BY ERICA PALMER The Salt Lake Tribune
For the first time in years, Utah lawmakers are making a serious push to dismantle — or at least chip away at — state laws protecting car dealerships.
The assault on longstanding rules by free-market Republicans who view them as protectionist and anti-competitive has taken the form of several bills up for consideration in the current legislative session.
One would amend a 1991 law that prohibits establishment of a new-car dealership within 15 miles of an existing one, unless it is OK'd by a board whose members include several representing current dealers.
Another would scrap the state mandate that a dealership must close on one weekend day — effectively a Sunday-closing law the late car dealer and Utah Jazz owner Larry H. Miller successfully requested in 2000.
A third measure would open the door for manufacturers to sell directly online, and another would change the formula for distribution of local tax revenue from auto sales.
Freshman Rep. Kim Coleman, R-West Jordan, said the bills take baby steps toward where she would like to end up.
She describes the raft of proposals as the "initial opening of this set of laws that we're going to try to repeal and or modify in the years to come. This is 25 years of protections in the making — very embedded in the industry — so it's going to take a while to peel some of these back."
Craig Bickmore, director of the New Car Dealers of Utah association, said the industry is concerned about attempts to shake up the current system that he said works "marvelously well."
Dealerships operate under unique protection laws because it is a unique industry, he said. The manufacturers set all the terms of the franchise agreements and franchisees have to take risks and make huge investments to open a new dealership.
"The reason for franchise laws is to keep that critical balance between the very, very large manufacturer and a comparatively small entity like a dealership," Bickmore said in an interview.
Although many people have labeled the laws as "anti-competition," he said that is not the case. "They are valuable because in any free-enterprise system, there has to be a set of rules and regulations for free enterprise to flourish. …[Car dealers] are the most competitive people on the planet. But there is one group they can't compete against: the manufacturers."
Danger zone • The bill that appears to have the most juice in this legislative session is one sponsored by Rep. Mike McKell, R-Spanish Fork, that would ease restrictions on opening new car dealerships anywhere near existing ones.
McKell said his main motive in pushing HB290 is to get more car dealerships in his city, one of the fastest-growing in the state.
"Car dealerships are great citizens of their community and they add tremendous value to a community," he said during a public hearing.
HB290 easily cleared committee and last weekpassed the House on a 70-0 vote and won unanimous approval Monday in a Senate committee.
A big attraction car dealerships hold for local governments is the lucrative slice of sales tax revenue — ten of millions of dollars — which now goes to the city where a dealership is located.
"That is only enjoyed by a handful of cities," Coleman said in an interview. "The state, through its regulation, through its sanctioning of protections, has picked winners and losers among cities."
Resource:
Free-Market Lawmakers Take Aim at Utah’s Restrictive Car Dealer Laws
Free-Market Lawmakers Take Aim at Utah’s Restrictive Car Dealer Laws
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