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Illinois lawmakers move 1 of 2 dealer bills as session wraps (sort of)

June 2, 2017
SPRINGFIELD — At the expected close of the Illinois General Assembly’s spring session: good news and maybe more good news in the days ahead for the state’s franchised dealers.
Legislation to improve the dealer-manufacturer dynamic advanced with Senate Bill 1687, which would prevent manufacturers from forcing dealers to remodel their stores twice within 10 years. The bill passed May 31 and heads to Gov. Bruce Rauner’s desk for his signature.
As important, another bill that would provide clarity to a recently enacted public act sits on the cusp of passing the legislature and could pass in the current overtime session. House Bill 1560 would clean up an impending law, scheduled to take effect July 1, which requires dealers to provide a 15-day/500 miles implied warranty on most used vehicles.
Legislators revisited the implied warranty rule to make clear what components would be covered by the warranty and where the boldfaced statement referencing the warranty should appear among all the paperwork presented to a customer at closing.
Some companies which produce forms have been printing revised paperwork for months, to be ready for the July 1 implementation of the rule. However, House Bill 1560, if passed, would allow the warranty disclosure to appear either in the body of the purchase agreement or on a separate disclosure form. It also clarifies the power train components involved in the implied warranty. Further, if a dealer offers a used-vehicle warranty that provides equal or greater coverage than the new statute outlines, the new disclosure would not have to be included in paperwork.
But the legislation does not delay the original July 1 effective date, even though the governor would have 30 days to approve or veto it.
The bill which passed has been reported several times in this newsletter during the General Assembly’s current session. Among other changes to the Illinois franchise act, it would prohibit a manufacturer from demanding a dealership remodel twice within 10 years.
It also would prohibit manufacturers from forcing a dealer to use a manufacturer-designated vendor for building-improvement materials if the dealer can find substantially similar materials at a lower cost.
The bill also would require a manufacturer to consider local factors in the dealer’s market area when evaluating a dealer’s sales performance as part of the termination process, and it would halt the manufacturer from exercising a right to buy the franchise from a selling dealer unless several steps are taken.
Further, Senate Bill 1687 would forbid a manufacturer from rescinding sales incentives paid to a dealer whose customer exports a vehicle out of the country, unless the manufacturer can prove that the dealer knew or should have known that the vehicle would be exported.
Both bills are backed by the Chicago Automobile Trade Association and the Illinois Automobile Dealers Association.