Vt. auto dealers may get a boost from Legislature
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By DANIEL BARLOW VERMONT PRESS BUREAU - Published: May 6, 2009
MONTPELIER - Vermont's slumping automobile dealers are hoping for a shot in the arm with a bill quickly moving its way through the Statehouse this week.
The Vermont House gave preliminary approval Tuesday to a bill that rewrites the state's motor vehicle franchise laws for the first time in nearly 25 years, a move that will give local dealers more bargaining power with the manufacturers.
The bill, which has already been approved by the Vermont Senate and is expected to find easy final approval in the House on Wednesday, makes it easier for dealers to diversify their automobile stock and bring in new brands from different manufacturers.
"This bill will inject balance into a one-sided economic relationship," said Rep. Jason Lorber, D-Burlington.
Just as the automobile manufacturers have taken dramatic economic hits in Detroit, local automobile dealerships in Vermont are struggling to stay afloat in an economy where few are shopping for cars - let alone new cars.
There are 87 auto dealers in Vermont now after about 10 went under in the last year, according to Marilyn Miller, the executive director of the Vermont Automobile Dealers Association, a trade organization located in Montpelier.
She said her organization began its push for the bill more than one year ago, months before the economy entered its latest crisis and the issue became even more exasperated. They found a receptive ear in lawmakers at the Statehouse, she said.
"A lot of people don't realize that the local dealers are independent from the companies that manufacture the cars," Miller said. "These are private entrepreneurs who often begin paying for the cars on their lots as soon as they hit the production line."
Lawmakers supporting the bill said Tuesday that automobile manufacturers hold all the cards in negotiations with local dealers. This includes the prices they pay for the vehicles on the lot and the appearance of the facility they are being sold in.
Vermont's proposed new law makes several major changes to the state's franchise laws to allow the dealers more bargaining power. Miller said the manufacturers now can require dealers to build a separate facility if they want to engage in what is known in the industry as "dualing" - essentially having vehicles from two different manufacturers on the same lot.
The proposal would change that to allow dealers - if they have sufficient space - to bring in a second line of vehicles from a new company. It also would require the manufacturers to pay more of the repairs covered under warranty - a responsibility that Miller says mostly falls on local dealers.
"We're not looking for a bailout and we're not asking for money," Miller said. "We're looking for the opportunity to be successful."
Right now, legal disputes between dealers and manufacturers usually go to the local Superior Court, which Miller said is often costly for Vermont business owners compared to the much larger automobile corporations.
The bill would instead allow these disputes to go before the Vermont Transportation Board, a quasi-judicial body appointed by Gov. James Douglas that hears transportation-related legal disputes. The cost to send a case to this board would be $1,500.
"That could prove to be one of the most important parts of the bill," Miller said.
Lorber said it is vital that Vermont help out its automobile dealers, pointing out that the industry generates $66 million in local and state taxes and comprises about 14 percent of the state's total retail payroll.
"This bill will not save all dealers," Lorber said. "But it is going to help some stay in business."
Contact Daniel Barlow at Daniel.Barlow@timesargus.com.
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