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DeSantis signs direct-to-consumer sales, vehicle glass AOB prohibition bills

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Florida Gov. Ron DeSantis and the legislature have banned the direct-to-consumer OEM sales model for automakers that already have franchise agreements in place with dealerships in the state — effectively excluding electric vehicle (EV) makers Tesla, Rivian, and Lucid since they don’t have said agreements.

The new law, effective July 1, states, “A licensee, a manufacturer, an importer, or a distributor, or an agent of the licensee, a manufacturer, importer, or distributor, or a parent, a subsidiary, a common entity, an officer, or  an employed representative of the licensee, manufacturer, importer, or distributor may not directly or indirectly own, operate, or control by contract, agreement, or otherwise a motor vehicle dealership for any line-make in this state if the licensee, manufacturer, importer, or distributor has manufactured, imported, or distributed motor vehicles of any line-make which have been or are offered for sale under a franchise agreement in this state with an independent person.”

Alliance for Automotive Innovation (Auto Innovators) State Government Affairs Vice President Wayne Weikel wrote to DeSantis in May following the legislature’s passage of the bill to ask that it be vetoed, calling it “one-sided legislation drafted at the behest of the state automobile dealers association.”

“Automakers have repeatedly stated throughout debate on this legislation our commitment to the automotive franchise system,” Auto Innovators wrote. “Unfortunately, the same cannot be said for this legislation put forward by the auto dealer association that seeks to tighten
restrictions on traditional automakers while not doing the same for new electric vehicle market entrants that sell directly to consumers.

“This bill will cement an unequal regulatory system by requiring some automakers to comply with restrictive, costly, and complex franchise laws (including this bill’s provisions discussed above) while exempting others from such compliance. There is nothing free market about creating two different regulatory schemes for competitors that sell competing products.”

Auto Innovators told Repairer Driven News on Monday that it had no commentary to add now that the bill has been signed into law.

The Florida Automobile Dealers Association (FADA), which lobbied for the passage of HB 637 (enrolled as Chapter 2023-233), says it’s one of the most important franchise bills in the association’s history.

FADA wrote on its website that the law will benefit dealers because it:

    • Protects important investments in brick-and-mortar dealerships and their digital markets;
    • Prevents legacy manufacturers from directly or indirectly owning dealerships if they have been a franchisor with independent dealers;
    • Protects “important sales functions that have been and are the natural province of the dealer,” including pricing and vehicle valuations;
    • Prohibits OEMs from requiring that all reservations be made through their direct digital platforms;
    • It means dealer reservations will “essentially become leads and you will continue to negotiate the terms of the sale;”
    • Requires licensees to provide all types of vehicles to dealers;
    • Further defines unfair allocations of vehicles, including offering incentives to dealers or requiring dealers to sell or lease a
      vehicle at a specified price or profit margin;
    • Prohibits an automaker from basing allocations of vehicles to dealers on the number of vehicles pre-ordered or reserved;
    • Requires manufacturers to compensate dealers for the remote sale of temporary features or improvements for two years at 8% for the original owner;
    • Allows FADA to make inquiries to the DMV when a factory appears to have violated a franchise law, which the department must take action on if there is a violation.

Manufacturers also must provide all dealers with a supply of new vehicles of equitable model, mix, and color.

FADA lobbyist Dave Ramba told Florida Politics the law ensures good dealer competition.

“The attempt by auto manufacturers to cut out the dealer would only result in higher prices and less customer service to the public,” he said. “The new car dealer is the customer’s advocate when it comes to warranty work and service on a manufacturer’s product, and this bill will protect that.”

In addition, Chapter 2023-233 will provide dealers with an 8% cut of over-the-air (OTA) upgrades purchased by consumers from OEMs. It also prevents OEMs from linking vehicle reservations to VINs to ensure the specific vehicle a customer wants is available at a lot.

DeSantis has also signed a glass repair bill into law that eliminates assignment of benefits (AOB) on insurance claims.

Assignment of benefits allows third parties, such as a repair shop, to file an insurance claim, make repair decisions, and directly bill a carrier for the policyholder. As a third party, AOB allows shops to pursue insurers to collect charges that carriers refuse and otherwise owe to the policyholder.

Chapter 2023-136  prohibits shops or their employees from “offering anything of value to a customer in exchange for making an insurance claim for motor vehicle glass replacement or repair,” otherwise known as AOB. It also prohibits insurance carriers and auto glass shops from steering customers to certain businesses.

Bill sponsor Sen. Linda Stewart (D-District 13) said in April that the law would “modernize our laws to include new technologies and make sure the calibration of these new systems are covered in replacements and will finally put an end to the frivolous lawsuits perpetrated by a few bad actors.”

One opponent, the Florida Independent Glass Association, said before the passage of the bill that it would create a glass repair monopoly for large chain businesses, like Safelite.

In addition to addressing AOB and steering, the new law also:

    • Defines ADAS as “any motor vehicle electronic safety system that is associated with motor vehicle glass and is designed to support the driver and motor vehicle in a manner intended to increase motor vehicle safety and reduce losses associated with motor
      vehicle crashes;”
    • Expands the state’s motor vehicle repairs definition to include ADAS calibration or recalibration;
    • Expands the state’s definition of unlawful vehicle repair shop acts to include offering inducements for making vehicle glass replacement or repair insurance claims; and
    • Adds failing to give customers notice about the necessity of ADAS calibrations as an unlawful vehicle repair shop act.


Featured image: Fahroni/iStock

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