RDCSB126 3858 2557
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
SB 126 Reengrossed 2018 Regular Session Martiny
Present law provides relative to regulation of vehicle manufacturers and dealers.
Present law provides relative to recall notices.
Proposed law provides relative to compensation for recall repairs.
Proposed law defines the following terms:
(1)"Stop sale order" means a notification issued by a manufacturer, distributor, factory
branch, or distributor branch to its franchised new motor vehicle dealers stating that
certain used vehicles in inventory shall not be sold or leased, at either retail or
wholesale, due to a federal safety recall for a defect or a noncompliance, or a federal
emissions recall.
(2)"Do not drive order" means a notification issued by a manufacturer, distributor,
factory branch, or distributor branch stating that certain used vehicles shall not be
driven due to a federal safety recall for a defect or a noncompliance, or a federal
emissions recall. Such notification shall include an unconditional instruction to the
recipient to not drive the vehicle until the remedy for the recall is complete.
Proposed law provides that a manufacturer shall compensate its new motor vehicle dealers
for all labor and parts required by the manufacturer to perform recall repairs.
Proposed law provides if parts or a remedy are not reasonably available to perform a recall
service or repair on an affected used vehicle held for sale by a dealer authorized to sell and
service new vehicles of the same line-make or authorized to perform recall work on an
affected vehicle within 45 days of the manufacturer issuing the initial notice of recall and
the manufacturer has issued a stop sale order or do not drive order on the vehicle, the
manufacturer shall compensate the dealer at a prorated rate of at least 1.25% of the value of
the vehicle per month. Such compensation shall begin 45 days after the date on which the
stop sale order or do not drive order was provided to the dealer and shall cease when one of
the following events occurs:
(1)The date the recall remedy or parts are made available.
(2)The date the stop sale order or do not drive order is withdrawn.
(3)The date the dealer disposes of the affected used vehicle.
Proposed law provides that the value of a used vehicle shall be the average trade-in value for
used vehicles as indicated in an independent third-party guide for the year, make, and model
of the recalled vehicle.
Proposed law shall apply only to:
(1)Used vehicles subject to safety or emissions recalls pursuant to and recalled in
accordance with federal law and regulations adopted thereunder and when a stop sale
order or do not drive order has been issued and repair parts or remedy remain
unavailable for 45 days or longer in accordance with proposed law.
(2)New motor vehicle dealers holding an affected used vehicle for sale in inventory at
the time the stop sale order or do not drive order was issued.
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(3)New motor vehicle dealers holding an affected used vehicle for sale that is a line-
make that the dealer is franchised to sell or one which the dealer is authorized to
perform recall repairs and that was taken in the used vehicle inventory of the dealer
as a consumer trade-in incident to the purchase of a new vehicle from the dealer after
the stop sale order or do not drive order was issued.
Proposed law provides that it is a violation for a manufacturer to reduce the amount of
compensation otherwise owed to an individual new motor vehicle dealer solely because the
new motor vehicle dealer has submitted a claim for reimbursement under proposed law.
Proposed law shall not apply to an action by a manufacturer to any prospective change,
modification, cancellation, or elimination of any incentive program that is applied uniformly
among all dealers of the same line-make in the state.
Proposed law provides that all reimbursement claims made by new motor vehicle dealers for
recall remedies or repairs, or for compensation where no part or repair is reasonably
available and the vehicle is subject to a stop sale order or do not drive order shall be subject
to the same limitations and requirements as a warranty reimbursement claim made under
certain provisions of law. However, a manufacturer may compensate its franchised dealers
under a national recall compensation program provided the compensation under the program
is equal to or greater than the compensation provided in proposed law, or the manufacturer
and dealer otherwise agree.
Proposed law provides that a manufacturer may direct the manner and method in which a
dealer shall demonstrate the inventory status of an affected used motor vehicle to determine
eligibility under proposed law, provided that such manner and method may not be unduly
burdensome and may not require information that is unduly burdensome to provide.
Proposed law provides that nothing shall require a manufacturer to provide total
compensation to a dealer that would exceed the total average trade-in value of the affected
used motor vehicle as originally determined in proposed law.
Proposed law provides that any remedy provided to a dealer is exclusive and may not be
combined with any other state or federal recall compensation remedy or other federal law.
Present law provides for licensing and compliance requirements for motor vehicle and
recreational products dealers, which includes maintaining adequate space for displaying new
vehicles or recreational products and adequate facilities for the repair and servicing of the
products. Proposed law retains present law but also provides that the repair and service
facility may be physically located in a building directly across a dedicated municipal street,
but not more than 1,000 feet from the applicant's established place of business.
Effective August 1, 2018.
(Amends R.S. 32:1254(E)(5); adds R.S. 32:1264.2)
Summary of Amendments Adopted by Senate
Senate Floor Amendments to engrossed bill
1. Provides that the repair and service facility of a dealership may be physically
located in a building directly across a dedicated municipal street, but not
more than 1,000 feet from the applicant's established place of business.
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Commerce to the
reengrossed bill:
1. Remove language relative to 45 day reimbursement requirement to
clarify the intent of proposed law with respect to a new motor
vehicle dealer in possession of an affected used vehicle.
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2. Make technical changes for organization and readability.
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