Capitol Briefs: Buy/Sell Bill Update

Today we've got small but mighty updates on VADA's 2024 premier legislation that will give dealers more predictability and objectivity in buy/sell transactions.

• The House version (HB191) passed the full Senate earlier last week.
• The Senate version (SB534) passed the House Transportation Committee on Thursday. It goes to the House floor.

Assuming the House passes that bill, both pieces of legislation must be engrossed — where final language is formalized by the Senate President and Speaker of the House — before heading to the Governor.

An Automotive News editorial called the legislation "good for dealers" and goes on to say: "More states should follow Virginia's lead and spell out when automakers can exercise their right of first refusal on proposed dealership sales, so people who want to exit or enter the auto retailing world can do so in a clear, timely and efficient manner."

We will update you as we learn more. The General Assembly adjourns March 9.

Here’s more on the bills we are tracking. Click the bill number for more details on the legislation and its current status in the process.

Buy/sell legislation to create Predictability and Objectivity: HB 191 (Austin) and SB 534 (Bagby)

Our priority legislation will help entrepreneurial dealers buy and sell their businesses in a more straightforward manner. Virginia’s existing statute was intended to create more predictable and objective dealership transaction approvals. Manufacturers often delay or oppose dealership sales due to a lack of clarity in the existing statute.

The bills would:

• Make dealership buy/sells more predictable, giving OEMs 60 days to object to a sale upon notification of a transaction and ending what can often become a lengthy transactional process by eliminating any misunderstanding around time limits. The bill requires dealers to include only specific, identified information about the sale. This notice starts the 60-day clock for approval. By specifying what the notice must include, OEMs will not be able to delay by claiming they still need more information about the sale.
• Make the process more objective, limiting review of a proposed buyer’s experience as an objective measure of their years in the business, as opposed to subjective measures a manufacturer may attempt to use improperly.

We will continue to look at addressing accountability measures for OEMs in the future should we violations of the statute in place for buy/sells.

Emissions standards stand: SB 3 (Stuart), SB 53 (McDougle), SB 160 (McGuire)

Several bills were introduced attempting to repeal the California Air Resources Board's zero-emission vehicle standards, which passed in 2021 with VADA’s backing. The Republican-sponsored bills were rejected by the Senate Agriculture, Conservation, and Natural Resources Committee, where Democrats remain firm in supporting the standards.

Committee Chairman Sen. Dave Marsden (D-35th/Burke) emphasized the need to evaluate Virginia’s Clean Cars and Clean Economy acts to consider the feasibility of meeting aspirational goals for zero-emission vehicle sales. A workgroup led by Sen. Marsden will assess the trajectory of new zero-emission vehicle sales and the industry's capacity to meet goals.

VADA supports various zero-emission vehicles — battery electric, plug-in hybrid, hybrid, and all the varied powertrains. Most auto manufacturers have made it clear they are committed to phasing out gas-powered engines over the next 15 years.

However, mass adoption of EVs requires government policies that are technologically achievable, maintain affordability, and complement the efforts of the private sector in advancing the vehicle fleet turnover needed to achieve the targeted environmental benefits within a timeframe that helps, not hurts, new vehicle buyers.

We appreciate Sen. Marsden, along with Commerce and Labor Chairman Sen. Creigh Deeds (D-11th/Charlottesville), intend to convene a working group to ensure Virginia’s policies achieve those goals.

A consumer protection bill that will harm consumers and businesses: HB 1320 (McClure) and SB 388 (Pekarsky)

• Update: VADA successfully secured an amendment on the Senate Bill so that it would not impact auto dealers. This exemption is crucial for maintaining fair advertising practices and will be closely monitored as the bill progresses through the House. The House version of the bill, meanwhile, was carried over to the 2025 session which means it will not be acted on this year.

From groceries to TVs to automobiles, these amendments to the Virginia Consumer Protection Act would make it mandatory for any seller of consumer goods to include all fees in the price in all advertising. The “Virginia Consumer Protection Act” would prohibit advertising, displaying, or offering any pricing information for goods or services without prominently displaying the total price, which includes all mandatory fees or charges other than taxes imposed.

Obviously, this bill affects retail automotive dealers who are permitted to charge processing fees, and additional charges and taxes. Unlike most retailers, Virginia dealers are subject to a robust set of laws and regulations related to advertising, including appropriate disclosure of fees and charges. Those rules take into account standard industry practices.

This bill would alter how dealers would advertise. For example, certain fees, like processing fees, that can be disclosed separately now must be lumped in with the vehicle price. This creates a significant disadvantage with dealers in other states that may be able to continue to advertise the same fees separately, making their transaction costs appear lower. It would also create consumer confusion.

Finally:

• Safety inspections dead-end: House Bill 1047 (Batten), which aims to revise safety inspection protocols by extending the period before new motor vehicles require an inspection from one year to two, hit a legislative roadblock. Despite passing the Transportation Committee in the House, its failure to be heard in the Appropriations Committee before Crossover essentially halts its progress, marking its demise this session.
• Protection for Auto Dealerships: House Bill 951 (Lopez), and its Senate counterpart, Senate Bill 247 (McPike), look to establish certain protections and a transition period of 90 days for certain building service employees by requiring the person or business contracting with the building maintenance company to ensure the employees are retained by a new contract building maintenance company. VADA scored a significant win, securing an exclusion for auto dealers from the requirements of the bill when it was limited to only certain locations.