SACRAMENTO, Calif. — California Gov. Gavin Newsom signed Assembly Bill 179 on Saturday, making official an update to the state’s franchised dealer law. The bill affects retailers in three key areas: reimbursement for warranty work, facility upgrades ordered by manufacturers, and compliance with the California Consumer Privacy Act.
• Warranty reimbursement: Vehicle manufacturers must now pay California dealers a warranty parts and labor reimbursement rate closer to that charged to consumers. California New Car Dealers Association officials had lobbied forcefully for this change, noting a near-40% spread between the going rates and the passage of similar bills in other states.
• Facility upgrades: AB 179 forbids factories from ordering dealers to renovate showrooms and other facilities in intervals of less than 10 years.
• CCPA compliance: California dealers and their manufacturers are permitted to notify owners of vehicles subject to recall without violating the California Consumer Privacy Act. The state’s enhanced data privacy rules go into effect Jan. 1.
“This bill brings California’s new motor vehicle franchise laws into the 21st century.”
“This is a significant step forward in our commitment to a stronger and more equitable new motor vehicle franchise system for California new car dealers,” said CNCDA President Brian Maas. “With AB 179 taking effect Jan. 1, 2020, this is a huge victory for all Californians, local businesses, and consumers alike. This bill brings California’s new motor vehicle franchise laws into the 21st century by establishing a level playing field between local independently owned dealerships and multinational vehicle manufacturers.
“Franchise laws exist to govern the relationship between dealers and manufacturers,” Maas added. “California was overdue for significant improvements in the laws that will continue to protect dealers, their businesses, and their patrons. We are pleased and encouraged that Gov. Newsom agrees and supports our approach to improvements in California’s franchise laws.”
A similar dealer protection bill was unexpectedly vetoed by former Gov. Jerry Brown last year. AB 2107 included 10 provisions, including the normalization of warranty reimbursement rates and 15-year factory upgrade intervals.
At the time, Brown expressed concern over unspecified complications.
“Under current law, manufacturers are required to reimburse dealers for warranty and recall repairs at a ‘reasonable’ rate negotiated between the two parties,” Brown wrote in a statement. “This framework appears to be working reasonably well and I see no reason to adopt the rather complicated formula authorized in this bill — with perhaps unintended consequences.”
Just over a year later, his successor signed the new bill — one of 68 passed into law on Saturday alone, part of a flurry of signatures and vetoes that closed California’s 2019 legislative session.
“We have clearly achieved a great deal together, and I commend the legislature for their hard work,” Newsom said in a release. “I look forward to our continued partnership as we head into the new year and continue to tackle challenges of affordability and work to expand opportunity to all Californians.”