February 3, 2016, Introduced by Reps. Aaron Miller, Yonker, Kelly, Glenn, Hooker, Victory, Irwin and Pagel and referred to the Committee on Commerce and Trade.
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 payable to the new motor vehicle dealer for
selling new motor vehicles or purchasing new motor vehicles from
(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, which is within a 10-mile radius of a
new motor vehicle dealer that is operating under an agreement or
franchise with that manufacturer or any of its controlled or
controlling entities. This subdivision does not apply to any of the
(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:
(A) As of May 1, 2000, the manufacturer for a period of not
less than 12 months has continuously owned, directly 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.
(C) As of January 1, 2000, not fewer than 1/2 of the new motor
vehicle dealers of the line make within this state own and operate
2 or more new motor vehicle dealer facilities in the geographic
territory or area covered by the franchise agreement with the
(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
Sell any new motor vehicle directly to a retail customer
than through franchised dealers, unless the retail customer
a nonprofit organization or a federal, state, or local
or agency. This subdivision does not prohibit a
from providing information to a consumer for the
of marketing or facilitating the sale of new motor vehicles
from establishing a program to sell or offer to sell new motor
through franchised new motor vehicle dealers that sell and
new motor vehicles produced by the manufacturer.
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
will result in executive management by a person or persons 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.
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.
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
Unless the manufacturer enters into
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.
Require unreasonable improvements
to a facility as a
condition to entering into or renewing a dealer agreement.
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 own vehicles.
Own a motor vehicle service and
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
(iii) Causes damage to a new motor vehicle dealer.
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.
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
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.
Establish a performance standard or
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.
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, 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 agreement, 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
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.
Prevent, attempt to prevent,
prohibit, coerce, or
attempt to coerce a new motor vehicle dealer from charging a
consumer any documentary preparation fee allowed to be charged by
the dealer 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
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.