Relates to safety recalls on used motor vehicles; requires dealers to provide notice to purchasers of safety recalls.
Summary
This bill amends the General Business Law to create a new section governing used motor vehicles subject to safety recalls. It focuses on situations where a manufacturer or franchisor restricts a dealer from selling or leasing a used vehicle because of an open recall, including through a “stop sell” notice or similar communication. When parts or a remedy are not reasonably available and the restriction remains in effect, the bill requires the manufacturer or franchisor to compensate the dealer after 15 days for the vehicle’s holding costs at a rate tied to 1.75% of the vehicle’s trade-in value for each 30-day period, or portion thereof, that the dealer cannot sell, offer for sale, or repair the vehicle because of the recall-related restriction.
The bill also requires reimbursement claims to follow the existing claim procedure used for certain dealer reimbursement disputes under the Vehicle and Traffic Law. It prohibits retaliation against dealers who seek reimbursement or are otherwise compensated, including chargebacks, incentive reductions, inventory withholding, allocation cuts, facility-upgrade demands, or other penalties. In addition, manufacturers or franchisors must pay for recall repairs performed by the dealer and reimburse replacement parts at the existing retail reimbursement rate. The act would take effect immediately, with the compensation provision becoming effective 60 days after enactment.
Impact
The bill would add a new dealer-protection and recall-reimbursement framework to the General Business Law, while cross-referencing existing Vehicle and Traffic Law procedures for handling reimbursement claims and recall repairs. It would affect motor vehicle manufacturers, franchisors, and licensed dealers by shifting some of the financial burden of holding unsold recalled used vehicles from dealers to manufacturers when recall remedies are not readily available. It also creates a statutory basis for dealer compensation and limits manufacturer conduct that could be viewed as retaliatory or coercive in response to reimbursement claims.
Sentiment
The available context suggests the bill is aimed at consumer safety and dealer fairness, with a generally pro-dealer, pro-recall-compliance orientation. Because there are no committee transcripts or recorded votes provided, there is no documented opposition or support in the supplied materials beyond the bill’s text and caption. The measure appears designed to balance safety recall enforcement with dealer compensation when vehicles cannot be sold due to manufacturer-imposed restrictions.
Contention
The main point of potential contention is the cost and operational burden placed on manufacturers and franchisors, who would be required to compensate dealers for vehicles held under recall-related restrictions and to pay for recall repairs and parts reimbursement. Dealers are the primary beneficiaries, as the bill protects them from financial losses and retaliation when they cannot sell recalled vehicles. Another possible issue is the interaction between this new compensation scheme and existing manufacturer programs, since the bill limits double recovery unless the alternative compensation is at least as generous as the statutory amount.
Requires notice of motor vehicle safety recalls upon inspection and registration of motor vehicle; requires motor vehicle manufacturers to pay annual fee to MVC.