MTV-13-15-00012-P Off Premise Sales of Motor Vehicles

4/1/15 N.Y. St. Reg. MTV-13-15-00012-P

NEW YORK STATE REGISTER

VOLUME XXXVII, ISSUE 13

April 01, 2015

RULE MAKING ACTIVITIES

DEPARTMENT OF MOTOR VEHICLES

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. MTV-13-15-00012-P

Off Premise Sales of Motor Vehicles

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Amendment of section 78.8 of Title 15 NYCRR.

Statutory authority:

Vehicle and Traffic Law, sections 215(a) and 415

Subject:

Off premise sales of motor vehicles.

Purpose:

Provides guidance of off premise sales of motor vehicles by registered dealers.

Text of proposed rule:

Paragraph (2) of subdivision (c) of section 78.8, and such subdivision are amended to read as follows:

(c) A dealer may conduct a maximum of two (2) sales per calendar year at additional locations if:

(2) the dealer [mans] staffs, for the entire duration of the sale, a booth or desk at the away-from-premises location which has the dealer's name, registered street address, registration number and telephone number [prominently] displayed proportionate to the size of the sign or in letters at least [two] four inches high[.] with a stroke of three-fourths of one inch on a sign at least 18 square feet in size. All sales must take place at the booth or desk;

Paragraphs (1), (2), (3), (4), (5) and (6) of subdivision (d) of section 78.8 are amended to read as follows:

(1) a written request from a dealer, [a dealer association or a manufacturer] on a form prescribed by the commissioner, is received at least [fifteen] twenty days before the sale is to begin;

(2) the sale location is within twenty (20) miles of the dealer’s registered location, provided, however, in the counties of Westchester, Rockland, Bronx, New York, Kings, Queens, Richmond, Nassau and Suffolk, the sale location is within six (6) miles of the dealer’s registered location; and

(3) the sale is to be of ten consecutive days duration or less; [and]

(4) neither the dealer nor the away-from-premises location has a history of violations[.] ; and

(5) all third party participants in such sale are identified at the time of the request, and, in the case of banks and/or credit lenders, are certified by the New York State Department of Financial Services to operate in New York State,

(6) the sale location complies with all applicable local zoning requirements and, if required, all necessary permits have been acquired and are maintained at the dealer’s registered location.

Subdivision (e) is relettered (g) and new subdivisions (e) and (f) are added to section 78.8 to read as follows:

(e) The provision of subdivision (c) of this section regarding the maximum number of sales per calendar year and the provision of paragraph (2) of subdivision (d) of this section regarding the location of sales shall not apply to sales of recreational vehicles. For the purpose of this section, the term "recreational vehicle" shall have the same meaning as "house coach" as such term is defined in section one hundred nineteen of the Vehicle and Traffic Law.

(f) All advertising for sales away from the dealer’s registered location shall include the dealer’s name, registered street address, facility registration number and telephone number.

(g) A display of a vehicle at which the dealer has no sales personnel or employee present shall be considered a display and not a sale and is permitted without compliance with this section. A display of a vehicle at which the dealer has a sales person or employee present requires the dealer to comply with this section[.]; provided, however, that a display of vehicles at an event, such as an auto show, in which numerous manufacturers participate and which is for the purpose of display is permitted without compliance with this section.

Text of proposed rule and any required statements and analyses may be obtained from:

Heidi Bazicki, Department of Motor Vehicles, 6 Empire State Plaza, Rm. 522A, Albany, NY 12228, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Ida L. Traschen, Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory authority: Vehicle and Traffic Law (VTL) section 215(a) provides that the Commissioner of Motor Vehicles may enact rules and regulations that regulate and control the exercise of the powers of the Department. VTL section 415 controls the registration, rights and responsibilities of dealers.

2. Legislative objectives: VTL 415(1)(c) provides that a dealer must have a “place of business,” which “means a designated location at which the business of the dealer is conducted, and, in relation to a retail dealer, facilities for displaying new or used motor vehicles.” However, under the Commissioner’s broad regulatory, authority, Section 78.8 establishes the parameters for conducting off-premise sales. The purpose of the proposed regulation is to provide more specific guidance for off-premise sales by dealers.

3. Needs and benefits: The proposed rule is necessary to provide specific guidance for the conduct of off-premise sales in New York State. Over the past several years, an increasing number of dealerships have exploited loopholes in the current regulation by using third-party promotional companies to sell vehicles, instead of the dealer’s own employees, selling vehicles far from their relevant market area, and conducting almost constant off-premise sales, making it a part of their every-day business model, rather than a “special event” conducted periodically. These amendments are intended to control these excesses.

Specifically, the proposed regulation provides that: a dealer may conduct a maximum of two off-premise sales per calendar year, more prominent signage must be displayed at the off-premise site, the Commissioner must be given at least 20 days’ notice before the sale, on a form to be prescribed by the Commissioner, sales must be held within a designated distance from the dealer’s registered place of business, all third party participants must be identified at the time of the request, and the place of sale must comply with local zoning requirements. The rule provides that the maximum number of off-premise sale events shall not apply to the sales of recreational vehicles.

This proposed regulation provides the necessary regulatory framework for the conduct of off-premise sales, while permitting such sales to continue, particularly since they benefit both the dealers who conduct such sales and the customers who purchase motor vehicles at such sales.

4. Costs: a. to regulated parties:

Dealers may need to purchase a new sign to comport with the regulation. The cost will be de minimus.

b. cost to the State, the agency and local governments: This proposed rule will have no fiscal impact on the DMV. In addition, it will not impact local governments, since the regulation concerns the regulation of off-premise sales by dealers.

c. source: The Department’s Office of Vehicle Safety provided this information.

5. Local government mandates: The proposed rule will not impact local governments, since it concerns the regulation of off-premise sales by dealers.

6. Paperwork: The proposed rule will require a dealership to request permission to conduct an off-premise sale using a new DMV form, on which the dealership would certify its compliance with all relevant DMV requirements and restrictions. Currently, dealers request permission in a letter to the DMV. The dealer associations that reviewed the proposed rule recommended that the DMV collect the information required on the new form.

7. Duplication: This proposed regulation does not duplicate or conflict with any State or Federal rule.

8. Alternatives: The Department sought comments from the New York State Automobile Dealers Association, the Greater New York Automobile Dealers Association, the Eastern New York Coalition of Automotive Retailers, the Rochester Automobile Dealers Association, the Syracuse Automobile Dealers Association, and the Niagara Frontier Automobile Dealers Association, regarding the proposed regulation. As a result of those comments the Department made some changes to our initial proposal. New language was added to provide that compliance with section 78.8 does not apply to the display of vehicles at an event, such as an auto show, in which numerous manufacturers participate. Additionally, the proposed rule will require applicants for off-premise sales to complete a form prescribed by the Commissioner. Such applicant will be required to submit information suggested by the dealer associations, such as the name of the dealer’s employees/salespersons, so that such employees are identified as NYS employees subject to NYS labor laws, worker’s compensation laws, benefits, and tax liabilities. Some of the dealers recommended that a $50,000 bond be posted by those conducting off-premise sales. We rejected this proposal due to the undue burden it would impose on used car dealers.

9. Federal standards: The rule does not exceed any Federal standards.

10. Compliance schedule: The Department expects that all regulated parties will be in compliance upon adoption of the regulation.

Regulatory Flexibility Analysis

1. Effect of rule: There are currently over 11,800 dealers in New York State, the majority of which are small businesses. This proposed regulation would have no impact on local governments.

2. Compliance requirements: Dealers who wish to conduct off-premise sales would be required to comply with the proposed rule. Such requirements include signage standards, limitations on the distance a sale can be conducted from the dealer’s place of business, notification of third party participants, compliance with local zoning requirements, and submitting a form, prescribed by the Commissioner, when applying to conduct an off-premise sale.

3. Professional services: This regulation would not require dealers to obtain new professional services.

4. Compliance costs: Dealers may need to construct or purchase a new sign that comports with the regulation, but such cost will be de minimus.

5. Economic and technological feasibility: The proposal is economically and technologically feasible for dealers to comply with as it does not impose any new technological requirements.

6. Minimizing adverse impact: The Department sought comments from the New York State Automobile Dealers Association, the Greater New York Automobile Dealers Association, the Eastern New York Coalition of Automotive Retailers, the Rochester Automobile Dealers Association, the Syracuse Automobile Dealers Association, and the Niagara Frontier Automobile Dealers Association, regarding the proposed regulation. As a result of those comments the Department made some changes to our initial proposal. New language was added to provide that compliance with section 78.8 does not apply to the display of vehicles at an event, such as an auto show, in which numerous manufacturers participate. Additionally, the proposed rule will require applicants for off-premise sales to complete a form prescribed by the Commissioner. Such applicant will be required to submit information suggested by the dealer associations, such as the name of the dealer’s employees/salespersons, so that such employees are identified as NYS employees subject to NYS labor laws, worker’s compensation laws, benefits, and tax liabilities. Some of the dealers recommended that a $50,000 bond be posted by those conducting off-premise sales. We rejected this proposal due to the undue burden it would impose on used car dealers.

7. Small business and local government participation: See response to number 6 above.

Rural Area Flexibility Analysis and Job Impact Statement

A rural area flexibility analysis and a job impact statement are not required for this rulemaking proposal because it will not adversely affect rural areas or job creation.

This proposal concerns the off-site sales by motor vehicle dealers. Due to its narrow focus, this rule will not impose an adverse economic impact on rural areas or on employment opportunities.