Capitol Briefs, Week 4

White blue minimalist capitol building logo (600 x 200 px)-2

February 4, 2024

Buy/Sell bills moving forward as safety inspection program gets discussion

Article summary:
  • The General Assembly passed VADA's SB 534 and HB 191 legislation to simplify buy-sell processes.
  • VADA succeeded in carving out an exemption for auto dealers on a Senate bill to require sellers of consumer goods include all fees in the price on all advertising.
  • A bill extending new vehicle safety inspection periods progressed in the House but failed in the Senate.
  • Senate Bill 247, affecting contractor employment practices, moves forward for further review.

Last week, the Virginia General Assembly was bustling with more legislative activity that will have significant implications for the state's retail automotive industry and its stakeholders.

Two bills championed by VADA, Senate Bill 534 and House Bill 191, made considerable progress, marking a pivotal moment for creating more predictability and objectivity for dealership buy-sell transactions.

Unanimous Approval for VADA's Buy/Sell legislation

Senate Approval for SB 534

Senate Bill 534, championed by Sen. Lamont Bagby (D-14th/Henrico), passed the Senate unanimously with a 40-0 vote on January 31. The bill (details of which are below) is now poised to move to the House for further consideration. This unanimous approval underscores the bipartisan support for measures aimed at streamlining automotive transactions, enhancing consumer protection, and continued support of the dealer franchise system.

House Bill 191 Clears House Transportation Committee; full passage expected this week

In a parallel development, House Bill 191, carried by Del. Terry Austin (R-37th/Botetourt) is also moving forward. This bill, the House counterpart to SB 534, aims to provide an identical framework for buy-sell transactions. After receiving unanimous support from the House Transportation subcommittee with an 8-0 vote on January 30, it was forwarded to the full committee, where it received the same (22-0) on February 1.

Safety Inspection Bill Update: SB 349 (Reeves) and HB 1047 (Batten)

The General Assembly also deliberated on a pivotal safety inspection bill, which looks to extend the period before new motor vehicles require a safety inspection from one year to two. VADA supports the inspection program and is open to evolving it, too.

While the Senate version of the bill, sponsored by Sen. Bryce Reeves (R-28th/Fredericksburg), was halted in the Senate Finance Committee due to concerns over its fiscal impact, the House version, led by Del. Amanda Batten (R-71st/Williamsburg), has gained traction. After passing the House Subcommittee on Highway Safety and Policy with a 7-1 vote, it moves to the Committee on Appropriations for further evaluation, which we will closely monitor.

Additional Legislation on Our Radar: SB 247 (McPike)

The General Assembly is also reviewing other legislative proposals with potential impacts on the automotive industry. Among these is Senate Bill 247, introduced by Sen. Jeremy S. McPike (D-29th/Woodbridge), which addresses employment practices among contractors and subcontractors within the private sector, including car dealerships. This bill has sparked considerable debate for its implications on business operations. It passed the General Laws Committee and is awaiting consideration by the Commerce and Labor Committee.

Looking Ahead

We are closely watching for future developments as these bills progress through the General Assembly. The outcomes of these legislative efforts will have lasting effects on our industry's regulatory landscape, business practices, and consumer protections. We will continue to provide updates on these and other bills of interest to the retail automotive sector as the legislative session unfolds nears its "Crossover" point.

Here’s more on the bills we are tracking. For more details on the legislation and their current status in the process, click the bill number.

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 has successfully gotten an amendment on the Senate Bill so that it would not impact auto dealers. We are awaiting an update on the House version.

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.