Pub. 17 2018-2019 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 9 10 new jersey auto retailer 2019’s Top 25 Legal Trends For Automotive Dealers BY ERIC L. CHASE, ESQ. America’s franchised dealers have enjoyed a run of several years of good times. For 2019, I join with a growing number of industry observers who say that there will likely be continued strength in retail sales, overall profitability and deal- ership blue sky values. At the federal level, there is likely to be a continuation of legal and regulatory reform to ease adminis- trative burdens and some cost. Nevertheless, there may be some thunder clouds approaching that could interrupt the good news of the past few years. In past years, my analysis enumerated 20 trends in the law and regulatory fields that could impact dealers. This year, we have moved to 25, and dealers are well-advised to assess which issues could affect them and to take appropriate action where applicable. 1. Factory Sales Performance Standards - Dealers Under Siege, But Moves Toward Rationality For years, the factories have deployed unreliable, unscientific standards and criteria to evaluate dealer sales performance. This problem exists among all auto franchisors in America, even though there may be immaterial differences from brand to brand. Making things worse, franchisors proclaim that every dealer should be at or above average in sales performance. Of course, this is an absurdity, because, at any given time, about half of the dealer network would be in contractual breach for under-performance in sales. The good news is that developing case law and amended state laws are overcoming these injustices. Thus, dealers have reason to be optimistic that the long-standing unfairness in factory policing of retail sales will be overhauled with reasonable and fair sales criteria. 2. The Autonomous Vehicle Phenomenon Rolls Along Automakers and other entrepreneurs are spending billions of dollars to develop autonomous (self-driving) vehicles. In doing so, they anticipate that the next generation of cars will be either dominated by the autonomous versions, or at least be on the roads in enormous numbers across America. Some industry experts predict a future within the next decade or two without dealers as we know them today. Not so fast. It will be at least several years before self-driving vehicles will be commonplace. Even when the phenomenon hap- pens, there will still be operator-controlled vehicles everywhere. Today the consumer preference for internal combustion engine (ICE) vehicles hovers at about 90%. The prediction of the near- term demise of franchised auto dealers is far off the mark. 3. The #MeToo Phenomenon and Related Issues: What Dealers Need to Do The recent #MeToo developments deserve separate emphasis from other discrimination categories for two reasons. First, this issue has triggered a lot of legal activity, and, second, dealers should focus upon it with great care to avoid sex-related miscon- duct in the workplace. Every dealership needs to assure there is regular training and communication within the dealership to establish a “zero tolerance” for this sort of misconduct. It must