Pub. 15 2016-2017 Issue 4

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 I S S U E N O . 1 , 2 0 1 7 16 new jersey auto retailer could make more profit from a cancelled deal than a successful deal. This proposal has been stalled for some time and shows no traction. A-838- Prohibits a purchaser of a used motor vehicle from waiving the dealer’s obligation regarding emissions control equipment. This Bill would prohibit waiver of the existing “Inspection Guarantee” which, at this point, is basically an emis- sions system warranty, since that is the only system still inspected. Under current law, a dealership must give an Inspection Guarantee on all used car sales, unless the buyer waives the guarantee in writing. Eliminating the waiver would have some small impact on the ability to sell very low priced vehicles, as it would mandate fixing any emissions problems before the sale of any used vehicle; at some point, this could make selling a vehicle eco- nomically unfeasible. This proposal has been pending for some time and shows no significant traction. A-2607- Right To Repair Act The aftermarket parts and auto repair industries have been pushing this Bill for years. It would require manufacturers to make public their proprietary specifica- tions for repair parts and diagnostics so that the aftermarket parts makers could copy them. It was believed that the issue was settled about five years ago when a compromise was reached, based on pas- sage of a law in Connecticut which gave the parts and repair people what they wanted. But now they are coming back for another bite at the apple with this Bill pending in New Jersey. Recall-Related Proposals A-755- Requires dealerships to notify buyers of recalls on used motor vehicles for sale. A-2555 - Requires recalls on motor vehicles to be repaired prior to sale. A-2808- “SafeMotor Vehicle Rental Act”; prohibits rental companies from renting, leasing, or selling unrepairedmotor vehicles which are subject to safety recall. All of these proposals have the effect of placing a burden on dealerships as a result of recalls. NJ CAR st rong ly bel ieves t hat t he burdens associated with manufacturer recalls should be imposed only on the manufacturers. A dealership is a con- sumer and as much a victim in a recall situation as a retail customer. NJ CAR will strongly resist any provision which places the costs and burdens associated with a recall on dealerships. Further, NJ CAR will propose that dealerships be afforded even more protection in recall situations, by pursuing measures that will require manufacturers to bear all incidental costs associated with recalls, such as the costs associated with idled inventory, diminution of value, and other impacts on dealerships. NJ CAR expects recall issues to remain prominent. The Takata airbag and Volk- swagen/Audi diesel debacles are not over yet, and will continue to be an is- sue in 2017, while new recalls related to airbags and other issues continue to be announced. Current law forbids the sale of NEW vehicles that are subject to an “open” NHTSA safety recall, one that has not yet been repaired. However, several measures have been proposed in the New Jersey Legislature involving recalls, including one that would ban all sales (new and used) of vehicles affected by an open recall, and one that would require dealerships to give priority to certain customers in performing recall work. Thus far, NJ CAR has suc- cessfully worked to educate lawmakers as to the enormous impact these measures would have on automotive commerce and the retail industry, and so far the status quo has prevailed. It should be remembered that this does not mean dealers are free to sell unsafe motor vehicles, and under New Jersey law, there is clearly an obligation to disclose any recall affecting a vehicle to the consumer. The Consumer Fraud Act’s requirement to disclose any defect or con- dition that would be considered “material” to a purchase decision clearly applies to an open recall affecting the vehicle. 2017 will probably bring more consumer protection proposals regarding recalls. There is good reason to believe that the Legislature will continue to act reasonably andwon’t pass some “feel good” provision that would be burdensome and costly to the industry and, ultimately, bad for consumers. NJ CAR has been successful in convincing legislators that disclosure is the key, and has suggested that codifying the disclosure obligation would not be objectionable, provided there is some kindof “safe harbor”underwhichdealerships should be protected so long as they provide buyers with any information on recall status that is available from the NHTSA website (www.safercars.gov) , which allows consumers and dealers to search for recall information by VIN. One area involved with recalls that NJ CAR will be pursuing is the issue of dealership reimbursement for the costs of recalls. New Jersey’s Franchise Practices Act makes a general statement that manufacturers must reimburse dealers for all costs associatedwith recalls. In addition, federal law states that manufacturers who require dealerships to ac- cept delivery of newvehicles which cannot be sold must reimburse the dealerships for their carrying costs at the rate of 1% per month. NJ CAR believes that manufacturers should be required to reimburse dealerships for ALL costs, as our statute requires, and this should include carrying costs on any used vehicles the manufacturer tells the dealerships not to sell, as well as lost opportunity, diminution in value, and other consequential damages