BILL ANALYSIS Ó AB 1178 Page 1 ASSEMBLY THIRD READING AB 1178 (Achadjian) As Amended June 2, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+---------------------+---------------------| |Transportation |16-0 |Frazier, Achadjian, | | | | |Baker, Bloom, Chu, | | | | |Daly, Dodd, Eduardo | | | | |Garcia, Gomez, Kim, | | | | |Linder, Medina, | | | | |Melendez, Nazarian, | | | | |O'Donnell, Santiago | | | | | | | |----------------+------+---------------------+---------------------| |Appropriations |17-0 |Gomez, Bigelow, | | | | |Bloom, Bonta, | | | | |Calderon, Chang, | | | | |Daly, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Holden, | | | | |Jones, Quirk, | | | | |Rendon, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------- AB 1178 Page 2 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: According to the Assembly Appropriations Committee, any costs to the New Motor Vehicle Board (NMVB) would be absorbable with the board's normal operations. (NMVB is a program within DMV which operates in a quasi-judicial capacity to resolve disputes between franchise vehicle dealers and manufacturers/distributors of new motor vehicles and specified motorsports vehicles.) 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 AB 1178 Page 3 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. This bill 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 unless certain conditions are met. The author notes that this bill will "strengthen California's law by prohibiting manufacturers from taking negative actions against a dealer when a vehicle is exported or resold if the dealer collects sales tax and registers the vehicle in California." Analysis Prepared by: Manny Leon / TRANS. / (916) 319-2093 FN: 0000872 AB 1178 Page 4