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OLR Bill Analysis
SB 127
AN ACT CONCERNING THE SALE OF ELECTRIC VEHICLES IN
THE STATE.
SUMMARY
This bill expands the ability of certain licensed motor vehicle
manufacturers to sell their vehicles directly to consumers in
Connecticut under specific conditions. It does this by authorizing the
motor vehicles commissioner to issue a new or used car dealer’s
license to a manufacturer that meets certain requirements.
Current law bars motor vehicle manufacturers from holding a new
or used car dealer’s license except that:
1. the motor vehicles commissioner may issue a used car dealer’s
license to a person, firm, or corporation owned or controlled by
a manufacturer, primarily in the business of renting motor
vehicles and industrial and construction equipment under
certain conditions, and
2. a manufacturer may operate a dealership for up to one year (or
two years if the commissioner makes certain determinations).
The bill also makes technical and conforming changes.
EFFECTIVE DATE: October 1, 2021
MOTOR VEHICLE MANUFA CTURER DIRECT SALE CRITERIA
To qualify for a new or used car dealer’s license under the bill, a
licensed manufacturer:
1. cannot have a franchise agreement with a new car dealer in
Connecticut; 2021SB-00127-R000419-BA.docx
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2. must manufacture only “electric vehicles” (which the bill does
not define);
3. must sell at retail only vehicles it makes; and
4. cannot hold a controlling interest in or be owned or controlled
by (a) another manufacturer or (b) a subsidiary, affiliate, or
entity owned or controlled by another manufacturer, licensed as
a dealer under the bill.
The bill exempts a manufacturer who meets these qualifications
from motor vehicle franchise laws (see BACKGROUND).
Under the bill, a “manufacturer” is any person, firm, or corporation
licensed as a motor vehicle manufacturer under state law and any
subsidiary, affiliate, or entity it owns or controls. The bill expands the
statutory definitions of “new car dealer” and “used car dealer” to
include such a manufacturer and generally subjects the manufacturer
to the rules governing these dealers. Under the bill, if a manufacturer
is licensed as a new car dealer, it may also repair vehicles and sell used
vehicles; if licensed as a used car dealer, it may also repair vehicles.
BACKGROUND
Motor Vehicle Franchises and Dealerships
Under the laws governing motor vehicle franchises, a motor vehicle
manufacturer makes or assembles new motor vehicles or imports them
for distribution to dealers or through distributors or factory branches.
A dealer sells motor vehicles and holds a valid sales and service
agreement, franchise, or contract with a manufacturer or distributor
for retail sale of the manufacturer’s or distributor’s new motor vehicles
(CGS § 42-133r).
The motor vehicle franchise laws set out, among other things, the
respective obligations of manufacturers and dealerships (CGS §§ 42-
133r to 42-133ee). They generally prohibit a manufacturer from
unfairly competing with a dealer who sells the manufacturer’s “line
make” of vehicles (e.g., Toyota or Ford) and is operating under an
agreement or franchise with the manufacturer in the relevant market 2021SB-00127-R000419-BA.docx
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area (CGS § 42-133cc(8)).
Motor Vehicle Dealer Laws and Regulations
Motor vehicle dealers are subject to laws governing vehicle sales,
registration, and recordkeeping, among other things.
The Department of Motor Vehicles (DMV) requires new and used
car dealers to pay a biennial license fee of $700 and $560, respectively.
New and used car dealers also must post a $50,000 cash or surety bond
and comply with applicable state and federal laws. The commissioner
may refuse to grant or renew a license if the dealer, or an officer or
major stockholder of the dealer, has been convicted of violating any
laws pertaining to the business or certain other crimes, such as fraud
(CGS §§ 14-52 & 14-52a).
Dealers must follow motor vehicle laws and regulations in such
areas as use of dealer plates, record-keeping, sales agreements, vehicle
registration, and customer complaints (Conn. Agencies Regs. § 14-63-1
et seq.).
Manufacturer
Under the motor vehicle statutes, a manufacturer generally is (1) a
person, whether or not a Connecticut resident, engaged in the business
of constructing or assembling new motor vehicles of a type required to
be registered by the commissioner for operation upon any highway
(except a utility trailer), which are offered for sale in Connecticut, or (2)
a person who distributes new motor vehicles to new car dealers
licensed in Connecticut (CGS § 14-1(53)).
The law prohibits any person, firm, or corporation from engaging in
the business of manufacturing motor vehicles without receiving a
manufacturer’s license, which expires biennially on June 30.
Applicants for a manufacturer’s license must apply to DMV and pay a
biennial license fee of $2,300 (CGS § 14-67a(a)).
COMMITTEE ACTION
Transportation Committee 2021SB-00127-R000419-BA.docx
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Joint Favorable
Yea 25 Nay 10 (03/24/2021)