- 2005. MTADA offered no legislation regarding the Montana Dealer Law during the 2005 session. The session concluded with a favorable resolution of most of the bills of general interest to the business community that MTADA took an interest in.
- 2007. MTADA offered legislation to permit franchised dealers to display and sell new cars at off-site, out-of-county events where the subject county has no franchised dealers but is part of a given dealer’s “area of responsibility.” In 2007, Montana had 22 counties with no franchised dealer. MVD and the OEM’s supported the proposal which was enacted. Other legislation offered and enacted in 2007 included:
- 61-4-123(3)(b) was revised to permit vehicle storage on property owned, leased, or rented by a dealer but not contiguous to the dealer’s established place of business.
- MVD bill was enacted regulating automobile brokers with support from MTADA. It allows a joint commercial endeavor (Costco) display, limited to 90 days in any calendar year.
- 2009. MTADA succeeded in its efforts to significantly amend 61-4-202. Changes adopted include:
- Requiring that warranty and incentive payments be paid in 30 days of receipt of the claim from the dealer and prohibiting an OEM from denying warranty claims based solely on a dealer’s incidental failure to comply with a specific claim processing requirement that does not put into question the legitimacy of the claim and prohibiting an OEM from adding fees or surcharges or raising prices in Montana to make up for the requirement that warranty parts and services be reimbursed at retail rates.
- Prohibits an OEM from considering a dealers performance relating to the sale of new motor vehicles or ability to satisfy any minimum sales or market share quota in determining eligibility to purchase program, certified or other used vehicles; to determine the volume, type or model of program, certified or other used motor vehicles the dealer is eligible to purchase; the price or prices of any program, certified, or other used motor vehicles that the dealer is eligible to purchase; or the availability or amount of any discount, credit, rebate or sales incentive that the new motor vehicle dealer is eligible to receive for the purchase of any program, certified, or other used motor vehicles.
- Prohibiting an OEM from penalizing a dealer for a vehicle sold that ended up in a foreign country and adding a rebuttable presumption that the dealer did not know or could not have reasonably known that the vehicle would be shipped to a foreign country if the motor vehicle is titled in one of the 50 States.
- Requires compensation to a dealer when an OEM drops a line-make.
- 2011. MTADA offered no legislation regarding the Montana Dealer Law during the 2011 Session but, in conjunction with other business associations, took positions in opposition to anti-business bills.
- 2013. MTADA’s efforts resulted in adoption of the following legislation during the 2013 Session:
- Permitting Demo Plates to be used on service loaners. (This language has now been replaced by the Loaner Plate authority passed during the 2019 Session.)
- 61-3-201(2)(c) was amended to allow a non-resident with a place of abode in Montana to register a vehicle here.
- 30-11-705 was amended to require an OEM to repurchase special equipment and signs from a terminating dealer.
- 61-4-207 was amended to provide that the desire of an OEM for reduced presence in the state is not good cause for termination of a dealer.
- 61-4-208 was amended to prohibit an OEM from requiring goods or services be purchased from its preferred vendor where the goods or services of like kind, quality and design are available from a vendor of the dealer’s choice.
- 2015. MTADA offered no legislation during the 2015 session. MTADA did cooperate with the MDV on a few revisions particularly revising the requirement that dealers have actual possession of titles on used units before sale. Copies are permitted.
- 2017. MTADA saw the following legislation adopted during the 2017 Session:
- The OEM’s contractual right of first refusal was declared unenforceable in Montana.
- The statutory language describing what constitutes “good cause” for termination of a dealer in 61-4-207 was amended to require that the analysis of the subject dealer’s sales consider those metrics that are essential, reasonable, not discriminatory and that take into account the dealer’s local market variations beyond adjusting for the local popularity of general vehicle types.
- Adding language to the luxury tax provisions to exclude motor vehicles and the sale, lease, rental, loan or providing of any item, product or service by a “franchisee” (a dealer) as that term is defined in 61-4-201(7).
- 2019. The 2019 Session was a big success for MTADA and Montana dealers. Several “real life” issues Montana dealers experienced over the prior few years were dealt with. Each change arose from circumstances where one OEM or another or a third-party vendor aligned with an OEM exerted their economic power and employed their heavy-handed tactics to take unfair advantage of several Montana dealers. These modifications address:
- Recognition that dealers collect information from their customers and store that information in electronic data management systems and the manner in which third parties can access and use the information is controlled by the dealer who owns the data.
- Clarifying the OEM’s obligation to a dealer whose franchise agreement is cancelled by requiring that signs and special tools must be repurchased and adding a timeline for payment with financial penalties for non-payment.
- Adding retirement of the dealer to the circumstances where an OEM is required to honor the designation of a family member as successor dealer for the franchise.
- Revising the method to be used in setting the warranty reimbursement rate. The new provisions completely replace the prior language of the Code regarding warranty reimbursement.
- Further revising the add point provisions, limiting the frequency of add point attempts, requiring additional information on the new dealer be included in the notice and allowing a dealer who successfully objects to recover his costs and attorney fees.
- 2021 Session. MTADA’s Legislative program for the 2021 Session included updates to the 2019 warranty laws allowing use of the dealer’s retail labor time guide, provides for the issuance of loaner plates, provides for mediation and administrative hearings before the MVD for dealer/OEM disputes and authorizes MTADA to act as the Plaintiff in general interest litigation against an OEM.
- Resolution of OEM / dealer disputes was changed by creation of a mandatory mediation process as the first step to resolution of any kind of dispute between an OEM and a dealer. If unsuccessful, the next step is the filing of a petition with DMV following the same procedures used for dealer termination proceedings. The decision of the hearing officer is still subject to appeal to state District Court and the Montana Supreme Court.
- 2023 Session. MTADA’s successful legislative program for the 2023 Session sponsored by Sen. Barry Usher concluded with a celebratory signing by Governor Gianforte on May 4, 2023. Senate Bill 411, as passed and signed by the Governor addresses the following issues:
- Update to Data Privacy Law. MTADA was successful in seeing a data privacy and protection statute enacted into law in the 2019 Session as 30-11-717, 718 and 719. The existing law was similar to AZ, but not identical. The AZ law was upheld by the 9th Circuit Court of Appeals. SB 411 revised the Montana statutes to mirror the provisions of the approved AZ law.
- Update Definition of “Motor Vehicle”. The definition of Motor Vehicle was revised to include motorboats. Personal watercraft (i.e.: jet skis) were already included in the definition and it appeared omitting motorboats may have been an oversight. The effect of this amendment is to give motorboat dealers the same statutory protections afforded to jet ski dealers.
- Written Franchise Agreement Required. 61-4-202(3) does not specifically state that the motor vehicle OEM and dealer will enter into a written franchise agreement although industry practice requires it and other provisions of the code seem to assume that the franchise agreement be in writing. SB 411 updates the code to make it clear that a written franchise agreement is required by adding subsection (e) to 61-4-202(3).
- Limitation on OEM’s Ability to Limit Dealer’s Choice of Vendors. Many OEMs are embarking on a course of conduct to inject themselves into the retail relationship between the dealer and his customer by requiring the dealer to use an OEM’s handpicked data management firm — always more expensive — and excluding the dealer’s historic free choice to pick the provider that offers the required services and the best price. 61-4-208(1)(a)(v) already prohibits such conduct by OEMs in the acquisition of goods or services generally. SB 411 amends the code section to make it clear that the prohibition also includes interfering with the motor vehicle dealer’s choice of data management system or digital retail platform and prohibits the OEM from withholding any benefit including monetary incentives and vehicle allocation.
- Limitation on OEM’s ability to involve itself in the retail sale of motor vehicles-the “Agency Model”. As noted above, many OEMs embarked on a recent course of conduct to inject themselves into the retail relationship between the dealer and his customer. This initiative is generally referred to as the “Agency Model.” The Agency Model moves sales of new automobiles from several dealerships around the state, to a single seller — the OEM. The Agency Model proposed by the OEMs is an attempt by the OEMs to:
- Eliminate inventory on the dealer’s sales lots for customers to shop.
- Eliminate the financing options customers have at a local dealership and/or bank and force customers to accept factory financing.
- Eliminate negotiation on trade-in vehicles.
- Eliminate competition between dealers on after-sales benefits like oil changes, repairs, and other related services.
- The idea that the agency model will be good for dealers or consumers is a myth. If permitted by law, the agency model would likely be the beginning of the end of new car dealerships. Following the lead of the Commonwealth of Virginia SB 411 makes revisions to 61-4-208 of the Montana Code that deal with motor vehicle dealers and manufactures to keep the OEMs out of the retail business and prohibit coercion or retaliation by the OEMs against dealers who don’t go along. Here is a summary of the enacted changes to 61-4-208:
- Prohibits threat to or denial of incentive payments to compel dealer to go along.
- Requires the OEM to take into account its ability to supply adequate vehicles to the dealer when setting the dealer’s minimum sales requirements.
- Prohibits amendment of the franchise agreement under threat to withhold incentive payments.
- Prohibits the OEM from selling vehicles via a website.
Prohibits the OEM from retaining ownership of or consigning vehicles until delivery to the consumer. - Prohibits the OEM from negotiating the terms of sale with a retail customer.
- Prohibits the OEM from unilaterally changing the franchise agreement, including a dealer’s area of responsibility, requiring notice of a proposed amendment, giving the affected dealers the right to request mediation and protest the proposed action and setting standards for review on objection by a dealer.
- The amendments apply to all presently existing or subsequent systems of distribution of motor vehicles, including all existing franchise agreements except to the extent that such application would impair valid contractual agreements in violation of the State or Federal Constitution.
