EXTERNAL AFFAIRS AND PUBLIC POLICY—AUBURN HILLS 

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  State Relations: A Value and Service Organization

  Legislative Activity

•  Bills Reviewed

•  Bills Tracked

•  Regulations Reviewed

•  Regulations Tracked

 H.R. 2927 IS SUPERIOR
TO BOTH THE SENATE ENERGY BILL (H.R. 6) AND TO H.R. 1506

H.R. 2927 sets rigorous standards for automobile fuel economy that are very challenging but achievable – a combined fleet average that will be between 32 mpg and 35 mpg in Model Year 2022. 

• Senate Energy bill requires standards that would attain a combined fleet of 35 mpg by Model Year 2020 – this goal is more ambitious than technology alone can absorb; it would force undesired mix shifts toward smaller vehicles.


• H.R. 1506 requires a completely unrealistic 4%/year increase in CAFE standards, coupled with a requirement for a combined fleet that attains 35 mpg by MY 2018 – an unachievable goal without massive mix shifts.


• H.R. 2927 respects the important functional differences between passenger cars and light trucks/SUVs.


• Senate Energy bill dissolves this distinction and authorizes a combined CAFE standard. A combined standard  would diminish the importance of the functional needs of light trucks/SUVs, such as cargo carrying capacity and towing capability, in the standard-setting process, and would adversely affect consumer choice.


• H.R. 1506 likewise dissolves the distinction between passenger cars and light trucks/SUVs and would extend CAFÉ standards to large work trucks.


• H.R. 2927 protects the manufacturers’ ability to earn and use credits for exceeding a standard – an important compliance flexibility provision that has been part of the law for more than a quarter of a century.


• Senate Energy bill deprives manufacturers of the ability to earn credits for exceeding the current passenger car standard, or for exceeding the new, increased standards to be effective in MY 2011 and thereafter.


• H.R. 2927 requires standards to be set at the “maximum feasible” level – a term that is defined in current law to include technology considerations as well as economic considerations that encompass protection of domestic employment in the auto sector and manufacturer compliance costs.


• Senate Energy bill redefines “maximum feasible” to include considerations of foreign policy, political instability in unfriendly countries, oil pipeline spills, and many other factors with which NHTSA has no expertise, and to diminish considerations of domestic employment and manufacturer compliance costs.


• H.R. 1506 likewise revises this well-understood term of art to include considerations of foreign policy, political instability and other factors with which NHTSA has no expertise, and to diminish considerations of domestic employment and manufacturer compliance costs.

  Warranty Reimbursement

The Alliance of Automobile Manufacturers opposes legislation which authorizes new car dealers to charge inflated retail prices for parts used in warranty repairs while prohibiting manufacturers from recouping their costs of doing business.

Current Situation 

Parts used for warranty repairs are provided to dealers at a wholesale price. Manufacturers reimburse dealers for those parts when they are used in warranty repairs at the wholesale price plus a company determined markup generally upwards of 40%.

Currently, 25 states have language on the books allowing dealers to claim “retail” for parts used in servicing vehicles under warranty. “Retail” typically means the price the dealer charges his/her non-warranty customers for the same part.
[AL, AR, FL, IL, KY, LA, ME, MA, MN, MT, NE, NV, NH, NJ, NM, NY, NC, OH, OK, OR, UT,VT, VA, WV, WI]

Example:

• FLA. STAT. § 320.696: “… reasonable compensation for work, including labor and parts, by a motor vehicle  dealer for warranty repairs or service…shall be determined to be equal to the amount charged by the dealer  for like work to retail customers for non-warranty repairs and service…”
• VA. CODE ANN. § 46.2-1571: “Compensation of a dealer for warranty parts, service and diagnostic work shall  not be less than the amounts charged by the dealer for the manufacturer's or distributor's original parts,  service and diagnostic work to retail customers for nonwarranty service, parts and diagnostic work installed or  performed in the dealer's service department unless the amounts are not reasonable.

• W. VA. CODE § 17A-6A-8a: “(3) It is a violation of this section for any manufacturer, distributor, wholesaler or  representative to require any dealer to pay in any manner, surcharges, limited allocation, audits, charge backs  or other retaliation, if the dealer seeks to recover its non-warranty retail rate for warranty and recall work.”
• FLA. STAT. § 320.696: “A licensee may not otherwise recover, or seek to recover, any of its costs for  compensating a motor vehicle dealer for warranty work, including labor and parts, by imposing on a motor  vehicle dealer any charge or surcharge to the wholesale price paid by a motor vehicle dealer to the licensee for  any product, including motor vehicles and parts.”
• VA. CODE ANN. § 46.2-1571: It shall be unlawful for any motor vehicle manufacturer to: Fail to fully  compensate its motor vehicle dealers … for warranty parts, work, and service… either by reduction in the  amount due to the dealer or by separate charge, surcharge, or other imposition by which the motor vehicle  manufacturer, factory branch, distributor, or distributor branch seeks to recover its costs of complying with  subsection A…”

  The Alliance Position

• Making it a statutory violation for a manufacturer to require a dealer to pay a surcharge when the dealer seeks to recover an excessive reimbursement amount for parts used, unfairly mandates that a manufacturer subsidize any unreasonably high warranty parts price the dealer chooses to charge.
• This is an unreasonable and expensive burden placed on manufacturers when there are no cost controls imposed on a dealer.
• Reimbursement price for warranty parts should not be left solely up to the unbridled discretion of the dealer in determining what is a legitimate and reasonable reimbursement amount.
• In many states, manufacturers may challenge excessive warranty parts and labor costs in a DMV proceeding, however the manufacturer is limited to proving that the labor and parts charges the dealer uses are “improper in light of all economic circumstances”. This is a vague and one-sided test.
• This legislation is a solution in search of a problem – very, very few dealers seeking to
• recover retail reimbursement rates are met with manufacturers refusing to comply.
• Consumers are penalized because the proposed legislation encourages dealers to establish high retail parts prices and labor rates to secure unreasonable profits for warranty work.
• Remember, only new motor vehicle dealers are authorized to perform warranty repairs. It is a captive business for them with no competition from independent repair shops and no selling expense. The higher dealer warranty prices for parts results in increased costs for purchasing, maintaining and repairing new motor vehicles. These costs ultimately are passed on to car buyers in the form of higher new car prices.
• This provision violates the commerce clause of the U.S. Constitution by regulating commerce outside the state and unconstitutionally favoring one state’s dealers over other dealers and manufacturers.

Websites of Interests 

 State sites: 
State of Arizona – www.az.gov
State of California – www.ca.gov
State of Colorado – www.colorado.gov
State of Delaware  – www.delaware.gov
State of Florida – www.myflorida.com
State of Georgia – www.georgia.com
State of Indiana  – www.in.gov
State of Illinois  – www.illinois.gov
State of Massachusetts – www.mass.gov
State of Michigan – www.mich.gov
State of Minnesota – www.state.mn.us
State of Missouri  – www.mo.gov
State of New York – www.ny.gov
State of Ohio – www.oh.gov
State of Oregon – www.oregon.gov
State of Tennessee – www.state.tn.us
State of Wisconsin – www.wisconsin.gov

Alliance – www.autoalliance.org
The Alliance of Automobile Manufacturers is a trade association of 10 car and light truck manufacturers including BMW Group, Chrysler LLC, Ford Motor Company, General Motors, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche, Toyota and Volkswagen.

ECO Drive – www.ecodrivingusa.com

NADA – www.nada.org
The National Automobile Dealers Association, founded in 1917, represents more than 19,700 new car and truck dealers, both domestic and international, with more than 43,000 separate franchises
 
National Governors Association -  www.nga.org
The National Governors Association--the bipartisan organization of the nation's governors--promotes visionary state leadership, shares best practices and speaks with a unified voice on national policy.

National Conference of State Legislatures - www.ncsl.org
The National Conference of State Legislatures was founded in 1975 with the conviction that legislative service is one of democracy's worthiest pursuits. NCSL is a bipartisan organization that serves the legislators and staffs of the nation's 50 states, its commonwealths and territories. NCSL provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues. NCSL is an effective and respected advocate for the interests of state governments before Congress and federal agencies.

US Conference of Mayors – www.uscm.org
The U.S. Conference of Mayors (USCM) is the official nonpartisan organization of cities with populations of 30,000 or more. There are 1,139 such cities in the country today. Each city is represented in the Conference by its chief elected official, the mayor.

The Democratic Party – www.democrats.org
Republican National Committee – www.rnc.org

Democratic Governors Association  – www.democraticgovenors.org
The Democratic Governors Association (DGA) is an independent voluntary political organization organized to support the candidacies of Democratic gubernatorial nominees and incumbents across the nation.

Republican Governors Association –  www.rga.org

Stateline.org – www.stateline.org
Stateline.org is a nonprofit, nonpartisan online news site that practices journalism in the public interest by reporting on emerging trends and issues in state policy and politics.

Governing. Com - www.governing.com/politics.htm
Governing is a monthly magazine whose primary audience is state and local government officials: the governors, mayors, legislators, council members, program directors, agency heads, policy advisors and other officials spanning the entire range of responsibility for state and local government.

Real Clear Politics.com – www.realclearpolitics.com
RealClearPolitics.com (RCP) has become one of America’s premier independent political web sites. Updated every morning and throughout the day, RCP culls and publishes the best commentary, news, polling data, and links to important resources from all points of the political compass and covering all the important issues of the day.

American Association of Retired Persons (AARP) -www.aarp.org/makeadifference/politics
AARP is a nonprofit membership organization of persons 50 and older dedicated to addressing their needs and interests.

Political Resources On-line - http://www.politicalresources.com/
Political Resources On-line provides tools for candidate, issue, and corporate campaigns


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Upcoming Events

• 14th Annual Bowhay Institute for Legislative Leadership, August 8 – 12, 2008, Madison, WI
• Center for Automotive Research Management Briefing Seminars, August 11-15, Traverse City, MI
• Democratic National Convention – August 25 – 28, 2008, Denver, Co
• Republican National Convention – September 1 – 4, 2008, Minneapolis, MN
• Women in Government  Western Regional Conference – September 11- 13, Santa Fe, NM
• National Speakers Conference – September 17 – 21, 2008, Providence, RI
• Election Day – November 4th

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