Gov. Rick Snyder signs bipartisan bill clarifying existing direct auto sales law

Calls for healthy, open discussion on potential changes to business model; also signs one other bill into law

Tuesday, Oct. 21, 2014

LANSING, Mich. – Gov. Rick Snyder today signed bipartisan legislation that clarifies and strengthens an existing law about direct auto sales in Michigan. 

House Bill 5606, sponsored by state Rep. Aric Nesbitt, also prohibits auto manufacturers from dictating fees franchised dealers can charge customers. The legislation allows individual auto dealers to make the business decision whether to charge the transaction fee.

The bill was approved by 38-0 in the state Senate, and 106-1 in the state House of Representatives.

Snyder said Tuesday there has been a misunderstanding about the legislation.

“This bill does not, as some have claimed, prevent auto manufacturers from selling automobiles directly to consumers at retail in Michigan – because this is already prohibited under Michigan law,” Snyder said in a letter to lawmakers that accompanies the signed bill.

Language in the bill states plainly that a manufacturer can only sell new vehicles to consumers through its own network of franchised dealers.  HB 5606 deletes the word “its” from a sentence in existing law.

This change would merely allow manufacturers who do not have their own franchised dealers to sell through another manufacturer’s network of franchised dealers. They will be required, just as they are now, to sell through a franchised dealer, and not directly to consumers. HB 5606 does nothing to change this fact.  At most, it clarifies the existing requirement in Michigan law.

Snyder requested Attorney General Bill Schuette analyze the effect of the bill, and the Attorney General’s Office also concluded that auto manufacturers could sell only through franchised dealers, as is the case in existing law.

Snyder said lawmakers can and should discuss the current business model soon to determine if it is best for the state’s consumers.

“We should always be willing to re-examine our business and regulatory practices with an eye toward improving the customer experience for our citizens and doing things in a more efficient and less costly fashion,” he said.

The bill is now Public Act 354 of 2014.                  

The governor also signed HB 5273, sponsored by state Rep. Nancy Jenkins which connects small businesses with funding opportunities by creating Michigan Investment Markets, which operate as intrastate broker-dealers. The law connects Michigan businesses and residents, allowing for stock in local businesses to be bought, sold and traded.

The legislation is an extension of the crowdfunding measure enacted in 2013, allowing companies to use crowdfunding to raise money for their business. It is now PA 355.

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Related Documents
HB 5606 Signing Letter PDF icon