8-2438. Ownership and operation of new vehicle dealership by certain entities prohibited; exceptions.
8-2438
8-2438. Ownership and operation of new vehicle
dealership by certain entities prohibited; exceptions.
(a) Except as provided by this section, and notwithstanding
any other provisions of the vehicle dealers and manufacturers licensing act,
with respect to motor vehicles, a first stage manufacturer of vehicles or
second stage manufacturer of vehicles, factory branch, distributor branch, or
distributor, distributor or factory representative, may not directly or
indirectly:
(1) Own an interest in a new vehicle dealer or dealership;
(2) operate a new vehicle dealer or dealership; or
(3) act in the capacity of a new vehicle dealer or dealership, or otherwise
sell new vehicles at retail.
(b) A first stage manufacturer or second stage manufacturer of vehicles,
factory branch, distributor branch, or distributor, distributor or factory
representative may own an interest in a franchised dealer or dealership, or
otherwise control a dealership, for a period not to exceed 12 months from the
date the first or second stage manufacturer of vehicles, factory branch,
distributor branch, or distributor, distributor or factory representative,
acquires the dealership if:
(1) The person from whom the dealer or dealership was acquired was new
vehicle dealer; and
(2) the dealership is for sale by the first stage manufacturer or second
stage manufacturer of vehicles, factory branch, distributor branch, or
distributor, distributor or factory representative, at a reasonable price and
on reasonable terms and conditions.
(c) On a showing of good cause by a first stage manufacturer or second stage
manufacturer of vehicles, factory branch, distributor branch, or distributor,
distributor or factory representative, as the case may be, the director may
extend the time limit set forth in subsection (b) one time for a period of not
to exceed 12 months.
(d) For the purpose of broadening the diversity of its dealer body and
enhancing opportunities for qualified persons who are part of a group who have
historically been under-represented in its dealer body, or other qualified
persons who lack the resources to purchase a dealership outright, but for no
other purpose, a first stage manufacturer or second stage manufacturer of
vehicles, factory branch, distributor branch, or distributor, distributor or
factory representative, may temporarily own an interest in a new vehicle dealer
or dealership if the
first or second stage manufacturer of vehicles, factory branch, distributor
branch, or distributor, distributor or factory representative's participation
in the new vehicle dealer or dealership is in a bona fide relationship with a
new vehicle dealer who:
(1) Has made a significant investment in the new vehicle dealer or
dealership, which is subject to
loss;
(2) has an ownership interest in the new vehicle dealer or dealership; and
(3) operates the new vehicle dealer or dealership under a plan to acquire
full ownership of the
new vehicle dealer or dealership within a reasonable time and under reasonable
terms and conditions.
(e) A first stage manufacturer of vehicles or a second stage manufacturer of
vehicles may own a minority interest in an entity that owns and operates a new
vehicle dealer, licensed under the dealers and manufacturer's licensing act, of
the line-make manufactured by the first or second stage manufacturer if all of
the new vehicle dealers owned and operated by the entity in this state are new
vehicle dealers of only the line-make manufactured by the manufacturer and if,
on January 1, 2000: (1) There were not more than two new vehicle dealers of
that
line-make licensed as new vehicle dealers in this state; and (2) at the time
the manufacturer first acquires an ownership interest or assumes operation or
control, the distance between any new vehicle dealer owned and operated by an
entity in which the manufacturer has an ownership interest and the nearest
unaffiliated new vehicle dealer of the same line-make is not less than 100
miles.
(f) The words or phrases used in this section shall have the meanings
otherwise provided by law, except the following specific words or phrases:
(1) "Dealership" means any physical premises, equipment, and business
facilities on or with which a new vehicle dealer operates its business,
including the sale or repair of motor vehicles. Dealership includes premises or
facilities at which a person engages in the repair of motor vehicles if repairs
are performed pursuant to the terms of a franchise agreement or a motor vehicle
manufacturer's warranty; and
(2) "line-make vehicle" means those new motor vehicles which are offered for
sale, lease or distribution under a common name, trademark, service mark or
brand name of the manufacturer or distributor of the same.
(g) The provisions of this section shall not apply to a first stage
manufacturer
or second stage manufacturer of vehicles, factory branch, distributor branch,
or distributor, distributor or factory representative as to only those dealers
or dealerships which are already owned by such first stage manufacturer or
second stage manufacturer of vehicles, factory branch, distributor branch, or
distributor, distributor or factory representative, as the case may be, on
the effective date of this act.
History: L. 2000, ch. 20, § 1; Mar. 30.