HOUSE BILL No. 5312

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

 

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

 

recognition programs.

 

     (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

 

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:

 

     (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

 

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

 

nonretail buyers.

 

     (i) 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.

 

     (i) (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

 

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.

 

     (j) (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

 


this state.

 

     (k) (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.

 

     (l) (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

 

vehicle dealership.

 

     (m) (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.

 

     (n) (o) Require unreasonable improvements to a facility as a

 

condition to entering into or renewing a dealer agreement.

 

     (o) (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 own vehicles.

 

     (p) (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.

 

     (q)(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.

 

     (r) (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.

 

     (s) (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

 

manufacturer.

 


     (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

 

manufacturer.

 

     (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

 

the manufacturer.

 

     (t) (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.

 

     (u) (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

 


the program:

 

     (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.

 

     (v) (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, 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

 

presumption.

 

     (w) (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.

 

     (x) (y) 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

 

state.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.