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I thought I'd post this, seeing that Rick and Char are from Arizona.
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Automakers fight Arizona dealer law
Measure protecting sales outlets goes too far, companies say
By Mark Truby / The Detroit News
DETROIT -- U.S. and foreign automakers banded together Wednesday to challenge a new state franchise law in Arizona aimed at preventing manufacturers from encroaching on the traditional turf of dealers.
The legal battle could have national implications as other states are looking at the Arizona law as a blueprint for similar legislation.
The Arizona law, which passed in April and is scheduled to take effect Monday, prohibits automakers from owning part or all of a dealership in most cases. It also prevents manufacturers from offering financing directly to consumers, doling out sales leads to particular dealers or controlling vehicle's final sale price.
The automakers' suit was filed in U.S. District Court in Phoenix by the Alliance of Automobile Manufacturers and the Association of International Automobile Manufacturers.
The trade groups are asking for a temporary injunction and ultimately that the law be ruled unconstitutional because it unfairly restricts interstate commerce and limits consumer choice.
"We are not challenging the role of the dealers, we are challenging a flawed law," said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, the chief lobbying group for domestic and foreign carmakers.
The law, for example, makes it illegal for auto companies to post average sales price of cars and trucks on the Internet -- a practice Ford Motor Co. began testing in Arizona last year -- or provide 24-hour roadside assistance.
"They just went too far with this law," Bergquist said.
Arizona dealers and the state's lawmakers say the statue is necessary to protect dealers from automakers. Dealers have grown increasingly wary as automakers have attempted forays into operating car dealerships and partnered with Internet car-selling firms. Distrust remains high even though Ford and General Motors Corps. have backed away from plans to invest in dealerships.
"It scared the daylights out of the dealers," said Dan Myers, a Talahassee, Fla., lawyer whose firm drafted the Arizona legislation. "All they want is to ensure they don't have to compete against the manufacturers to sell cars. That's not a level playing field."
Both sides are gearing up for a fight.
On Wednesday before the suit was filed, Ford division president James O'Connor sent a memo to Ford dealers alerting them to the suit. The law "places unacceptable restrictions on the way (auto companies) do business," O'Connor wrote.
Ford and other auto companies are also clearly worried that similar franchise laws will follow if the Arizona law is successful.
"We know that dealers are seeking to use this as a blueprint and it would be likely to spread," Bergquist said.
Similar legislation is being considered in Oklahoma and Missouri. By next year, Myers predicts six to eight states will have enacted statutes preventing manufacturers from competing with dealers.
"Dealers tend to be pretty wealthy and powerful in ther community so it's not surprising that these fights are starting to play out," said Jim Levinson, an economics professor at the University of Michigan who monitors the auto industry. "It's going to get heated."
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Automakers fight Arizona dealer law
Measure protecting sales outlets goes too far, companies say
By Mark Truby / The Detroit News
DETROIT -- U.S. and foreign automakers banded together Wednesday to challenge a new state franchise law in Arizona aimed at preventing manufacturers from encroaching on the traditional turf of dealers.
The legal battle could have national implications as other states are looking at the Arizona law as a blueprint for similar legislation.
The Arizona law, which passed in April and is scheduled to take effect Monday, prohibits automakers from owning part or all of a dealership in most cases. It also prevents manufacturers from offering financing directly to consumers, doling out sales leads to particular dealers or controlling vehicle's final sale price.
The automakers' suit was filed in U.S. District Court in Phoenix by the Alliance of Automobile Manufacturers and the Association of International Automobile Manufacturers.
The trade groups are asking for a temporary injunction and ultimately that the law be ruled unconstitutional because it unfairly restricts interstate commerce and limits consumer choice.
"We are not challenging the role of the dealers, we are challenging a flawed law," said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, the chief lobbying group for domestic and foreign carmakers.
The law, for example, makes it illegal for auto companies to post average sales price of cars and trucks on the Internet -- a practice Ford Motor Co. began testing in Arizona last year -- or provide 24-hour roadside assistance.
"They just went too far with this law," Bergquist said.
Arizona dealers and the state's lawmakers say the statue is necessary to protect dealers from automakers. Dealers have grown increasingly wary as automakers have attempted forays into operating car dealerships and partnered with Internet car-selling firms. Distrust remains high even though Ford and General Motors Corps. have backed away from plans to invest in dealerships.
"It scared the daylights out of the dealers," said Dan Myers, a Talahassee, Fla., lawyer whose firm drafted the Arizona legislation. "All they want is to ensure they don't have to compete against the manufacturers to sell cars. That's not a level playing field."
Both sides are gearing up for a fight.
On Wednesday before the suit was filed, Ford division president James O'Connor sent a memo to Ford dealers alerting them to the suit. The law "places unacceptable restrictions on the way (auto companies) do business," O'Connor wrote.
Ford and other auto companies are also clearly worried that similar franchise laws will follow if the Arizona law is successful.
"We know that dealers are seeking to use this as a blueprint and it would be likely to spread," Bergquist said.
Similar legislation is being considered in Oklahoma and Missouri. By next year, Myers predicts six to eight states will have enacted statutes preventing manufacturers from competing with dealers.
"Dealers tend to be pretty wealthy and powerful in ther community so it's not surprising that these fights are starting to play out," said Jim Levinson, an economics professor at the University of Michigan who monitors the auto industry. "It's going to get heated."
