A wide-ranging bill that the California New Car Dealers Association says will strengthen laws for franchised dealers has passed the California Assembly and is headed to Gov. Jerry Brown's desk.
On Thursday, the California Assembly unanimously approved the legislation, concurring with amendments that had been made in the state Senate. The California Legislature is set to recess at midnight Friday.
The dealers association, which represents 1,300 franchised new-car dealers in the state, had sponsored the bill, AB 2107, and lobbied for its passage since early this year. It includes measures that address what it calls "inappropriate treatment of dealers by manufacturers" and bolsters warranty reimbursement terms and laws around facilities mandates, among other points. But several measures were either stripped out or modified from the legislation as first proposed to remove certain objections by automakers and consumer advocates and gain passage by legislators.
"This has been a long and difficult battle," Brian Maas, president of the California association, told Automotive News. "The manufacturers are obviously worthy combatants in the legislative process. I think our dealer leadership and dealer body will be pleased."
A key compromise: A proposed statewide prohibition on automaker direct sales was dropped. Another provision that would have prohibited automakers from offering subscription programs outside of their dealer network also was stripped from the bill earlier this summer. The association and the Alliance for Automobile Manufacturers, a trade association representing 12 automakers, have agreed to sit down beginning in September to talk about how to address these concerns and others in future legislation, Maas said.
The dealers association has said it would consider resubmitting AB 2107's language on subscriptions if the dealer and automaker groups can't resolve their differences.
"We're not opposed to subscriptions," Maas said. "We're opposed to subscriptions that don't use franchised dealers."
The alliance is disappointed with the bill's passage and is reviewing its options, said Bryan Goodman, a spokesman for the group. Of particular concern to the alliance and its members is how the legislation would treat reimbursement on vehicle warranty claims to dealers. The changes could significantly raise costs for automakers, which would be passed on to consumers, according to the alliance.
"If this bill is signed by Gov. Brown, it will become the most unreasonable warranty reimbursement law in the nation," Goodman said. "And that will impact manufacturers, dealers and consumers."
The alliance paid for a website, noonab2107.com, opposing the bill's passage. Its banner reads "AB 2107 is awful for car buyers." The website claimed the bill would limit consumers' choice on where they could take a car for warranty repair work and could create a monopoly for dealers on selling original parts.
A provision that would have required the sale of manufacturer parts only through franchised dealerships was removed from the bill.
Brown has until Sept. 30 to veto or sign the bill. If no action is taken, the bill becomes law.
Maas said the governor's office is aware that the bill, as passed, is narrower in scope than first proposed.
"We're cautiously optimistic that he'll view the bill favorably and sign it next month," Maas said.