RELATING TO MOTOR AND OTHER VEHICLES -- REGULATION OF BUSINESS, PRACTICES AMONG MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND, DEALERS
S2347 amends Rhode Island’s motor vehicle dealer franchise law in Chapter 31-5.1 to extend a number of existing rules that apply to manufacturers to also cover distributors and factory branches. The bill preserves and clarifies dealership succession rights for family members, sets procedures and timelines for manufacturers or distributors to object to a succession, and strengthens the notice and hearing process for dealership establishment, relocation, or expansion within a relevant market area. It also keeps the burden of proof on the party seeking to add or move a dealership and preserves judicial review of department decisions.
The bill makes substantial changes to dealer compensation rules, especially for warranty work, recall repairs, and promotional incentive programs. It requires fair and reasonable reimbursement for parts and labor, establishes methods for calculating retail parts and labor rates, limits how often dealers may declare those rates, and bars manufacturers or distributors from shifting those reimbursement costs back to dealers through surcharges or wholesale price increases intended solely to offset those obligations. It also adds or updates rules for recall compensation, including payment for vehicles held under stop-sale or do-not-drive orders when parts are unavailable, and it specifies claim-processing deadlines, deemed approvals, and chargeback protections for dealers.
S2347 also addresses several other dealer-manufacturer issues, including disclosure and liability for transportation damage, risk of loss during shipment, and equal treatment of dealers in state and local fleet sales inducements. The bill applies these provisions broadly to written and oral agreements in which the manufacturer or distributor has a direct or indirect interest, making the chapter’s protections harder to avoid by contract. The act would take effect immediately upon passage.
The overall sentiment reflected in the available history is favorable to the bill’s policy direction, at least at the committee level, but not yet final. On April 14, 2026, the Senate Commerce Committee voted 6-0 to hold the bill for further study, which suggests interest in the proposal but also a desire for additional review before advancing it. No floor vote or recorded opposition is provided in the available materials.
The main points of contention likely involve the balance of power between franchised dealers and manufacturers/distributors, especially around warranty reimbursement rates, recall compensation, and the ability of manufacturers to manage dealership networks. Dealers would generally benefit from the bill’s stronger reimbursement rights and procedural protections, while manufacturers and distributors may view the measure as increasing their costs and limiting their discretion over franchise operations, market expansion, and chargebacks.
The bill would amend multiple sections of Rhode Island General Laws chapter 31-5.1, expanding the chapter’s reach from motor vehicle manufacturers to distributors and factory branches and revising the statutory framework governing dealership succession, dealership protests, warranty reimbursement, recall compensation, promotional incentives, transportation damage, and risk of loss. It would also create or reinforce procedural rights before the Department of Revenue, including notice, hearing, protest, burden-of-proof, and judicial-review provisions, and it would apply these protections broadly to many dealer-related agreements. Dealers, manufacturers, distributors, and factory branches would all be directly affected, with dealers receiving stronger statutory reimbursement and anti-chargeback protections.
The available record suggests generally supportive or at least constructive sentiment toward the bill’s subject matter, since the Senate Commerce Committee advanced it only for further study and did so unanimously by a 6-0 vote. That indicates no recorded committee opposition at that stage, but also that members wanted more time to evaluate the bill’s details. No public transcript is available here, so the broader debate cannot be characterized beyond the committee’s cautious but non-adverse posture.
The likely areas of contention are the bill’s expansion of dealer protections and corresponding constraints on manufacturers, distributors, and factory branches. The most sensitive issues are the new reimbursement formulas for warranty and recall work, the limits on chargebacks and cost recovery, the requirement to compensate dealers for stop-sale inventory, and the procedures that make it harder to establish or relocate competing dealerships without proving good cause. Dealers are the primary beneficiaries of these provisions, while manufacturers and distributors are the parties most likely to object to the added financial obligations and reduced operational flexibility.