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House | April 22, 2015 | Committee Room | House: Commerce and Development

Full MP3 Audio File

Clear the calender and we do have session coming up so I wanted to ahead get started. House bill 564, I going to recognize Representative Hardstra[sp?] I think and Representative Ferocrof[sp?] but I think Hadastra[sp?] is Thank you Mr. Chair. Good afternoon members of the committee. Representative Faircroff[sp?] has done the heavy lifting on this bill so I'm going to  turn it over to him. I do need to live but I want to let you know this is a free market bill, it has a very narrow focus, it's addressing a unique industry, and I hope you'll support the bill Thank you. Representative Ferocrof[sp?]. Thank you Mr. Chairman this bill was brought to us by Prevost which is Delaware Corporation and a subsidiary of Volvo. Prevost currently holds on North Carolina dealers license to sell motor coaches. Privo currently employs folks in North Carolina in their Greensburg facility they move to greens borrow from New Jersey and we are certainly glad to have them there and they are respected business entity in that area, this bill makes some amendments which exempts motor coach manufacturers from the probation on owning operating or controlling a motor vehicle dealership in North Carolina. The bill does not attempt to exempt motor coach dealers shifts from obtaining and maintaining a North Carolina licence to sell motor vehicle in North Carolina that dealer has to be licenced. under the current motor coach dealers are subject of the same motor vehicle dealer regulations as cars semi trailer tracks and RVs. The motor couch industry is different. The industry is too small to report the fully independent dealership without the help of resources from manufacturers and parent company. In 2014 there were less than 1400 motor coach sales in North America compare that to the thousand and thousand of orders and trucks out of that 1400 [xx] sold 373, so the number they are working with is relatively small in the overall market motor coach sales the purchase prices ranges from 400, 000 to 600, 000 and these are the large commercial vehicles that you see, buses that you see on the road, they are not recreational vehicles they are for commercial purpose only. Motor coach purchases or commercial businesses they fully understand the nature that this purchase transactions negotiating power utilized the motor coach is in commercial money making operations, the North Carolina motor coach association which is represented here today, comprised of motor coach owners and operators join in pre [xx] support for this house bill. There is some opposition from the auto mobile and[xxx]dealers and [xx] recognizes there I think there have been discussions that have gone on, but we are right on point that it's felt that this particular select business should be set apart from a typical dealer organization that we all know and love and buy so many vehicles from. It's a niche business it deserves to be allowed to have all the benefits it can and being a successful business, I urge your support Mr chairman there are speakers here from [xx] and I suspect they'd like to be recognized in the federal order bill. Alright and I will and in time recognise the speakers from both sides, what I want to do first is I want to go to questions from committee members, Representative [xx]. Thank you Mr. Chair, Representative [xx] thank you for bringing this forward the question about the auto dealers. Franchise auto dealers has been a little bit opposed, do you think that's just some anxiety that this maybe the first step to allowing same sort of sales on autos or do you know what the opposition consist of? no, because this will be a change and what we've seen in the past. I know they have concern but I would prefer they tell you what their concerns are and I will preview too Follow up follow. Are there other dealers here?

Anybody here? Yeah, there are.  Any other questions from committee members? I'll go to the alright let's start with Robert Glazier with all the automobiles bills associations. Sir if you could keep your comments to up to 3 minutes. Thank you, Mr. Chairman my name is Bob Glaser, I am the president North Carolina auto dealers association we represent 32, 000 employees that work within franchise cars, truck and RV dealers in the state of North Carolina. The franchise laws in North Carolina have been on the books in North Carolina for 60 years. For 60 years manufacturers have selling cars, trucks, RVs all sorts of vehicles through franchise system. This bill basically and I ask your opposition of this bill. This bill basically is trying allow one company to by pass the dealers, to by pass the dealers that they put in business [xx] is a subsidiary Volvo and Volvo has 5 or 6 dealers in North Carolina who they put in business, these dealers have spent million of dollars upgrading the facilities, hiring following the guidelines of Volvo and now Volvo wants to bypass these dealers When you talk about the vehicles that are being sold, these motor coaches, they're no different than any other vehicle, any other business transactions, let me talk about that. They say that there are 1, 400 motor coaches sold in United States there are roughly the same number of road races sold in United States and every one of those dealers or everyone of those road race is sort through dealer. So you talk about they sold the businesses, this motor coaches is to the businesses while the heavy duty trucks, the trucks truck, the tow trucks there are also the businesses and there are also the dealers so, the last thing you say well is it's a $400, 000 vehicle or it's a $600000 vehicle, well, there are a lot of $400, 000 and $600, 000 RVs everyone of those RVs is sold through the dealer, so on behalf of the employees we look forward to working with [xx] what we don't want, we don't want this company to be allowed to buy cars, the very dealers that they put in business, the very dealers that they supported, the very dealers that spend millions of dollars to enhance the reputation involved, and we ask your opposition on this bill thank you thank you. Thank you. Alright, the other side of the issue I think we have Steven [xx] Thank you so much. Mr. Chairman and the members of the committee, my name is Steven [xx] and I am an attorney of the law firm of [xx] downtown Riley. For the past 12.5 years it's been my privilege to represent Bravo Car US Inc, which is a Delaware Corporation, that up until two and a half years ago operated in the United States, primarily out of New Jersey, and then moved to Greensboro North Carolina. Bravo was a dealer and servicer of motor coaches, the vast majority of which were manufactured by a sister company in Quebec. Bravo brand buses have been assembled in that factory for nearly 100 years shortly after [xx] moved its administrative to Greensboro it obtained a North Carolina dealers' license and has worked closely and directly with NCDMV ever since unfortunately that license has had a cloud hanging over it ever since it was issued, a cloud which could bust into a full [xx] storm at any point in time, that cloud is caused by section 20-305.2 of the general statute, which makes it an unfair method of competition for a motor-vehicle manufacturer or its affiliates to own any interest in any motor vehicle dealer under the DNV statutes and regulations anyone with an extra ground against PRIVO could seek a hearing at any point in time to have PRIVO license revoked on the ground that PRIVO is owned by an affiliate of the manufacture of the vehicle it sells. The purpose of House bill 564 is to remove motorcars dealers like Bravo, and not just Bravo, from the threat of having their dealer licenses revoked on basis of section 20-305.2. Essentially section 20-305.2 creates a defacto requirement that only truly independent dealers with no relationship to a manufacturer, can sell motor vehicles the manufacturer assembles. That's why Ford and GM dealerships are companies that are completely independent from those manufacturers. There are many public policy reasons to require that independence. House bill 564 does not in

any way undermine or affect those good public policy reasons or put into limbo the statutory requirement of independent dealership for cars, trucks N. R. Vs. Rather house bill 564 recognizes that the motor coach industry is entirely different from those industries, and those differences make the requirement of independent dealers wholly and practical and constant prohibitive. The crucial distinctions between these industries relate to who is doing the buying, how they do that buying and how much buying they do. Who buys motor coaches? For profit bus tour companies including Grey Count, Coach America, Young Transportation and Ashville and holiday tours in random and a couple of their buses were in fact sitting in front of the legislative building this morning when I walked over here. These companies are all highly regulated by the Federal Motor Carrier Safety Administration. They are very sophisticated operations that comply with an intricate web of federal state laws. How do they do that buying? By determining the make and type of buses they want in their fleet in any given year, how many seats they need, the performance requirements of the buses they want and so fourth. They do not visit lots of commercial buses to pick out what they want, there is no such thing. Mr. [xx] I'm going to have to have you if you could wrap up. OK. we have had the opposition from the auto dealers and truck dealers and we do believe it's born of the slippery slope from the motor the slippery slope from motor coach industry to their industries, respectfully. No such slope exists because only this body could ever change the law to do away with independent dealerships for those industries, and your action here day one no way set the stage for that step. We ask you to support this bill to allow how PRIVO and all the motor coach carriers who were supported by the entire motor coach industry to have this niche that has operated without any problem for many, many years without this cloud having over its head. Thank you. Mr. Chair. Mr. Chair, up for a motion in the appropriate time. Alright, Representative [xx] I have a couple of committee question so Representative Shepard. [xx] answering my questions. I'm sorry, you say your questions were answered? Yes Sir. Okay. Alright, Representative Bradford. Thank you Mr. Chair, my question, I'll direct to the bill sponsor although the gentleman from PRIVO is the main answer. Since companies like PRIVO have operated through an established established dealer network. It appears, and I'm looking for clarity, that this bill would allow the manufacturer to have direct sales which could cannibalize the very dealer network that they've established, and so I'm looking for clarity in the sense that, is there Privo dealers that is here represented, that would stand up or would get behind this legislation, or would he or she feel differently because this is creating now competition against the network that was already established to sell this particular product.  I think the product you are asking me about was made by the gentleman with the dealers association, but I think the answer to the question comes from the gentleman who's representing Privo Could you state your name?  Privo doesn't setttle for a dealer network he was talking about a vulgar network which is a network of Volve track dealerships those dealers know nothing whatsoever about the commercial versus that Bravo and it's competitor sell, Bravo and it's competitor all sell through dealers that they have themselves setup because only companies that are closely align with them understand the nature of their business understand the nature of their customers business there is no dealer anywhere in North America that is independent from a motor coach manufacturer that sell motor coaches. Follow up? Follow up. So forgive me, it's late and it's been a long day. So how does Bravo today sell a unit of one? Who actually sales it on your company's behalf Bravo in Greensboro sell motor coaches on behalf of the Bravo organization in Canada as its dealer, but they're aligned in terms of ownership, that's who sell Bravo vehicles in North Carolina under the license issued by NCDMV with the cloud that hangs over it because of 20-305.2 which could at any day cause that license to

be revoked Representative Brown? Thank you Mr. Chairman. Members, I would ask for you to support this bill this is truly a common sense method to allow these very sophisticated buyers to purchase these very sophisticated piece of equipment essentially in a very sophisticated and regulated industry. And as last speaker just said, truly removes that cloud that could potentially erupt by the methodology in which these motor coaches were being sold presently. So I would certainly ask you to support this legislation. Other questions, comments from committee members? Representative Avila.   OK I'm one of these people who learned in public speaking to restate in order to make sure you understood. I'd like to ask, if I may the attorney with [xx] a question for clarification Would you state your name again? Stephen Epstein. Mr. Epstein as I understand it, you moved into the state with a business alignment that is different than the alignment that's currently in place with said automobile dealer or something of that nature. That particular business alignment of companies and their connections being different is causing problems for you because of our statute that has been drafted for dealers who are separate and independent from their manufacturers. That's absolutely correct. Thank you. Representative Yoburn. I'd like to clarify on Representative Bradford's question, you saying that there are competitors of the [xx] have also got dealerships of the same arrangement that it's [xx] are illegal correct. If you would state your name again. Stephen Obsteen  yes I'll give an example abc this company is a Corleone subsidiary of Vanghou or a Vanghou set of companies, there're a couple of them parked outside the legislative building as well. That's the only way this works for this industry and that's why motor coach association is entirely supportive and it works also for companies like young and actual and holiday tours and randomen because that's who they want to deal with, they don't want to deal with a Volvo truck dealership to specify the specific things that they need in their commercial buses. They want to work with the companies that really know their buses which are going to have a relationship with the bus manufacturers Thank you. Representative Martin. Thank you Mr. Chair, a question for the bill sponsors, I'm interested in supporting our franchise laws and our local auto-dealerships that have done a lot in the communities, so I just want to verify that passing this statute in your view and your intentions is not in at all to disrupt that way of doing business, and this is a kind of stand alone and not the slippery slope, can you just verify that intention please? Representative Faircloth? You're exactly right. Our intent is to allow this business to function with it's xx within the state but not at the expense of any automotive dealer, truck dealer or whatever, and I would personally resist any change that would damage them, because we have some very good citizens all over the  the state who are in their xx bill on track business. So this is a very narrow exception that we feel like it's appropriate and workable. Thank you. Representative Bradly? Yes, Mr. Chair. May direct a question to the president of the car dealer network who is here?  That would be industry [xx] If you would state your name.  I'm Robert Lester with the North Carolina Auto Dealer Association. Thank you Mr. Chair. Hearing Representative in his questions and the bill sponsor's answer, how would you respond to that? Well, I would respond Representative, thank you for the question. I'd respond that right now you have five or six Volvo dealers out there who'll be impacted, because these guys have spent millions of dollars developing a relationship with Volvo now understanding that Volvo was separate from [xx] that are going to be impacted by this. And basically this people has been in business for decades and now we're going to pass a law that goes around that relationship just because it's a subsidiary, it would weaken the franchise loss. Follow up? Follow up. Thank you for your answer so the gentleman, the attorney who represents [xx]  just told

the committee that the way these units are old have sort of been direct already, so today if I went to one of those six excuse me Volvo dealerships and wanted to order on of these units, would I be able to order one or would I have to be sent somewhere else? They would deffer you to the although subsidy [xx]  Follow up one more sir? Follow up. So the how would they be impacted if they couldn't sell the unit anyway and just sent me to that facility. They'd be impacted in two ways. First they'd be, the relationship they have with Volvo today will be diminished. Secondly is any service, any repair, any work like that would be outside of their network, so for example if a [xx] bus ever breaks down who does [xx] call? Why wouldn't they just call the local dealer like you call the local dealer? It's an arm of the manufacturer that works to support the manufacture, thank you. Representative Richards. Yes this is just for my clarity, I have a question for someone, when this deal was made between the motor coach and DMV with the understanding that their license, were they told it was temporary and could be revoked or were they told that they would have to make some other arrangement. I just wondered why would the company come in if they knew that they would lose their ability to sell these vehicles. I just Mr. Chairman I'd have to be part of the discussion. Alright Rep. Faircloth is differed to Mr. Epstain. I had discussions with members of the Attorney General's office with the Department of Motor Vehicles about these very issues before [xxx] sought it's licence, they were aware private was going to be seeking such a license and this very discussion occurred which is, they won't have the authority to deny the licence, however, that licence will exist with a cloud hanging over it and anybody that wants to get a hearing going to establish that privo is operating a follow of section 20-305.2 can do that and the potential result will be the revocation by the DMV. And so [xx] was aware of that but didn't have an option to this point other than to do that and simultaneously seek this legislative change which is why we are here today. Thank you. Rep. Brown. Mr. Chairman I'll differ my comments I suppose because there just a few too many holes for me to even begin to understand where I would want to start in questioning the President of the Automobile Dealers Association in his theory. Thank you. Representative Barbra. Thank you Mr. Chairman, I'm in the right location for that. I direct my question to Representative [xx], in terms of setting this up based on the definition of a vehicle, could you not have set this up based on the description of the business model since it is so dramatically different from the dealer manufacturer regarding tracks and cars, I would assume this is the only type in the state that carries a license, with this type business model is that a potential solutions, and since you've defined it that way, Ford and Chevy and everybody else can't get too excited. That's certainly possible representative [xx] I would have to defer to staff and see what might have been the reason of not doing it that way. Thank you, [xx] question forward to staff. Thank you Mr. Chairman representative Faircloth. I cannot speak to the reasoning as to why the bill was drafted in its current state, I suspect that the attorneys and legislative drafting made that call when the proposal was brought to them. Follow up Mr. Chair? Follow up. If I might direct a question to Mr. Epstein would that type of description in law rather than motor coaches based on the definition of a motor coach be more and tuned and put to rest the concerns of a slippery slope, or would we be impending on somebody else that I don't know about? Stephen Epstein and with due respect I think we are more likely to [xx] concerns by defining in a different way because if you look at a definition of motor coach it couldn't be clear for that we were talking about is a commercial bus designed to transport passengers for compensation. Got to be spells and pounds, got to have to have at least two rows of forward facing sits.

So, there can't be any confusion that this has anything to do with trucks, or aveys or cars. And this was a definition that was taken from federal law. So we relying on a definition that was tried, trued and tested. And if we try to do this in terms of business model, I think we are more likely to create the concerns of a slope here slope there because this vehicle no one can confuse with anything that looks like a car, a truck, or an [xx] and it does describe the operation as transporting passengers for compensation which is the business model as you describe it. Thank you Representative Ray Thank you, Mr. Chairman, when the vote goes, may I ask the nays and aye's please. Representative [xxx] I think I have Representative Goodman did you intend to make a motion? I do Mr. Chair, are we ready? Any other questions from the committee? Representative Bradley. Just a comment on the bill, I have been contacted by a lot of dealers and this could be an education issue. Everything I've heard does seem reasonable, however from the reasonable tasks, the fact that I've have so many dealers in my district that have pro-actively reached out to me saying, do not support this, and I suspect that this is purely may be more education is needed. I'm going to not support this today, I think it's going to pass but I would strongly encourage whatever auto mobile dealer network could work and see if there is any additional language that could be added to protect that piece that is keeping the dealers up at night. Our dealers do a lot and for our community they bring a lot to the table and while I respect what this is about and I've heard from the good attorney it does seem as though that this is within a reasonable box but I still think it's an education issue, so I'm going to vote no but I'm doing it for those reasons and I hope everyone can get together and get it to everyone's liking. All right representative Goodman Thank you Mr Chair, move for favorable report on House Bill 564 with referral to transportation. Okay, there is a referral to transportation right we have a motion for a favorable report then we've had a question of division so we'll do this by a show of hands. All those in favor? Mr. Chairman, that was not sustained. The aye's and no's was not sustained. OK, so you are absolutely correct. So we'll call for a vote and you've heard the motion before the committee. So all those in favor signify by saying aye. Aye. All the no's? No. It's the opinion of the Chair that the no's have it. Now we have division. Alright, show of hands, all those in favor of the motion alright, all the nos already have 16 ayes and I have seven nos motion passaes, Thank you that conclude our business And again I apologize for the late notice.