Legislature(2005 - 2006)
03/27/2006 03:38 PM House L&C
| Audio | Topic |
|---|---|
| Start | |
| SB255 | |
| SB273 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 273-MOTOR VEHICLE SALES 3:50:55 PM CHAIR ANDERSON announced that the next order of business would be SENATE BILL NO. 273, "An Act relating to a motor vehicle dealer's selling or offering to sell motor vehicles as new or current models or as new or current model motor vehicles having manufacturer's warranties." 3:51:12 PM RYAN MAKINSTER, Staff to Senator John Cowdery, Alaska State Legislature, sponsor, explained that SB 273 corrects a problem in AS 08.66.015, which resulted from changes made in 2004. He said that the Department of Law (DOL) was directed to submit a report to the legislature outlining any consumer or enforcement problems associated with the aforementioned changes. He stated that in its report to the legislature, the department concluded that the 2004 change in statutory language was not needed and instead created a problem for consumers and used car dealers. He said that currently, it is illegal to sell a current model used vehicle. 3:53:57 PM MR. MAKINSTER noted letters of support from the Alaska Auto Dealers Association and the Department of Law. He said that during the previous legislative session, two bills were introduced in an attempt to deal with this issue; however, the language became complicated, and as a result, the current legislation was introduced. He added that this legislation was introduced at the recommendation of the department. REPRESENTATIVE LEDOUX asked why, if the problem resulted from legislation that was not needed, the sponsor does not repeal the statute. MR. MAKINSTER replied that the department requested that this portion be removed in order to enforce the law. CHAIR ANDERSON clarified that there are portions of the aforementioned statute that are needed. REPRESENTATIVE LYNN asked if the bill addresses warranty issues with Canadian vehicles. MR. MAKINSTER replied no. He stated that, according to the department, this has not been a large concern. He noted that there are other issues regarding warranties, which fall under the "advertising [provision]." 3:57:41 PM CHAIR ANDERSON commented that these issues were addressed previously, along with the issue of recertifying Canadian vehicles with fewer than 2,000 miles as a new vehicle. MR. MAKINSTER agreed, adding that there are many issues in this area; however, SB 273 does not deal with these. 3:58:16 PM REPRESENTATIVE LYNN commented that disclosure [of a used vehicle] was part of the problem. 3:58:52 PM REPRESENTATIVE CRAWFORD noted that [AS 08.66.015(b)] is repealed. He quoted from AS 08.66.015(b), which reads: (b) A person who does business as a dealer in the state may not offer to sell or sell a motor vehicle as a new or current model motor vehicle having a manufacturer's warranty unless (1) the dealer has a current sales and service agreement with the manufacturer and the agreement requires the dealer, upon demand of the motor vehicle buyer, to perform or arrange for, within a reasonable distance of the dealer's place of business in the state, the repair and replacement work required of the manufacturer under the warranty; or (2) the dealer offers to give the buyer a rebate to cover the repair and replacement work that the dealer cannot perform or arrange for within a reasonable distance of the dealer's place of business. REPRESENTATIVE CRAWFORD opined that removal of this section would result in less consumer protection. 3:59:49 PM MR. MAKINSTER replied that this section is part of the problematic language. He explained that if a car dealer is selling a vehicle with a manufacturer's warranty, the contract requires that the car dealer perform the services as stated in AS 08.66.015(b). He stated that this section was written for dealers selling a service contract as a manufacturers warranty; however, this did not address the problem. 4:00:56 PM MR. MAKINSTER went on to say that the current language is "redundant." In addition, he said, current model vehicles have a manufacturer's warranty that travels with the vehicle, regardless of where it is sold. He stated that if the statute is left as it is, only dealers that hold an agreement with the manufacturer would be able to sell current model used vehicles. 4:02:01 PM MR. MAKINSTER, in response to a question, stated that under current law, used car dealerships are unable to sell a current model used car. 4:03:21 PM MR. MAKINSTER, in response to additional questions, explained that according to the manufacturers warranty, [the car dealership which holds a contract with the manufacturer] is required to perform service or pay to have the service performed. He stated that [AS 08.66.015(b)] merely reiterates this. REPRESENTATIVE GUTTENBERG remarked that if the dealership were to burn down, for example, the consumer would not be able to receive warranty work. He surmised, then, that this would place the burden on the consumer. He opined that it would be more difficult for the consumer to request payment than for the dealership. In addition, he said that if this is currently in statute, he does not see a reason to repeal it. MR. MAKINSTER replied that if something were to happen to the dealership, the consumer would simply go to the closest dealership. CHAIR ANDERSON read an example from the letter of support from the Alaska Auto Dealers Association, which reads in part [original punctuation provided]: For example, we are a GMC dealer and are currently selling 2007 GMC Yukon's. The 2008 model will not come out until August of 2007. If a customer wanted to trade that vehicle in at any other new or used dealership other than a GMC dealer, they could do so, but the dealer would not be allowed to sell the trade in until August of 2007, when the vehicle is no longer "current model". Obviously, this scenario is detrimental to the dealer and consumer who will be penalized monetarily if the dealer can not sell the trade in for eighteen months. 4:08:46 PM MR. MAKINSTER, in response to a question, stated that [10-30] current model vehicles are returned [annually] per dealership, and this is overlooked. He said that if the violations were enforced, the penalty would be up to $5,000 per violation. He opined that this cost would be passed on to the consumer. Therefore, this legislation would help the consumer [by removing the aforementioned language]. In regard to an earlier comment, he reiterated that if left in, subsection (b) would limit current model used car sales to new car dealerships, as used car dealerships do not meet the current statutory requirements. 4:10:22 PM REPRESENTATIVE CRAWFORD replied that the operative word is "or," and added that this "seems to be a reasonable safeguard" which will enable the consumer to receive warranty work. CHAIR ANDERSON informed the committee that the bill will be held over, as further clarification is needed. REPRESENTATIVE GUTTENBERG said that while he understands the intent of the bill, he is concerned with removing [subsection (b)] 4:11:21 PM REPRESENTATIVE LEDOUX agreed with this concern. CHAIR ANDERSON opined that there is a misunderstanding, and suggested that the [department] testify at the next hearing. MR. MAKINSTER noted that the language came from the department. 4:11:56 PM REPRESENTATIVE KOTT asked why there is not an immediate effective date, if the statute is not currently being enforced. MR. MAKINSTER replied that the department would be able to answer this question [at the next committee hearing]. [SB 273 was held over.]
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