‣ 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 aftersales 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. 14 MTADA MEMBERSHIP DIRECTORY 2023
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