Pub. 15 2016-2017 Issue 3

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 7 new jersey auto retailer W W W . N J C A R . O R G More than 17.1 million cars and lights trucks will be sold by dealerships across the country when 2016 comes to a close. That’s four years in a row of 17 million-plus vehicles sold. But in the past two years alone, nearly 100 MILLION VEHICLES HAVE BEEN RECALLED. Dealers don’t build vehicles. They retail and service them. But when recalls ground vehicles on dealer lots or manufacturers are slow to provide a fix or parts to address a recall, it hits dealers hard. It’s up to the National Highway Transportation and Safety Ad- ministration (NHTSA) and manufacturers to actually issue a safety-related recall and to tell dealers which vehicles are safe to drive and which ones are not. Dealers have a moral and a legal obligation not to sell unsafe cars. A good rule of thumb is that if you wouldn’t put a family member in a car, then don’t sell it. But when a vehicle is unsafe to drive or sell, dealers are entitled to fair compensation for vehicles that are stranded on their lots. That drop in value or the inability to move inventory impacts profitability. The National Traffic andMotor Vehicle Safety Act (NTMVSA) prohibits selling a new vehicle that is subject to an open safety recall, unless the repair has been completed. As the sheer number of recalls break new records each year, these recalls could cost dealers mil- lions in added floor-plan expense, lost business opportunities and vehicle depreciation. Fortunately, dealers have a statutory remedy when faced with recall-related expenses. The NTMVSA, as well as New Jersey law, requires manufacturers to reimburse dealers for recall expenses. The NTMVSA says that a manufacturer must either immediately repurchase vehicles under a stop sale, immediately provide a remedy, or reimburse the dealer (at least one percent a month of the manufacturer’s selling price) from the date the stop order is issued until the recall has been addressed. The New Jersey Franchise Practices Act requires a manufacturer to reimburse dealers for the cost of performing recall repairs. It also says that a dealer is entitled to reimbursement of “all reasonable costs incurred by the franchisee in complying with the requirements imposed on the franchisee by the franchisor relating to a product recall.” Nevertheless, disputes arise over the manufacturer’s responsibility for damages resulting from a recall and stop-sale, such as floor- plan interest, diminution in the value of vehicles, and lost business opportunities. Some manufacturers have stepped up to offer as- sistance to their dealers. Others have ignored their responsibilities and are leaving many dealers in the lurch, unable to sell some of the vehicles on their lots. Things shouldn’t be this way. This is one area where dealers and manufacturers should be able to find common ground and identify a fair and efficient process to deal with the record level of recalls. In the absence of a timely fix, manufacturers MUST be President’s MESSAGE | BY JAMES B. APPLETON PRESIDENT’S MESSAGE  continued on page 10 Manufacturers Should Find Common Ground With Dealers On Recalls