Assembly Bill A314

                                BILL NUMBER:A314

TITLE OF BILL:
An act to amend the vehicle and traffic law, in relation to the financ-
ing of inventory by franchised motor vehicle dealers

PURPOSE OR GENERAL IDEA OF BILL:
To prevent a motor vehicle manufacturer from making the terms of sale or
lease of a motor vehicle department upon whether a franchised motor
vehicle dealer accepts inventory financing from a motor vehicle manufac-
turer or a corporation affiliated with the manufacturer.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends Section 463 of the Vehicle and Traffic Law by adding a
new paragraph (bb) to subdivision two of that section to prohibit a
franchisor from conditioning sales incentives or favorable finance terms
on a dealer's acceptance of floor financing from the franchisor or a
corporation affiliated with the franchisor.

Section 2 adds a new subdivision 2-c to section 463 of the Vehicle and
Traffic Law to prohibit a corporation affiliated with a franchisor from
tying favorable financing terms, sale or lease terms, or other favorable
treatment, to a dealer's willingness to place its floor financing with
the affiliate.

STATEMENT OF SUPPORT:
              

New motor vehicles are distributed through a long standing franchise
system. Under the system, motor vehicle manufacturers contract with
motor vehicle dealers, providing those dealers with a franchise to sell
and service that manufacturer's vehicles.  As franchisees, the dealers
make substantial investments and take on substantial responsibilities.
They must display vehicles in accordance with manufacturer's standards,
train personnel, and make substantial investments in product and equip-
ment.

The New York Franchised Motor Vehicle Dealer Act was enacted to regulate
the relationship between dealers and manufacturers.  Recently, a prac-
tice has developed under which a manufacturer, through its affiliated
financing corporation, has made certain sales and leasing incentives
available only to or through those dealers who secure their inventory
financing, i.e.  floor financing, through the manufacturer's affiliated
financing corporation. This has resulted in situations, for example,
where a consumer can receive advertised lease terms at some dealers but
not at others. In other circumstances, the manufacturer has imposed less
favorable payment terms on non-participating dealers. This bill would
address those practices by prohibiting a manufacturer/franchisor from
linking a franchised dealer's choice of financing to the availability of
sales and 1 case terms to the franchised dealer's customers, or from
otherwise treating such dealers or this customers less favorably than
dealers who secure financing through the franchisor's affiliated corpo-
rations.

LEGISLATIVE HISTORY:
A.213 of 2008, A.684 of 2006, A.368 of 2004, A.707 of 2002, A.7564 of
2000

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.