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Senate bill seeks relief for car dealers

State House Bureau

March 14. 2013 8:14PM

CONCORD - The state's auto dealers and auto manufacturers are in a dogfight over a bill now before the Senate.

Senate Bill 126, or the Dealer Bill or Rights, changes business practices between manufacturers and their local dealers. Every state has such laws.

The Alliance of Auto Manufacturers placed full-page ads in the New Hampshire Union Leader and several other newspapers in the state Thursday claiming the bill is government overreach and an 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?"

But the state's auto dealers criticized what they called the out-of-state carmakers for trying to mislead the public and lawmakers about the bill.

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

"When building a showroom, dealers should be allowed to use local contractors and suppliers," said NH Auto Dealers Association President Pete McNamara. "The manufacturers force dealers to take on debt as they demand new buildings every few years. Consumers focus on the quality and price of a car, not how fancy the showroom is."

Daniel Gage, director of communications and public affairs for the Alliance of Automobile Manufacturers, said dealers can use local vendors if they want to do that, but manufacturers need to be part of the decision due to brand consistency.

"All we are asking for is a little balance," Gage said. "We encourage the use of local vendors if that is important, but we need brand consistency."

Another issue of dispute between the dealers and manufacturers concerns the state's warranty law and whether manufacturers are complying.

Dealers are mandated to fix factory mistakes, yet several manufacturers won't follow New Hampshire warranty law, local dealers claim.

"It's unfortunate that out-of-state interests would rather mislead the public through an ad campaign instead of trying to work with local business owners," said Andy Crews, president and CEO of Autofair. "But this shows exactly what dealers like me have been dealing with for years."

New Hampshire already has a dealer bill of rights law as do all 49 other states, and 38 states have similar warranty laws requiring manufacturers to reimburse local dealers 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.

The dealers claim some dealers have sold their facilities due to the demands of the manufacturers and their failure to follow state law.

"Claims by the Alliance this bill will drive up car prices and give us too much power would be laughable if it wasn't so painfully ironic," said McNamara. "The reason we need this proposal is because manufacturers force us to do things their way, even though we are spending our own money. They have the power, not us. Why would local dealers do anything that would drive up car prices and threaten sales in a competitive industry?"

SB 126 extends protections to construction and farming equipment dealers in New Hampshire as well.

"This threat is real, and the impact is being felt by dealers statewide and their employees. We are standing with one voice, asking lawmakers to make sure there is fairness in the process," says McNamara. "This law will protect one of the most important economic engines in the state. This is about fairness."

New Hampshire's auto industry employs more than 14,000 people, the dealers said.

Gage had a different opinion of the bill.

"This is a bad bill for consumers, it's anti-competitive and it's anti-free market," Gage said. "It is also poor public policy that allows the state to pick winners and losers."

He said the ads are the beginning of his organization's push to inform the public and the Senate members about the bill.

A letter was sent this week to all senators outlining the organization's objection to the bill.

The bill is expected to be voted on by the Senate next week.

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