Identical to H 406, filed 3/13/25.

Section 1.

Amends GS 20-305 (concerning coercing a dealer to accept commodities not ordered; threatening to cancel franchise; preventing transfer of ownership; granting additional franchises; terminating franchises without good cause; preventing family succession), as follows. Makes technical changes.  

Adds the following two new things that a manufacturer is prevented from doing in relation to challenges to the sale or transfer of ownership of a dealership as described under GS 20-305(4)(i): (1) to inquire about or consider whether another manufacturer or distributor had previously denied, rejected, or otherwise turned down the application of the applicant, or any person or entity affiliated with the applicant, to acquire a franchise or dealership or become principal operator, part of the executive management, or a successor owner or manager of a dealership under the circumstances described and (2) to inquire about or consider whether the applicant, or any person or entity affiliated with the applicant, had, for any reason, ever previously commenced a civil or administrative proceeding against any manufacturer or distributor in the under the circumstances described.  Adds new GS 20-305(4)(j) requiring a manufacturer or distributor to reimburse both the dealer and applicant for their respective attorneys' fees if a manufacturer or distributor takes adverse action as described in response to a dealer’s proposed ownership transfer as described and (1) both the dealer and applicant elect not to appeal from or otherwise seek civil or administrative redress from the adverse action or (2) the manufacturer or distributor’s adverse action is ultimately overturned by a reviewing court or administrative agency.

Expands the conditions under which failure by a motor vehicle dealer to comply with the manufacturer’s reasonable performance criteria as described may constitute good cause for purposes of a manufacturer’s cancellation, termination or nonrenewal of a franchise with a licensed new motor vehicle dealer under GS 20-305(6) to also require that during the entire performance review period established by the manufacturer, the manufacturer made available to the dealer a sufficient number and model mix of new motor vehicles for the dealer to achieve all elements of the manufacturer's performance criteria. Expands the types of new and unsold goods that the manufacturer must purchase if cancelling a franchise to include but not be limited to travel trailers, slide-in truck campers, and park models. Removes provisions exempting a termination, nonrenewal, or cancellation of the franchise agreement at the initiation of a new motor vehicle dealer of recreational vehicle motor homes in the circumstances described, from GS 20-305(6)(e) and (f)’s provisions relating to payments and facilities assistance.

Section 2.

Now requires a manufacturer or distributor to compensate a franchised or new franchised motor vehicle dealer in an amount not less than 20% of the gross compensation that was collected from the customer (was, reasonable compensation) under the described circumstances in GS 20-305(57)(c) and (d) as part of the requirements to be met to sell, or activate for a fee, any permanent or temporary motor vehicle accessory, option, add-on, service, feature, improvement, or upgrade on or to any motor vehicle owned or leased by a retail customer located in the State, through over-the-air or remote means. Also requires those manufacturers and distributors to provide to each of its franchised dealers within this State, on at least a monthly basis, an itemized statement as described of over-the-air or remotely activated products and services that were sold to the dealer's customers and calculating the fees and commissions to which the dealer is entitled.

Section 3.

Amends GS 20-305(4)(e)’s provisions on hearings before the Commissioner of Motor Vehicles relating to an adverse action by a manufacturer or dealer to the described changes in dealer ownership, as follows. Places the burden of proof as described, on a manufacturer if they are objecting to a proposed change in the executive management or principal operator of the dealership on the candidate's alleged poor past performance. Details information now required to be contained in a manufacturer notice of objection.  

Section 4.

Includes persons who perform any warranty service or recall work on motor vehicles, except for a commercial fleet customer that has a designation as such by the manufacturer or distributor under the definition of motor vehicle dealer or dealer under GS 20-286(11). Removes exemptions from the definition for persons providing vehicle subscriptions or monthly rental programs on or after January 1, 2025.

Section 5.

Adds new term sell to GS 20-286, applicable to Article 12 (Motor Vehicle Dealers and Manufacturers Licensing Law). Makes organizational changes.

Section 6.

Expands the triggering events under GS 20-305(7) that authorize an owner of a new motor vehicle dealership to appoint a designated successor to include retirement of the owner or principal operator. 

Section 7.

Adds the following two new unlawful practices to GS 20-305:

• To sell, transfer to floor plan, assign a certificate of origin, or otherwise require a dealer to accept ownership or possession of a new motor vehicle that either (1) cannot be immediately sold at retail due to the existence of an open recall, missing or inoperable part or component, or stop sale order or (2) has not actually been delivered to a dealer within 90 days after the manufacturer or distributor has represented to the dealer that the vehicle was shipped.
• To vary the price charged to a dealer for any training, software, equipment, or tools that is in any way based upon a dealer's compliance with a facility image program or requirement.

Section 8.

Modifies the information that a motor vehicle manufacturer, factory branch, distributor or distributor branch must specify in writing to each of its motor vehicle dealers under GS 20-305.1(a) (automobile dealer warranty and recall obligations) to now include obligations related to pre-sale maintenance, manufacturer-directed component installation or assembly, and compensation related to battery or airbag shipping, storage, or disposal, for shipping, storage, or disposal of any other parts, fluids, or vehicle components.  Removes requirement that time allowances for the performance of preparation, delivery, warranty, and recall work and service must be reasonable and adequate for the work to be performed. Removes provisions pertaining to retail rates charged for parts and labor by other franchised dealers of the same line-make located within the dealer's market.  Adds the two following provisions to the listed obligations under GS 20-305.1

Allows a motor vehicle dealer to either (1) accept a manufacturer's, factory branch's, distributor's, or distributor branch's labor time guide as adequate and fair compensation for labor services rendered for repairs in an amount equal to the amount a retail customer pays for the same labor services with regard to labor time or (2) elect to establish an average retail labor time allowance as discussed below.

Provides a process and calculation by which a motor vehicle dealer may elect to establish an average retail labor time allowance in lieu of the manufacturer's, factory branch's, distributor's, or distributor branch's labor time guide for manufacturer, factory branch, distributor, or distributor branch-paid repairs or service.

Section 9.

Amends GS 20-305(33) to govern failure to reimburse a dealer for the described costs when the manufacturer approves (currently just requires) a rental or loaner vehicle to a customer having their vehicle serviced at the dealership. Provides that it is unlawful to or a manufacturer to fail to reimburse the dealer in full for a rental or loaner vehicle to a customer because all or any portion of the time the dealer has provided the customer with a loaner or rental vehicle is due to the unavailability of one or more parts sold  or distributed by the manufacturer or through its  supplier, regardless of whether or not the manufacturer has its own loaner program in which the dealer has elected not to participate. Sets forth a process for reimbursement of rental vehicles. 

Section 10.

Contains severability clause.

Section 11.

Applies to all current and future franchises and other agreements in existence between any new motor vehicle dealer located in the State and a manufacturer or distributor as of the effective date of this act.