April 15, 2015, Introduced by Senator BOOHER and referred to the Committee on Economic Development.
A bill to amend 1981 PA 118, entitled
"An act to regulate motor vehicle manufacturers, distributors,
wholesalers, dealers, and their representatives; to regulate
dealings between manufacturers and distributors or wholesalers and
their dealers; to regulate dealings between manufacturers,
distributors, wholesalers, dealers, and consumers; to prohibit
unfair practices; to provide remedies and penalties; and to repeal
certain acts and parts of acts,"
by amending section 14 (MCL 445.1574), as amended by 2014 PA 354.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 14. (1) A manufacturer shall not do any of the following:
(a) Adopt, change, establish, or implement a plan or system
for the allocation and distribution of new motor vehicles to new
motor vehicle dealers that is arbitrary or capricious or based on
unreasonable sales and service standards, or modify an existing
plan or system that causes the plan or system to be arbitrary or
capricious or based on unreasonable sales and service standards.
(b) If requested in writing by a new motor vehicle dealer,
fail or refuse to advise or disclose to the dealer the basis on
which new motor vehicles of the same line make are allocated or
distributed to new motor vehicle dealers in this state and the
basis on which the current allocation or distribution is being made
or will be made to that new motor vehicle dealer.
(c) Refuse to deliver to a new motor vehicle dealer in
reasonable quantities and within a reasonable time after receipt of
the dealer's order, any new motor vehicles that are covered by the
dealer agreement and specifically publicly advertised in this state
by the manufacturer as available for immediate delivery. However,
the failure to deliver any motor vehicle is not considered a
violation of this act if the failure is due to an act of God, a
work stoppage or delay due to a strike or labor difficulty, a
shortage of materials, a lack of manufacturing capacity, a freight
embargo, or other cause over which the manufacturer has no control.
If a manufacturer requires a new motor vehicle dealer to purchase
essential service tools with a purchase price in the aggregate of
more than $7,500.00 in order to receive a specific model of
vehicle, the manufacturer shall on written request provide the
dealer with a good faith estimate in writing of the number of
vehicles of that specific model the dealer will be allocated in the
model year in which the dealer is required to purchase the tool.
(d) Increase the price of a new motor vehicle that the new
motor vehicle dealer had ordered, and then eventually delivered to,
the same retail consumer for whom the vehicle was ordered, if the
order was made before the dealer's receipt of a written official
price increase notification. A sales contract signed by a private
retail consumer and binding on the dealer constitutes evidence of a
vehicle order. In the event of manufacturer price reductions or
cash rebates, the dealer shall pass on the amount of any reduction
or rebate received by the dealer to the private retail consumer.
Any price reduction in excess of $5.00 shall apply to all vehicles
in the dealer's inventory that were subject to the price reduction.
A price difference applicable to new model or series motor vehicles
at the time of the introduction of the new models or the series is
not considered a price increase or price decrease. This subdivision
does not apply to price changes caused by any of the following:
(i) The addition to a motor vehicle of required or optional
equipment under state or federal law.
(ii) In the case of foreign made vehicles or components,
revaluation of the United States dollar.
(iii) Any increase in transportation charges due to an increase
in rates charged by a common carrier or transporter.
(e) Offer any of the following to any new motor vehicle dealer
of a specific line make without making the same offer available to
all other new motor vehicle dealers of the same line make:
(i) Any specific model or series of new motor vehicles
manufactured for that line make.
(ii) Any incentives, rebates, bonuses, promotional items, or
other similar benefits that are payable to the new motor vehicle
dealer for selling new motor vehicles or purchasing new motor
vehicles from the manufacturer.
(iii) Any consumer rebates, vehicle price reductions, or
interest rate reductions or other changes to finance terms that
benefit the consumer.
(iv) Any program that provides marketing and sales assistance
to new motor vehicle dealers, including, but not limited to,
internet listings, sales leads, marketing programs, and dealer
(f) Release to an outside party, except under subpoena or in
an administrative or judicial proceeding to which the new motor
vehicle dealer or the manufacturer are parties, any business,
financial, or personal information that has been provided by the
dealer to the manufacturer, unless the new motor vehicle dealer
gives written consent.
(g) Deny a new motor vehicle dealer the right to associate
with another new motor vehicle dealer for any lawful purpose.
(h) Directly or indirectly own, operate, or control a new
motor vehicle dealer, including, but not limited to, a new motor
vehicle dealer engaged primarily in performing warranty repair
services on motor vehicles under the manufacturer's warranty, or a
used motor vehicle dealer. This subdivision does not apply to any
of the following:
(i) The ownership, operation, or control by a manufacturer of a
new motor vehicle dealer for a period of not more than 24 months
during the transition from 1 owner or operator to another. The
circuit court may extend the 24-month time period for an additional
12 months upon receipt of an application from a manufacturer and a
showing of good cause.
(ii) The ownership, operation, or control of a new motor
vehicle dealer or a used motor vehicle dealer by a manufacturer
while it is being sold under a bona fide contract or purchase
option to the operator of the new motor vehicle dealer or the used
motor vehicle dealer.
(iii) The direct or indirect ownership by a manufacturer of an
entity that owns, operates, or controls a new motor vehicle dealer
of the same line make franchised by the manufacturer, if all of the
following conditions are met:
As of May 1, 2000, the manufacturer for a period of
than at least 12 months has had continuously owned,
or indirectly, 1 or more new motor vehicle dealers in this state.
(B) All of the new motor vehicle dealers selling the
manufacturer's motor vehicles in this state trade exclusively in
the manufacturer's line make.
As of January 1, 2000,
not fewer than at least 1/2 of the
motor vehicle dealers of the line make
within in this
and operate 2 or more new motor vehicle dealer facilities in the
geographic territory or area covered by the franchise agreement
with the manufacturer.
(D) For a manufacturer or any entity in which the manufacturer
has more than a 45% ownership interest, the manufacturer or entity
has not acquired, operated, or controlled a new motor vehicle
dealer that the manufacturer did not directly or indirectly own as
of May 1, 2000.
(iv) The acquisition by a manufacturer of a used motor vehicle
dealer's license for the purpose of selling motor vehicles to
(v) The ownership, operation, or control by a manufacturer of
autocycles of a new motor vehicle dealer or used motor vehicle
dealer that is engaged in purchasing, selling, exchanging, or
dealing in autocycles manufactured or assembled by that
Sell Except as provided in
subsection (4), sell any new
motor vehicle directly to a retail customer other than through
franchised dealers, unless the retail customer is a nonprofit
organization or a federal, state, or local government or agency.
This subdivision does not prohibit a manufacturer from providing
information to a consumer for the purpose of marketing or
facilitating the sale of new motor vehicles or from establishing a
program to sell or offer to sell new motor vehicles through
franchised new motor vehicle dealers that sell and service new
motor vehicles produced by the manufacturer.
(j) Prevent or attempt to prevent by contract or otherwise any
new motor vehicle dealer from changing the executive management of
a new motor vehicle dealer unless the manufacturer, having the
burden of proof, can show that the change of executive management
result in executive management by
a person or persons 1 or
more individuals who are not of good moral character or who do not
meet reasonable, preexisting, and equitably applied standards of
the manufacturer. If a manufacturer rejects a proposed change in
the executive management, the manufacturer shall give written
notice of its reasons to the dealer within 60 days after receiving
written notice from the dealer of the proposed change and all
related information reasonably requested by the manufacturer, or
the change in executive management is considered approved.
(k) Unreasonably withhold consent to the sale, transfer, or
exchange of a new motor vehicle dealership to a qualified buyer
that is capable of being licensed as a new motor vehicle dealer in
(l) Fail to respond in writing to a request for consent to a
sale, transfer, or exchange of a new motor vehicle dealership
within 60 days after receiving a written application from the new
motor vehicle dealer on the forms generally utilized by the
manufacturer for that purpose and containing the information
required in that application. Failure to respond to a request for
consent within the 60-day period is considered consent to the sale,
transfer, or exchange.
(m) Unfairly prevent a new motor vehicle dealer that sells,
transfers, or exchanges a new motor vehicle dealership from
receiving reasonable compensation for the value of the new motor
(n) Unless the manufacturer enters into a written agreement
with the new motor vehicle dealer that clearly states the amount of
the incentive payments and the period of time during which the
incentive payments are paid, offer incentive payments to a new
motor vehicle dealer in consideration for a new motor vehicle
dealer's promise to do any of the following:
(i) Make material alterations to any facilities at the dealer's
place of business.
(ii) Construct new facilities for the conduct of the business
of the dealership.
(o) Require unreasonable improvements to a facility as a
condition to entering into or renewing a dealer agreement.
(p) Authorize a motor vehicle service and repair facility to
perform motor vehicle warranty repairs and recall work, unless the
work meets any of the following:
(i) Is required for emergency service of a vehicle.
(ii) Is work performed at a service center owned or operated by
a manufacturer on a manufacturer-owned vehicle.
(iii) Is work performed by employees of a fleet operator on its
(iv) Is work performed on an autocycle that was manufactured or
assembled by the manufacturer.
(q) Own a motor vehicle service and repair facility, except
that a manufacturer may own a service and repair facility for the
repair of manufacturer-owned vehicles.
(r) Engage in conduct that meets all of the following:
(i) Materially affects a new motor vehicle dealer.
(ii) Is capricious, is not in good faith, or is unconscionable.
(iii) Causes damage to a new motor vehicle dealer.
(s) Impose unreasonable standards of performance on a new
motor vehicle dealer or require, attempt to require, coerce, or
attempt to coerce a new motor vehicle dealer to adhere to
performance standards that are not applied uniformly to other
similarly situated new motor vehicle dealers.
(t) Use or consider the performance of a new motor vehicle
dealer in selling the manufacturer's vehicles or the new motor
vehicle dealer's ability to satisfy any minimum sales or market
share quota or responsibility relating to the sale of the new motor
vehicles in determining any of the following:
(i) The new motor vehicle dealer's eligibility to purchase
program, certified, or other used motor vehicles from the
(ii) The volume, type, or model of program, certified, or other
used motor vehicles that a new motor vehicle dealer is eligible to
purchase from the manufacturer.
(iii) The price of any program, certified, or other used motor
vehicle that the new motor vehicle dealer purchases from the
(iv) The availability or amount of any discount, credit,
rebate, or sales incentive that the new motor vehicle dealer is
eligible to receive from the manufacturer in connection with any
program, certified, or other used motor vehicle offered for sale by
(u) Require that a new motor vehicle dealer provide its
customer lists or service files to the manufacturer, unless
necessary for the sale and delivery of a new motor vehicle to a
consumer, to validate and pay consumer or dealer incentives, or in
connection with the submission of a claim to the manufacturer for
services supplied by the new motor vehicle dealer for any claim for
warranty repairs. This section does not limit a manufacturer's
authority to require or use customer information to satisfy any
safety or recall obligation.
(v) Establish a performance standard or program for measuring
new motor vehicle dealer performance that may have a material
impact on a new motor vehicle dealer that is not fair, reasonable,
and equitable. For purposes of this subdivision, all of the
following apply if a manufacturer does not provide a complete
program description explaining the performance standard or program
details to a new motor vehicle dealer on or before the beginning of
(i) Within 10 days after receiving a request from the new motor
vehicle dealer, the manufacturer shall provide the new motor
vehicle dealer with a written description of how a performance
standard or program is designed.
(ii) Within 30 days after receiving a request from the new
motor vehicle dealer, the manufacturer shall provide information
relating to how the performance standard or program applies to the
new motor vehicle dealer.
(w) If a new motor vehicle dealer sold or leased a new motor
vehicle to a customer that exported the motor vehicle to a foreign
country or resold the motor vehicle, unless the manufacturer proves
that the new motor vehicle dealer knew or reasonably should have
known that the customer intended to export or resell the vehicle,
refuse to allocate, sell, or deliver new motor vehicles to the
dealer; charge back or withhold payments or other things of value
for which the dealer is otherwise eligible under a sales promotion,
program, or contest; prevent a new motor vehicle dealer from
participating in any sales promotion, program, or contest; or take
or threaten to take any other adverse action against a new motor
vehicle dealer, including, but not limited to, reducing vehicle
allocations or terminating or threatening to terminate a dealer
unless the manufacturer proves that the new motor vehicle
dealer knew or reasonably should have known that the customer
intended to export or resell the motor vehicle. In an
action by a new motor vehicle dealer for a violation of this
subdivision, there is a rebuttable presumption that a new motor
vehicle dealer did not know or should not reasonably have known of
its customer's intent to export or resell a motor vehicle if the
vehicle was titled in the United States, and the manufacturer bears
the burden of rebutting that presumption.
(x) If a new motor vehicle dealer is a party to a dealer
agreement on August 4, 2010, and the dealer agreement provides for
sale of a competing line make of new motor vehicles at the same
place of business where the manufacturer's line make is sold,
require or otherwise coerce the new motor vehicle dealer to remove
the sale or servicing of new motor vehicles of that competing line
make from that place of business.
(y) Prevent, attempt to prevent, prohibit, coerce, or attempt
to coerce a new motor vehicle dealer from charging a consumer any
allowed to be charged by the dealer is
allowed to charge under the laws of this state.
(2) A manufacturer, either directly or through any subsidiary,
shall not terminate, cancel, fail to renew, or discontinue any
lease of a new motor vehicle dealer's established place of business
except for a material breach of the lease.
(3) This section applies to a manufacturer that sells,
services, displays, or advertises its new motor vehicles in this
(4) The manufacturer of new or used autocycles may engage in
the direct retail sale, purchase, or exchange of, or deal in, or
make repairs to those autocycles. As used in this subsection,
"repairs" includes general repairs, warranty work or repairs, or
recall work or repairs.
(5) As used in this section, "autocycle" means that term as
defined in section 25a of the Michigan vehicle code, 1949 PA 300,
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.