Alaska dealers get major legislation

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Alaska. It’s the state with the most coast line . . . the most salmon . . . and now, perhaps, the most interesting legislation affecting manufacturer-dealer relationships.

Backed by Alaska’s marine dealers, the “Alaska Marine Products and Motorized Recreational Product Act” has been unanimously passed by the Alaska Legislature and is headed for Gov. Sarah Palin’s signature. The bill (HB 177) is interesting on two fronts: how the dealers succeeded in passing it while vigorously opposed by NMMA; and, of course, the bill’s content.

After examining HB 177, it appears much of it, particularly sections dealing with cancellation/non-renewal as well as the transfer of a dealer agreement, generally reflects what NMMA’s Board unanimously supported back in May, 2005. That was, if you recall, when a Special Task Force on Dealer Agreements issued unprecedented recommendations to everyone’s applause. Indeed, during the task force’s work, dealers and manufacturers had yielded to each other on many points and the finished product was a good one.

MRAA and the marine trade associations (MTAs) also announced strong support for the recommendations. The MTAs even indicated they would no longer seek legislation in their states, expecting the manufacturers to follow through. Major manufacturers (63 initially and more later) pledged to incorporate the recommendations by the summer of 2006 (2007 model year) at the latest. Even task force chairman David Slikkers declared, “It’s a new day” for the industry.

So, with everyone singing Kum Ba Yah, what happened? Clearly, not enough! Sadly, too many of the task force’s recommendations have reportedly never made it into dealer agreements as promised. The resulting breakdown is, obviously, why Alaskan dealers stopped singing and started seeking legislation. I believe they’re the first to do so since the “It’s-a-new-day” proclamation, but they’re likely not the last.

In essence, the Alaskan dealers crafted the legislation as a consumer protection, employment and lemon law issue capitalizing on existing auto lemon law. Consumers gave testimony on problems experienced with warranty procedures. Others cited the challenges in Alaska to fulfill wage demands of employees when dealers receive insufficient reimbursements for warranty claims. The bill was seen as good for consumers and that put it on every lawmaker’s “yes” list.

Just a few of the provisions contained in the HB 177 include:

• Manufacturer cannot unreasonably withhold transfer of a dealer agreement.
• Prohibits cancellation/non-renewal without cause; prohibits coercing dealers by threatening cancellation; requires repurchase of current and previous year’s models (including all transportation costs); requires repurchase of all parts from last 2 years;
• Warranty reimbursement: requires payment of dealer’s customary labor rate; Must include payment for diagnostic time, prep, testing, disassembly, cleanup, one added hour for dealer administration of warranty claim, and any additional time necessary to provide a “quality result and customer satisfaction.”
• Parts: reimbursement for all parts taken from dealer’s inventory at MSRP. Or, if parts are shipped from manufacturer, no freight or handling charges may be imposed.

Clearly while surviving the current economic problems facing the industry grab our focus these days, old issues like improved dealer agreements haven’t disappeared from view.

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