The Business Council opposes this legislation that would mandate that automobile manufacturers make significant and unwarranted payments to auto dealers in certain cases where used vehicles cannot be sold because of a safety recall. This bill has the potential to negatively impact both manufacturers and New York State consumers.
Auto manufacturers voluntarily support their dealers in a number of ways to ensure that customers have the very best sales and service experience. However, this bill is based on the false premise that a state law is needed to compel payments to dealers or else they will suffer grave financial harm – a premise that is not supported by historical facts in the industry and has not been substantiated by any actual current data.
Additionally, most manufacturers already have voluntarily implemented programs to help dealers defray reasonable costs which may be associated with recalls affecting used vehicles in the dealer’s inventory.
Specifically, this legislation would mandate that manufacturers to compensate dealers at monthly rates of as much as 3.46% (an annualized rate of a 41.52%) of the value of a used car calculated over the course of one year. In addition, it would require manufacturers to purchase such used vehicles from dealers under certain circumstances. Studies show that the cost of legislation like this are ultimately paid for by consumers, with the main effect of simply increase income to dealers.
It is bad public policy for the state law to interject itself into contracts entered into by sophisticated private businesses. Moreover, this bill sends a message to all manufacturers that New York is hostile to their interests. The automobile industry is always changing based on consumer demand and technological innovation. It should not be impeded by protectionist state laws that ultimately harm consumers.
For these reasons, The Business Council opposes adoption of A.8268.