Virginia has adopted a law that protects dealers who unknowingly sell vehicles to exporters.
House Bill 461, which was signed into law last month, says a dealer cannot be held liable for incentives and fees on an exported vehicle as long as the dealer did not know the car would be exported and can prove he or she 'exercised due diligence.' The law does not define what it means to prove due diligence.
The National Automobile Dealers Association believes the law is a first. 'This has been an issue,' says NADA attorney Jim Moors. 'The factories don't want dealers to export to other countries,' Moors said. 'The flash point on the dispute is how does the dealer know that a vehicle is going to be exported?'
Some manufacturers charge back incentives and other fees when vehicles designated for sale in the United States are exported, Moors says.
But manufacturers fought the bill because they believe it will encourage dealers to export vehicles overseas. In many cases, off-shore sales violate the dealer agreement, says Max Gates, a spokesman for the American Automobile Manufactur-ers Association.
AAMA complains the law is too vague. 'The language in the law lowers the bar so that it might encourage export activity. It should clarify the situation where a dealer has made an honest effort' to avoid selling vehicles to exporters, explains Gates.
Don Hall, Virginia Automobile Dealers Association president, says dealers can prove due diligence by checking the list of known exporters some manufacturers distribute to their dealers. They also can have customers sign affidavits saying the vehicles will not be exported.