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 16 new jersey auto retailer BY ROBERT C. MAY Factory Demands, Direct Sales, Brokers & Lead Generators… Auto retailing is a tough business, with ever-increasing demands by auto manufacturers for facility upgrades, coupled with a myriad of pricing schemes designed to pump up sales. Such demands often force dealers to look to some non-conventional ways to sell more vehicles (i.e. using brokers). At the same time manufacturers are heap- ing their demands on dealers, they are also looking for ways to compete with them directly. Just look at Volvo’s sub- scription service program. Dealers need to know what protections New Jersey law affords, so they are prepared to push back, when necessary. Two-Tier Pricing. Two-tier pricing programs, and the frequent changes made to them, are confusing to salespersons and consumers, often favor larger dealers over smaller dealers and result in distrust by the public, which can impact brand loyalty. New Jersey’s Motor Vehicle Franchise Practices Act (“FPA”) is very explicit when it comes two-tier pricing. In 2011, amendments to N.J.S.A. 56:10-7.4(h) require motor vehicle manufacturers to sell all comparably-equipped motor vehicles to all dealers in New Jersey at the same price, without any differential in discount, allowance, credit or bonus. Accordingly, manufacturers’ incentive programs that compensate dealers at increasing levels (retroactive to the first sale of the month), if certain sales objectives are reached at the end of the month, are patently unlawful. Facility Mandates by the Manufac- turer. An amendment made to the FPA in 2011 makes it unlawful for automakers to compel their dealers to make financial- ly unjustified facilities modifications or to punish or deny benefits to dealers who do not comply with such demands. Under N.J.S.A. 56:10-7.4(l), a manufacturer violates the FPA if it seeks: “To require or attempt to require a motor vehicle franchisee to relocate his franchise or to implement any facility or operational modifi- cation or to take or withhold or threaten to take or withhold any action, impose or threaten to impose any penalty, or deny or threaten to deny any benefit as a result of the failure or refusal of such motor vehicle franchisee to agree to any such relocation or modification, unless the motor They All Impact Your Business… Fortunately, NJ Law Provides Dealers With Many Protections