to a buyer who then  
          either exported the vehicle to another country or resold the  
          vehicle unless the manufacturer's export or sale-for-resale  
          prohibition policy was provided to the dealer in writing prior  
          to the sale or lease and the dealer knew or reasonably should  
          have known of the customer's intent to export or resell the  
          vehicle.  SB 155 further specified that the dealer processing a  
          vehicle's registration or collecting taxes on the sold vehicle  
          creates a rebuttable presumption that the dealer did not have  
          reason to know of the consumer's intent.  


          According to the sponsor, last year a specific manufacturer  
          adopted several export-dealer policies and sent updated  
          notifications to franchise dealers of those policy changes.   
          Both policies established strict liability provisions for  
          dealers who sold these particular types of vehicles that were  
          ultimately exported.  Additionally these policies excluded the  
          rebuttable presumption provisions established under SB 155.   
          Thus, these franchise dealers could be subject to penalties if a  
          vehicle was exported even if the franchise dealer processed the  
          vehicle's registration and collected relevant taxes.


          AB 1178 is the latest attempt to address issues between vehicle  
          manufacturers and franchise dealers related to vehicle export  
          and resale policies by clarifying that a vehicle manufacturer is  
          prohibited from taking any adverse action against a dealer once  
          the vehicle's registration and relevant taxes are processed.   
          The author notes that AB 1178 will "strengthen California's law  
          by prohibiting manufacturers from taking negative actions  








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          against a dealer when a vehicle is exported or resold if the  
          dealer collects sales tax and registers the vehicle in  
          California."  Thus, AB 1178 appears to be a reasonable attempt  
          to provide clarity to existing export and resale policies as  
          they relate to vehicle manufacturers and franchise dealers.    


          Previous legislation:  SB 155 (Padilla), Chapter 512, Statutes  
          of 2013, modified the relationship between motor vehicle dealers  
          and manufacturers by, among other things, making changes  
          regarding the use of flat-rate time schedules for warranty  
          reimbursement, warranty and incentive claims, audits, protest  
          rights, export policies, performance standards, and facility  
          improvements.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          California New Car Dealers Association (Sponsor) 




          Opposition


          The Association of Global Automakers




          Analysis Prepared by:Manny Leon / TRANS. / (916) 319-2093









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