Three Questions with with Hilary Holmes Rheaume

Bernstein Shur’s Hilary Holmes Rheaume answers questions about laws affecting automobile and equipment dealerships in New Hampshire and beyond.

What is the New Hampshire Dealer Bill of Rights?

In 1981, the New Hampshire Legislature enacted R.S.A. 357-C, which is often referred to as the “Dealer Bill of Rights.” The Dealer Bill of Rights was enacted to “protect retail car dealers from perceived abuse and oppressive acts by the manufacturers.” For example, R.S.A. 357-C, in part, regulates a manufacturer’s delivery and warranty obligations, terminations, and add point disputes. Over time, the New Hampshire Legislature created the New Hampshire Motor Vehicle Industry Board to enforce the statute and expanded the definition of “motor vehicle” to include off-highway recreational vehicles and snowmobiles. In 2015, the New Hampshire Supreme Court concluded that the Dealer Bill of Rights also applied to equipment manufacturers and dealers.

What are some challenges that automobile and equipment dealers are facing right now?

The supply chain shortage has taken a toll on automobile and equipment dealers. Dealers are not only experiencing low inventory for new and used vehicles, but dealers are also experiencing a parts shortage. As a result, I am seeing an increase in customer complaints concerning the amount of time it takes a dealership and/or service center to repair a vehicle.

I am also seeing an increase in disputes between manufacturers and dealers.  For example, some manufacturers are attempting to consolidate dealers, which may result in terminations and/or add point disputes. Additionally, there is an increase in disputes arising out of warranty obligations and inventory allocations. I am also monitoring manufacturers’ efforts to recognize and/or create new divisions for electronic vehicles that could attempt to disrupt the dealership-manufacturer model.

What are some best practices to reduce my dealership’s liability?

Dealerships interface with a number of audiences on a daily basis, including customers, employees, manufacturers, and state and federal agencies. Dealerships are also highly regulated businesses that generate a significant amount of attention from state and federal agencies.

To start, it is important to confirm that the documents your dealership uses in connection with a sale comply with current law. For example, does the Retail Installment Sales Contract include the required disclosures? Does the Motor Vehicle Purchase Agreement include current language about your delivery obligations, especially in light of a delayed delivery with the current inventory shortage? If you do not know the answers to these questions, then I recommend contacting an experienced attorney to ensure your deal documents comply with current laws.

Next, it is important to conduct an audit of your employment practices. For example, when was the last time that you reviewed whether certain employees are properly classified as exempt or non-exempt? Does your dealership’s Employee Handbook comply with current laws? Does your dealership comply with wage and hour laws? When was the last time your dealership conducted a harassment and discrimination training? These are all important questions that should be answered with the assistance of an attorney.

Finally, pay attention to all communications from your manufacturer(s). At times, it might be tempting to place the letter from a manufacturer in a drawer to “read later” because you are in the middle of a busy time at the dealership. However, it is crucial that you read each letter closely. What might seem like a positive change (i.e., an increase in your area of responsibility) may actually have negative implications down the road, such as decreased sales performance based on market share. It is important to read all correspondence from a manufacturer and contact counsel with any questions immediately because the Dealer Bill of Rights includes certain time periods to file a protest and you do not want to miss the deadline.

If you have any questions about what this new law means for you, we encourage you to consult with Hilary Holmes Rheaume and our Auto & Equipment Dealers practice group.