Pub. 13 2014-2015 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 5 new jersey auto retailer W W W . N J C A R . O R G President’s MESSAGE | BY JAMES B. APPLETON The New Jersey Legislature is considering amendments to New Jersey’s Franchise Practices Act (S927/A2035) that would protect the consumer interest in the franchise systemand further level the playing field between franchisors and franchisees. Automakers are fighting the legislation and making threats, in an attempt to defeat the bill. Some manufacturers have threatened to pull their 0% financing programs from the marketplace. Others have threatened tomove their headquarters from New Jersey entirely and take thousands of jobs with them. These threats are both cruel and senseless, but serve as a great example as toWHY this legislation is needed. It’s no surprise thatmanufacturers throwtheir considerable economic weight around in an attempt to get what they want. They threaten dealers everyday with serious financial and business repercussions. Fromwhat I’ve read, they’ve even threatened Senate President Steve Sweeney that they will relocate jobs outside New Jersey if he moves on the bill. As far as the automakers are concerned, New Jersey new car dealers, new car consumers and working men and women are just pawns in the game. Need more proof? Automakers have threat- ened topull valuable incentive programs, such as 0% financing, fromtheNewJerseymarket if this legislation advances. Clearly, they are over-reacting to a section of the proposed law [ Section 3, subsection (t) ] that would prevent manufacturers and their captive finance companies fromcreating amonopoly around after-sale products. Manufacturers claimthat section and subsec- tion in the legislation would no longer allow them to offer 0% financing. However, the ap- plicable section’s only aim is to curtail preda- tory conduct. The language does not address the finance rate offered by the manufacturer or its finance captive, whether that rate is 0% or otherwise. This section of the legislation ONLY addresses the specific finance terms for “after-sale” products, such as extended warranties. The proposed law prohibits differentiation between the finance terms offered on those products when provided by an independent company as opposed to the manufacturer or its captive. The languagewill NOTpreventmanufacturers and their captive finance companies fromoffering “0%” or any other type of financing incentive. All the subsection does is put after-sale prod- ucts sold by independents on a level playing field with those sold by manufacturers and their captives. This will free dealers to offer consumers a variety of competitive products and the consumer can select the best product at the best price. While manufacturers have deep pockets to fight legislation they don’t like, they lack the community focus of the 515 franchised deal- erships in New Jersey. It is true that several automakers have corporate offices in New Jersey and they claim to employ 4,000 people in the Garden State, but that number pales in comparison to the 35,000 uniquely local jobs created by New Jersey’s new car and truck dealerships. Many are high-paying jobs that come with great benefits. The automakers threat to leave New Jersey over a bill that protects jobs at dealerships is cruel, heavy-handed and vindictive. And it’s illogical. Closing up corporate operations and punishingworkers andNewJersey communi- ties bymoving jobs out of statewon’t change a thing. That’s because S927/A2035 affects the operation of dealerships that do business here, not the automakers’ corporate operations . So, un- less these automakers plan to stop selling cars in New Jersey, their threats are just senseless. What’s really at stake is consumer safety. In the past 18months, automakers have recalled more than 45 million motor vehicles, many with serious safety defects. Fortunately, the New Jersey law that these automakers op- pose so vigorously requires them to pay local dealers to fix their mistakes, so the consumer doesn’t get stuckwitha lemon. The real reason automakers oppose this bill is because itwould toughen New Jersey’s Franchise Practices Act, level the playing field for new car deal- ers, andprevent automakers fromunilaterally shifting the cost of warranty and safety recall repairs to local dealers and consumers. NJCARwill continueworkingwithmembers of the Legislature to pass S927/ A2035. And dealer grassroots support will offer the boost we need to defeat themanufacturers lobbying campaign against this bill. Auto Makers Pull Out All The Stops In Effort To Kill Franchise Bill