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Auto dealers get more control with Senate bill

State House Bureau

March 22. 2013 12:50AM

CONCORD - By an overwhelming 21-2 vote on Thursday, the state Senate sided with local auto dealers over auto manufacturers in approving Senate Bill 126, or the Dealer Bill of Rights.

The bill changes business practices between manufacturers and their dealers and would give local auto and other vehicle dealers greater flexibility to run their franchises. All other states have similar laws.

During debate, several senator told of long-time auto dealerships that went out of business due to the demands of manufacturers.

"This will allow local owners to run their businesses as they see fit," said Sen. David Pierce, D-Hanover, "not as Detroit thinks it should be."

But Senate President Peter Bragdon, R-Milford, who was one of the two no votes on the bill along with Sen. John Reagan, R-Deerfield, said he believes the law changes too many existing business contracts between dealers and manufacturers.

"These are current contracts that are being changed unilaterally by the state," Bragdon said. "That was too much for me."

Earlier this month, the Alliance of Auto Manufacturers placed full-page ads in the New Hampshire Union Leader and several other newspapers in the state claiming that the bill is government overreach and intrusion into private business practices.

The ad calls the bill a lemon and says it will cost consumers more money.

"Why should our State House pick business winners and losers?" the ad asks. "And why should we in New Hampshire pay more than motorists in neighboring states?" At the time the state's auto dealers criticized "the out-of-state car makers" for trying to mislead the public and lawmakers about the bill.

The dealers say SB 126 would reduce costs by stopping manufacturers from forcing dealers to rebuild facilities every five to seven years and would allow dealers to buy tools and building materials and from local suppliers, instead of from out-of-state companies picked by Detroit or Tokyo.

"I want to do business with the people who do business with me." said Andy Crews, president of AutoFair, after the vote. "This bill goes a long way to making that happen."

The bill includes; A "buy local" provision, which dealers say will end mandates by auto makers to use out-of-state contractors and suppliers for work; Transparency in inventory and sales decisions made by auto makers; Market-based reimbursement for warranty work done by local dealers: Gives local dealers more control over decisions regarding major capital expenses, such as showroom renovations and new construction; and incorporates equipment manufacturers and farm equipment dealers into the bill of rights.

The manufacturers say the bill is bad public policy.

"We are disappointed the Senate chose car dealers over consumers, but are confident the 400 members of the House will demand a balanced compromise that protects the interests of all parties," said Alliance of Auto Manufacturers director of communication and public affairs, Daniel Gage. "The Senate version of this bill is bad public policy that unfairly extends the arm of government into private and voluntary business relationships."

Earlier Gage said the dealers can use local vendors if they want to do that, but manufacturers need to be part of the decision due brand consistency.

And he charged the dealers with driving up auto repair costs so they can receive the current market rate in New Hampshire for warranty work.

Gage said New Hampshire's warranty law allows dealers to charge manufacturers retail service rates for warranty work, which drives up the cost to consumers because the dealers bump up the rates to get more money. And he said the bill would also allow dealers to charge manufacturers the retail rate for parts, which is not the current arrangement.

Most states allow bulk rates for warranty work, Gage said, and allow surcharges on new auto sales to hold the escalating rates of service departments in check, but the bill would not allow that.

However, senators were not convinced the dealers have been treated fairly by the manufacturers.

Sen. Jeff Woodburn, D-Dalton, said there once were nine new car dealers in Coos County; today there are four. One of the remaining dealers works out of a barn in Lancaster, he noted, selling about 15 cars a month.

The business has been in the family for three generations and needs to be protected, he said.

Sen. Pierce of Hanover, told of a Claremont dealership selling Chevrolets since 1958 that was told by General Motors it had to build a new facility to separate it from its Toyota operation. The owner could not afford that and lost the GM dealership.

Senate Majority Leader Jeb Bradley, R-Wolfeboro, said the local auto dealer in his community has closed and now he has to travel to Laconia, Rochester or Conway for a dealership.

"I want to get my service in Wolfeboro," Bradley said. "This is about convenience and costs."

The bill now goes to the House for action.

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