Pub. 58 2017-2018 Issue 3

30 then the dealer is in a downward spiral while competing with its franchisor. A result never intended by the Leg- islature. Warranty repairs by either a manufac- turer or a distributor are not allowed under the State’s statutory scheme or by a regulation. To defy this construct is contrary to the State’s word as well as intent by the State's 68th through 85th Legislatures extending from 1971 to 2017. Respectfully submitted, Karen Phillips General Counsel/EVP  End Notes 1 Act of April 7, 1971, 62nd Leg., R.S., ch. 51, 1971 Tex. Gen. Laws 89, SB 140 (Vernon) (to be codified as Vernon’s Ann. Civ. St. art. 4413(36), §§ 1.01-1.03; 2.01- 2.11; 3.01-3.05; 4.01-5.01, 5.02; 6.01-6.05; 7.01). 2 1d. at Sec. 1.02. Policy and Purpose The distribution and sale of new motor vehicles in this State vitally affects the general economy of the State and the public interest and welfare of its citizens. It is the policy of this State and the purpose of this Act to exercise the State’s police power to insure a sound system of distrib- uting and selling new motor vehicles through licensing and regulating the manufacturers, distributors, and franchised dealers of those vehicles to provide for compliance with manufacturer’s warranties, and to prevent frauds, unfair practices, discriminations, impositions, and other abuses of our citizens. 3 tex. occ. code ann. § 2301.002(23) (Vernon’s Supp. 2017). 4 Id. Subchapter I, §§ 2301.401 - 2301.406. This Subchapter requires a manufacturer or distributor to fairly and adequately compensate its dealers for warranty work. In addition, the agency may request a copy of the require- ments that a manufacturer or distributor imposes on its dealers with respect to warranty repair duties and vehicle and delivery obligations. 5 Act of June 19, 1983, 68th Leg. R.S., ch. 651, § 7, 1983 Tex. Gen. Laws 4134. 6 The Texas Comptroller of Public Accounts reported total revenue for Fiscal Year 2017 from motor vehicle sales and rental taxes at $4,534,696,760.66 ( See Revenue, Motor Vehicle Sales and Rental Taxes, https://bivisual.cpa.texas. gov) TADA and NADA survey information with sources from the Alliance of Automobile Manufacturers, Center for Automotive Research, IHS Market, NADA Industry Analysis, and the U.S. Bureau of Labor Statistics. 7 Act of April 7, 1971, 62 nd Leg, R.S., ch. 51, 1971 Tex. Gen. Laws 89; Act of June 11, 1973, 63 rd Leg., R.S., ch. 266 § 18, 1973 Tex. Gen. Laws 622, 627; Act of May 6, 1975, 64 th Leg., R.S., ch. 128, 1975 Tex. Gen. Laws, 297; Act of June 10, 1977, 65 th Leg., R.S., ch. 357, 1977 Tex. Gen. Laws 947; Act of Sept. 1, 1979, 66 th Leg., R.S., ch. 709, 1979 Tex. Gen. Laws 1725; Act of May 28, 1981, 67 th Leg., R.S., ch. 235, 1981 Tex. Gen. Laws 555; Act of Sept. 1, 1983, 68 th Leg., R.S., ch. 81, § 15, 1983 Tex. Sess. Law Serv. 355, 388; Act of June 19, 1983, 68 th Leg., R.S., ch. 651, 1983 Tex. Gen. Laws 4134; Act of June 4, 1985, 69 th Leg., R.S., ch. 241, 1985 Tex. Gen. Laws 1215; Act of June 11, 1987, 70 th Leg., R.S., ch. 357, 1987 Tex. Gen. Laws 1781; Act of June 16, 1989, 7151 Leg., R.S., ch. l 130, 1989 Tex. Gen. Laws 4653; Act of June 16, 1991, 72 nd Leg., R.S., ch. 501, 1991 Tex. Gen. Laws 1749; Act of Sept. 1, 1991, 72 nd Leg., 151 C.S., ch. 7, §§ lA.0l-lA.08, 1991 Tex. Gen. Laws 226; Act of April 29, 1993, 73 rd Leg., R.S., ch. 61, 1993 Tex. Gen. Laws 136; Act of April 29, 1993, 73 rd Leg., R.S., ch. 61, 1993 Tex. Gen. Laws 136; Act of June 8, 1995, 74 th Leg., R.S., ch. 345, 1995 Tex. Gen. Laws 2869; Act of June 8, 1995, 74 th Leg., R.S., ch. 357, 1995 Tex. Gen. Laws 2887; Act of June 11, 1997, 75 th Leg., R.S., ch. 639, 1997 Tex. Gen. Laws 2185; Act of Sept. 1, 1997, 75 th Leg., R.S., ch. 779, 1997 Tex. Gen. Laws 2567; Act of Sept. 1, 1997, 75 th Leg., R.S., ch. 871, § 10, 1997 Tex. Gen. Laws 2788; Act of Sept. 1, 1997, 75 th Leg., R.S., ch. 1171, §§ 3.01-3.10, 1997 Tex. Gen. Laws 4427, 4450; Act of Sept. 1, 1997, 75 th Leg., R.S. ch. 1401, 1997 Tex. Gen. Laws 5256; Act of June 18, 1999, 76 th Leg., R.S., ch. 1047, 1999 Tex. Gen. Laws 3861; Act of Sept. 1, 1999, 76 th Leg., R.S., ch. 962, 1999 Tex. Gen. Laws 3707; Act of May 18, 2001, 77 th Leg., R.S., ch. 155, 2001 Tex. Sess. Law Serv. 296; Act of June 1, 2001, 77 th Leg., R.S., ch. 1421, § 13, 2001 Tex. Sess. Law Serv. 4317, 4734; Act of June 1, 2001, 77 th Leg., R.S., ch. 1421, § 5, 2001 Tex. Sess. Law Serv. 4642; Act of Sept. 1, 2003, 78 th Leg., R.S., ch. 85, 2003 Tex. Gen. Laws 124; Act of June 20, 2003, 78 th Leg., R.S., ch. 503, 2003 Tex. Gen. Laws 1773; Act of Sept. 1, 2003, 78 th Leg., ch. 1276, §§ 14A-601-14A.625, 203 Tex. Gen. Laws 4158, 4399; Act of June 14, 2005, 79 th Leg., R.S., ch. 281, §§ 7.01-7.06, 2005 Tex. Gen. Laws 778, 839; Act of Sept. 1, 2008. 80th Leg., R.S., ch. 105, 2007 Tex. Gen. Laws 114; Act of Sept. 1, 2007, R.S., ch. 732, 2007 Tex. Gen. Laws 1526; Act of June 15, 2007, 80 th Leg., R.S., ch. 1363, 2007 Tex. Gen. Laws 4655; Act of Sept. 1, 2007, 80 th Leg., ch. 1403, 2007 Tex. Gen. Laws 4809; Act of Sept. 1, 2009, 8151 Leg., R.S., ch. 684, 2009 Tex. Gen. Law 1740; Act of Sept. 1, 2009, 81 st Leg., R.S., ch. 933, 2009 Tex. Gen. Laws 2485; Act of Sept. 1, 2009, 81 st Leg., R.S., ch. 933, §§ 6.01-10.01, 2009 Tex. Gen. Laws 2485, 2519; Act of Sept. 1, 2011, 82 nd Leg., R.S., ch. 137, 2011 Tex. Gen. Laws 644; Act of Sept. 1, 2011, 82 nd Leg., R.S., ch. 1290, §§ 1-21, 2011 Tex. Gen. Laws 3597; Act of Sept. 1, 2013, 83 rd Leg., R.S., ch. 1135, 2013 Tex. Gen. Laws 2705; Act of Sept. 1, 2013, 83 rd Leg., R.S., ch. 1338, 2013 Tex. Gen. Laws 3550; Act of Jan. 1, 2014, 83 rd Leg., R.S., ch. 1379, 2013 Tex. Gen. Laws 3666; Act of Sept. 1, 2015, 84 th Leg., R.S., ch. 777, § 14, 2015 Tex. Gen. Laws 2407; Act of June 16, 2015, 84 th Leg., R.S., ch. 512, 2015 Tex. Gen. Laws 1876; Act of Sept. 1, 2015, 84 th Leg., R.S., ch. 1236, § 14.002, 2015 Tex. Gen. Laws 4136; Act of Sept. l, 2017, 85 th Leg., R.S., ch. 354, 2017 Tex. Gen. Laws 1007; Act of Sept. 1, 85 th Leg., R.S., ch. 183, 2017 Tex. Gen. Laws 334. 8 Id. at § 1.03(5): “Manufacturer” means any person who manufactures or assembles new motor vehicles either within or without this State.” 9 In 1999, the definition of “manufacturer” was amended to delete “either within or without this State.” Act of June 18, 1999, 76 th Leg., R.S., ch. 1047, 1999 Tex. Gen. Laws 3861; § 1.03(21): "Manufacturer" means any person who manufactures or assembles new motor vehicles [either within or without this State]. 10 Id . 62 nd Leg.; In 2011, the “distributor” definition was amended: “Distributor means a person, other than a manufacturer, who: (A) distributes or sells new motor vehicles to a franchised dealer; or (B) enters into fran- chise agreements with franchised dealers, on behalf of the manufacturer. (Act of Sept. 1, 2011, 82 nd Leg., R.S., ch. 1290, §§ 1-21, 2011 Tex. Gen. Laws 3597) (tex. occ. code. ann. § 2301.002(11)). 11 Id . 62 nd Leg. 12 Act of June 8, 1995, 74 th Leg., R.S., ch. 357, 1995 Tex. Gen. Laws 2887. 13 TEX. OCC. CODE ANN. § 2301.002(16) (Vernon Supp. 2017). See Act of June 8, 1995, 74 th Leg., R.S., ch. 357, 1995 Tex. Gen. Laws 2887: “Franchised dealer [Dealer] means any person who holds a general distinguishing number issued by the Department pursu- ant to the terms of Article 6686. Revised Statutes, and who is engaged in the business of buying, selling, or exchanging new motor vehicles and servicing or repairing motor vehicles pursuant to the terms of a franchise and a manufacturer’s warranty at an established and permanent place of business pursuant to a franchise in effect with a manufacturer or distributor.” “Nonfranchised dealer” means a person, other than a franchised dealer, who holds a general distinguishing number issued by the Department pursuant to the terms of Article 6686. Revised Statutes.” “Dealer” means a person who holds a general distinguishing number issued by the Depart- ment pursuant to the terms of Article 6686, Revised Statutes.” (Codified at art. 4413(36), Vernon’s Texas Civil Statutes,§ 1.02(4), (22), (23)). 14 tex. fin. code ann. § 348.501 (Vernon 2016). 15 tex. tax code § 152.041-152.047 (Vernon 2015). 16 tex. transp. code ann. §§ 548.301-.304; 548.401- .404 (Vernon 2011 and Vernon Supp. 2017). 17 In a recent study, the evidence showed that where there are fewer same line-make dealers in a specific area, consumers paid more for new vehicles. As an example, in- creasing the distance between Honda dealers by 30 miles