BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1178|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: AB 1178
Author: Achadjian (R)
Amended: 9/4/15 in Senate
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 11-0, 7/7/15
AYES: Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva,
McGuire, Mendoza, Roth, Wieckowski
SENATE JUDICIARY COMMITTEE: 7-0, 7/14/15
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,
Wieckowski
SENATE APPROPRIATIONS COMMITTEE: Rule 28.8, 8/17/15
ASSEMBLY FLOOR: 80-0, 6/4/15 - See last page for vote
SUBJECT: Vehicles: manufacturers and distributors
SOURCE: California New Car Dealers Association
DIGEST: This bill 1) authorizes the New Motor Vehicle Board
(NMVB) to hear protests by an association challenging the
legality of an export policy of a manufacturer, sunsetting this
authorization on January 1, 2019, and 2) provides that an
automobile manufacturer may take an adverse action against a
dealer pursuant to export prohibitions only if the manufacturer
has provided the dealer with the export policy in writing at
least 48 hours before the vehicle is sold, and the dealer knew
or should have known of the customer's intent to export.
Senate Floor Amendments of 9/4/15 sunset the authority of the
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NMVB to hear protests by an association on January 1, 2019, and
resolve chapering out issues with AB 759 (Linder).
ANALYSIS: Existing law restricts an automobile manufacturer
from taking any adverse action against a dealer pursuant to
export prohibitions unless the export prohibition policy was
provided to the dealer in writing prior to the sale, and the
dealer knew or reasonably should have known of the customer's
intent to export the vehicle in violation of the prohibition.
If the dealer causes the vehicle to be registered in California
or any other state and causes to be collected any applicable
sales or use tax, a rebuttable presumption is established that
the dealer did not have reason to know of the customer's intent
to export or resell the vehicle.
This bill:
1)Adds the additional requirement that the manufacturer must
have provided its export prohibition policy to the dealer in
writing at least 48 hours prior to the sale.
2)Gives associations the standing to challenge the legality of a
manufacturer's export prohibition policy to the NMVB until
January 1, 2019. Under current law, only dealers have the
standing to make such a challenge.
Comments
Purpose of bill. According to the author, this bill is
necessary because an automobile manufacturer is ignoring a
recently passed law dealing with automobile exports. That law
established a rebuttable presumption that a dealer did not know
or should not have known that an automobile was being exported
if the dealer caused the vehicle to be registered and sales
taxes were paid. Effective November 2014, the policy of this
manufacturer is to punish a dealer if a specified number of its
sales are exported, a clear violation of California's law,
according to the author. This bill strengthens and clarifies
California law.
Good for the dealer, good for California. The state has a clear
interest in increasing in-state vehicle sales, as this generates
sales tax revenue and profits for California dealers. This may
conflict with the interests of automobile manufacturers who have
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an interest in segmenting their markets and maximizing profits
in each.
Trying, and failing, to crack down. Buying luxury cars in the
United States and exporting them to countries like China can be
lucrative, as automobile manufacturers price their cars much
more expensively overseas, according to two recent articles in
Autoweek, "Exporting New Luxury Cars Is Lucrative, Legally
Questionable," July 22, 2014, and the Financial Times,
"Carmakers Face Fresh China Import Threat," January 18, 2015.
Some manufacturers have responded by charging auto dealers and
threatening future vehicle allocations, according to the
articles. The federal government has also been investigating
whether such exports may be illegal, but in its first case
against an alleged illegal exporter, a judge in Ohio ruled that
the federal government had failed to make its case. ["U.S.
Ordered to Return Assets Held in Crackdown of Luxury Cars
Exported to China," New York Times, April 3, 2014.] A more
recent report notes that at least a dozen other similar cases
have been dropped by federal authorities. ["Prosecutors Ease
Crackdown on Buyers of China-Bound Luxury Cars," New York Times,
April 1, 2015.]
Opposition. This bill's source, the California New Car Dealers
Association, notes that this version of the bill addresses the
opponents' concerns but is not sufficient for them to remove
their opposition.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified9/4/15)
California New Car Dealers Association (source)
California Motorcycle Dealers Association
OPPOSITION: (Verified9/4/15)
Alliance of Automobile Manufacturers
Association of Global Automakers
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Honda North America, Inc.
ASSEMBLY FLOOR: 80-0, 6/4/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
Prepared by:Randy Chinn / T. & H. / (916) 651-4121
9/8/15 14:55:29
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