Legislature(2005 - 2006)BELTZ 211
03/17/2005 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB102 | |
| SB124 | |
| SB131 | |
| SB138 | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 131 | TELECONFERENCED | |
| *+ | SB 138 | TELECONFERENCED | |
| += | SB 124 | TELECONFERENCED | |
| += | HB 102 | TELECONFERENCED | |
| += | SB 130 | TELECONFERENCED | |
SB 138-MOTOR VEHICLE DEALER SALES
CHAIR CON BUNDE announced SB 138 to be up for consideration.
SENATOR SEEKINS moved to adopt CSSB 138(L&C), version G, for
discussion. There were no objections and it was so ordered.
CHAIR BUNDE asked Mr. Sniffen to explain the differences.
ED SNIFFEN, Department of Law (DOL), said he is the attorney who
handles all of the consumer protection issues that come with
automobiles in the State of Alaska. The reason the language in
AS 08.66.015 is the way it is currently is because of a concern
with auto brokers some years ago who were selling used cars as
new vehicles. A lot of those problems are no longer prevalent in
auto transactions today, but there is some question about when a
used car dealer should be allowed to obtain a low-mileage
vehicle and sell if off their used-car lot as a used car even
though it might have the appearance of a new car. There were
concerns about warranty and odometer issues with cars imported
from Canada and the lemon. Those were addressed through
amendments to another statute that require auto dealers to
disclose those issues to consumers.
2:40:02 PM
He wanted a balanced fix to the problem of allowing new and used
car dealers to sell products and not interfere with the free
flow of commerce. He proposed in his report:
The first one was to simply remove the language
"current model vehicle" from the statute, which would
essentially allow anyone to sell a vehicle as a used
vehicle as long as it had been sold once and the
vehicle lost its manufacturer's statement of origin
(MSO), which is a document that comes from the factory
with a new car that is surrendered to the Department
of Motor Vehicles (DMV) as soon as a car has been
titled to a first purchaser.... Then we would leave
these other issues related to low mileage, current
model vehicles showing up on car lots - we would leave
that to the auto dealers and their manufacturers to
resolve, because that really doesn't involve too many
enforcement issues with our office.
The second proposal I made and, I think, the committee
substitute that you have before you is premised on the
second proposal is essentially adopted from Washington
State's DMV's approach to this problem. They deal with
some related issues being a border state with Canada
and they have decided in their code to define new
motor vehicles to mean motor vehicles that have 3,000
miles or less or have been titled for 90 days or less
- and you can't sell a vehicle unless it meets that
requirement unless you are a new car dealer. And there
is an exception to that rule that allows for the
resale of a vehicle if it was actually a vehicle
purchased by a bona fide purchaser and that is defined
to mean someone who actually bought the car to use it
as opposed to a broker who is actually buying a car
just for the purpose of reselling it.
The CS has language that allows for that arrangement. The
department's concern is to fix language in AS 08.66.015, because
now no car dealer, new or used, can sell a used current model
vehicle. He thought it was an oversight.
CHAIR BUNDE asked if the new definition of "new vehicle" takes
care of that problem.
MR. SNIFFEN replied yes.
2:45:45 PM
STEVE ALLWINE, Alaska Automobile Dealers Association, supported
CSSB 138(L&C) and agreed with Mr. Sniffen's synopsis of the
issue. Currently, new car dealers who sell used cars are in
violation of this statute, which was an unintended consequence
to the legislation.
2:49:26 PM
CHAIR BUNDE said that 3,000 miles is a lot of miles.
STEVE ALLWINE said that "demonstrators" are still under the MSO
and it must be disclosed that it is demonstration vehicle, but
they are still new vehicles.
CHAIR BUNDE asked him to comment on the 90 days difference
between 120 days and 30.
MR. ALLWINE replied that 90 days is a compromise.
This precludes people from manufacturing used cars....
In other regions of the country, manufacturers may
pile on some significant incentives because they have
huge inventories. If they put those incentives on and
somebody walks in there to buy one of those cars...
those incentives may be significant enough that it
allows them to manufacture a used car, bring it to
this side of the world and dump here in Alaska.
Now, that vehicle, depending on the manufacturer, also
may or may not include any manufacturers warranty. If
you put a 90-day or a 120, or 150 or a 180-day time on
it, if they want to manufacture a used car, they are
going to pay the interest on that money for that
period of time. What that does is it slows them down
from doing that. That's the reason we feel the 90 or
120 or 150 is more than appropriate. If you went with
a 30-day number, I think that would be a cursory
number; it would have zero impact.
2:51:15 PM
SENATOR SEEKINS disclosed that he has been an automobile dealer
in Alaska since 1977.
2:52:07 PM
There are ways to obtain a vehicle from the black market or from
another country where the exchange rate is different and not
increase the price. However, the manufacturer takes a lesser
profit than if they sold it to a dealer in the United States. He
explained:
As a result of that, in the exchange rates, there may
be automobiles that come into the market that a broker
can buy and turn around and sell at a reasonable
profit for less money than a franchise automobile
dealer can buy from their own manufacturer. In some
cases, for some manufacturers, those vehicles that do
cross the international border no longer carry a
warranty on them from the fact that - Chrysler
Corporation was one of them that I'm aware of - that
dropped the warranty. I believe Daimler Benz may have,
Honda may have, Chevrolet, General Motors may have -
I've seen lists and I think that those four, maybe
Toyota, as well have it, but I'm not sure of all the
manufacturers. I just know that some of them don't do
that.
So, when it comes time, then, for someone who has a
used car license in a temporary facility that's on the
corner of a lot somewhere - will attempt to sell that
vehicle and misrepresent it as a vehicle with a
warranty. Because all automobiles in the United State
that are bought in the United States, the warranty
follows that vehicle, not the owner. And all of a
sudden, the person finds out they don't have a
warranty. But they may have been sold a service
contract that was represented as a warranty. So
there's a lot of misrepresentation that can take place
in that process and I think probably the best police
that are out there of other dealers are automobile
dealers, themselves. When they see someone who is not
living up to the standards of the law, it's not
unusual for them to make a phone call to Mr. Sniffen
or someone else in the DMV or Department of Law and
say this dealer is not complying with the law....
2:57:18 PM
Franchise dealers who feel they must meet the needs of their
community by providing expensive servicing are at a disadvantage
because of the loophole. There are also problems with people are
buying cars without knowing for sure.
2:58:04 PM
MR. ARPINO, Affordable Used Cars, said he is located in both
Fairbanks and Anchorage. He supported the CS with the timeframe
and mileage. He said it would help clarify current law which is
not working.
ART HOUSER, Alaska Park and Sell, agreed that the loopholes have
to be closed. The only issue he has is that using 3,000 miles
and 90-days for a new vehicle is that there are still loopholes.
For long-term benefits, the bill has to be kept
simple. If it's got an MSO, it's a new vehicle; if
it's got a title, it's a used vehicle.
2:59:44 PM
RICK MORRISON, Auto Dealers Association, agreed that the law
needs to be clarified or there could be a class action suit. He
supported CSSB 138(L&C).
3:03:24 PM
CHAIR BUNDE asked if he thought industry would be self-policing.
MR. MORRISON said he thought that would help. The current law is
very vague.
If you are in the new car business and are a franchise
dealer, you have paid thousands of dollars for tools;
you've paid thousands of dollars for training; you've
paid millions of dollars for a facility and all in
order to take care of the consumer....
He concluded saying that this bill gives the consumer an
opportunity to defend himself and gives other dealers in the
area something to stand on.
WAYNE BANNOCK, Division of Motor Vehicles, said he works very
closely with dealers and has some concerns with version G. His
comments were on section (d)(2), but didn't concern the mileage
or the timeframe.
DMV believes that the definition of a new motor
vehicle is limited to that of a vehicle that retains
its MSO or MCO. Once a vehicle has been converted to a
titled vehicle, it is a used vehicle. What is
described in (d)(2)(b)(1) and (2) is indeed a used
vehicle. It is a very slightly used vehicle, but it is
without exception a used vehicle. Now recognizing the
industry, recognizing some of the excellent points
that have been made by the speakers before me, with
your permission, sir, I would like to propose an
alternative that I think may solve both the DMV's
problem and adequately addresses the other speakers as
well.
3:05:48 PM
If the language of (d)(2)(b)(1) and (2) is written in
the affirmative and is placed in section (c)(4),
(c)(4) would then read, 'The vehicle has been operated
in excess of 3,000 miles or titled and registered in
more than 90 days.'
Section (c) speaks to what cars can be sold. So, what
it says in section (c), if that were to be adopted, is
that it is definitely a used car. We're recognizing
that it's a used car and it can be sold if it meets
that threshold of 3,000 miles or more than 90 days....
So, I believe from the speakers we've heard from
before, it would accomplish the exact same effect, yet
it would not put the State of Alaska in the awkward
position of attempting to define a slightly used car
as a new car.
CHAIR BUNDE thanked him for the suggestion. He said he would
hold the bill for a further hearing.
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