Local GM car dealer backs ‘Bill of Rights’ law

Local GM car dealer backs 'Bill of Rights' law

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Scott Holloway of Holloway Buick Pontiac GMC Cadillac on the Route 1 Bypass in Portsmouth, stands in the showroom where used cars are featured.Deb Cram/dcram@seacoastonline.com

"Many consumers think we are one and the same, but we are not. It's an adversarial relationship and the manufacturers can get heavy handed," said Holloway, owner of the Holloway Buick GMC and Cadillac dealerships in Portsmouth.

That adversarial relationship will be tested further as the N.H. House considers a measure to alter some of the contract arrangements between dealers and manufacturers and expand the existing "Auto Dealer Bill of Rights" law. Senate Bill 126 had broad bipartisan sponsorship — including Sen. Martha Fuller Clark, D-Portsmouth, Sen. Nancy Stiles, R-Hampton, and Rep. Donna Schlachman, D-Exeter — and passed the Senate easily by a 21-2 vote last month.

"It's a bill supported by almost every auto dealer in the state and it's a necessary intervention by government to protect dealers," said Holloway, who admits to a libertarian bias of less government most of the time.

One of the most welcome pieces of the legislation, Holloway said, is that it would prevent manufacturers from forcing dealers to rebuild or renovate their facilities more than once every 15 years. Holloway, who will testify Tuesday before the House Commerce and Consumer Affairs Committee, said since the 2009 bankruptcies and subsequent reorganizations of General Motors and Chrysler, auto manufacturers have forced dealers to renovate or rebuild their dealerships. In his case, the cost was more than $1 million.

Holloway said he was not only forced to break off from his flagship dealership and build a separate Cadillac dealership, but GM also required him to furnish the facilities with specific types of furniture or flooring and only from vendors GM approved.

"They wanted me to put $4,200 chairs in my showroom. I found I could get six of the same chairs locally for the same price," he said. He added there is no correlation between the amount dealers are forced to spend to regularly renovate or upgrade their facilities and increased sales. He said the added cost of continually remortgaging their properties to finance renovations is another unnecessary burden.

Opponents of the measure say SB 126 is an unwelcome intrusion of government into contracts between private parties, will raise auto prices for consumers, and will have unintended consequences. "In saying auto dealers no longer are required to hold up their end of the bargain, the government would vastly expand its power, allowing politics to override free-market principles and tilt policies in favor of one segment of an industry over the other," said Stephen DeMaura, former executive director of the New Hampshire Republican Committee, in an opinion piece submitted to the Portsmouth Herald. DeMaura, who is also president of the business advocacy organization Americans for Job Security, said he believes "such policymaking will lead to increased government involvement in the business process, the prioritization of litigation, and ultimately higher prices for products sold by the auto industry — all of which will contribute to rising prices for automobiles that consumers will be forced to absorb."

Holloway and the New Hampshire Auto Dealers Association dismiss these concerns and point to the fact that similar laws have been passed in other states. Pete McNamara, president of the N.H. Auto Dealers Association, said the attacks on the bill from trade organizations such as the Alliance of Auto Manufacturers (which has run newspaper ads in the state) ignore the realities of car buying for most consumers.

"Customers don't care if the front of the building has fancy sheet metal or the show room has leather couches," McNamara said. "They care about the vehicle quality and the price."

SB 126 will provide dealers with the power to "buy local," he said, instead of being forced to use out-of-state vendors for goods and services. And the proposal will mandate more transparency between automakers and local dealers.

The transparency provision that would allow dealers to annually see the dealer files kept by manufacturers is a New Hampshire twist that distinguishes it from similar laws in other states. The manufacturers object because they say it would reveal proprietary information that could affect negotiations. But Holloway said the provision, which was amended by the Senate to only cover new files going forward, said the transparency is important in allowing dealers to have a more even hand in dealership negotiations.

"People think we work hand in hand as partners (with manufacturers). We don't. Dealers are independent business people and they (the manufacturers) have done some pretty questionable things in the past," he said.