Legislative Memo

Johnny Evers
Director of Government Affairs
T 518.694.4463


S.7545-A (Funke) / A.8268-B (Pheffer-Amato)



Vehicle Safety Recalls



May 11, 2018


The Business Council of New York State, Inc., the leading state business and industry trade association comprised of over 2,500 members, opposes this legislation that would mandate payments from automobile manufacturers to its dealers for vehicles in their inventory that are subject to “stop drive” orders.

The bill requires payments from manufacturers to new car dealers for used vehicles in inventory that are not available for sale due to an outstanding safety recall. Under this bill, cars subject to a “stop drive” directive would be subject to a payment from the manufacturer of 1.75% per month of the average trade-in value of the used vehicle. This equates to an annualized rate of 21%. For as long as the dealer is unable to sell, offer to sell, or repair such vehicle (due to inability to satisfy any recall issues) the payments under Section G of the bill would continue from manufacturer to dealer.   

Our major objection to this bill is that it attempts to insert State government into the contractual relationship between the manufacturer and dealer. This is not the message New York State should be sending to the manufacturing community.

Automakers and dealers are private concerns. In researching the scenarios outlined in the bill, we find no public justification for this legislation. Rather, it is one participant in an industry stating that they have an issue with another participant, in so doing, is seeking redress from the State government via the imposition of fees on manufacturers.

It is inappropriate public policy to the State to interfere with contracts entered into by private businesses. The automobile industry is based on consumer demand and technology changes. It is, in a sense, ever changing. This industry should not be hampered by protectionist State laws that, in the end, harm consumers through increased costs to manufacturers.

For the above stated reason, The Business Council opposes this legislation.