CONCORD — Legislation giving local auto dealers greater flexibility in business dealings with auto manufacturers was signed into law Tuesday.
Senate Bill 126, or the Auto Dealers Bill of Rights, had overwhelming support in both the House and Senate. The bill changes business practices between manufacturers and their dealers, giving local auto and construction and farm equipment dealers more flexibility to run their franchises. All other states have similar laws.
Supporters say the bill will level the playing field for the dealers who have said they are often held hostage to the manufacturers’ demands.
But opponents believe the bill overturns existing business contracts and, rather than leveling the playing field, tilts it significantly in favor of the dealers and will drive up the costs for consumers.
“This updated law provides a more level playing field between national manufacturers and the men and women of New Hampshire who work so hard in our vehicle and equipment sales industry,” said Gov. Maggie Hassan at a bill signing ceremony in the Executive Council Chambers. “Local control is a hallmark of New Hampshire, and this law will bring an end to unfair practices in the industry.”
Peter McNamara, president of the New Hampshire Auto Dealers Association, said the law will better ensure that decisions made by the national manufacturers will not harm local businesses and consumers.
“This is a bipartisan bill that focuses on local jobs and focuses on local businesses,” he said.
Auto manufacturers unsuccessfully fought the bill in both the Senate and the House.
“Automakers are disappointed that unneeded special interest legislation won the day in New Hampshire,” said Dan Gage, director of communications and public affairs for the Alliance of Automobile Manufacturers. “The likely end result is that consumers will unfortunately pay more for both vehicles and vehicle repairs.”
Gage’s organization sent a letter to Hassan Monday asking her to veto the bill instead.
“Senate Bill 126 is an ill-crafted piece of special interest legislation that will increase the cost of doing business for manufacturers in the state and result in added costs to consumers,” said Matthew Godlewski, vice president for the alliance. “The legislation remains unbalanced and unwarranted. Not one of the six major provisions identified by the Alliance at the initial stages of the legislative process has been fairly addressed to resolve manufacturer concerns.”
Among the concerns is a provision prohibiting manufacturers from requiring facilities be improved more than once in 15 years, while the industry standard is seven years and no other state has gone beyond 10 years.
SB 126 includes a “buy local” provision allowing dealers to use New Hampshire contractors and suppliers when updating facilities.
“How would it feel if you were told that you had to spend millions on a remodeled showroom, when you aren’t finished paying for the last facility upgrade a few yeas ago?” said Andy Crews, president and CEO of Autofair in Manchester. “This law will hopefully stop the unreasonable and unexpected mandates that come from vehicle manufacturers. They need to know this has to be a mutually beneficial relationship in order to be successful.”
Manufacturers say the bill is unprecedented by allowing dealers to demand manufacturer information outside of due process and it allows dealers to charge manufacturers retail rates for labor and parts on warranty work.
They say the provision is unconstitutional because it does not allow dealers to recoup those costs in New Hampshire. “We never take any options off the table,” said Gage when asked if the association would sue, noting the group is litigating similar provisions in Florida and Connecticut.
Manufacturers also say the bill allows New Hampshire dealers to undermine manufacturers’ efforts to make auto purchasing more consumer friendly.
But local auto dealers say they are often threatened with loss of their franchises if they do not bow to manufacturers’ demands to update showrooms and change signs and locations.
They say manufacturers have controlled the business relationship through the pricing and allocation of vehicles. If local dealers do not go along, they receive fewer vehicles, higher sales targets and higher prices, the local dealers say.
The bill’s provisions also cover equipment and farm and construction equipment dealers.