PROPOSED RULEMAKING
STATE BOARD OF VEHICLE MANUFACTURERS, DEALERS AND SALESPERSONS
[49 PA. CODE CH. 19]
Branch Lots
[33 Pa.B. 1124] The State Board of Vehicle Manufacturers, Dealers and Salespersons (Board) proposes to add § 19.5 (relating to branch lots) to read as set forth in Annex A.
The proposed rulemaking would inform licensees of the conditions under which a licensed dealer may keep vehicles at an unlicensed location used only for storage purposes and the conditions under which a licensed dealer may exhibit a single vehicle at an unlicensed location.
Effective Date
The proposed rulemaking will be effective upon publication of final-form rulemaking in the Pennsylvania Bulletin.
Statutory Authority
The proposed rulemaking is authorized under section 4 of the Board of Vehicles Act (act) (63 P. S. § 818.4).
Background and Need for the Proposed Rulemaking
Storage of Vehicles
Section 5(e)(1)(ii) of the act (63 P. S. § 818.5(e)(1)(ii)) provides that ''[a] branch lot shall be a separately licensed location which meets the facility requirements defined herein and by the regulations as a main lot, unless used solely for the storage of vehicles.'' As space to park vehicles has become a premium commodity, dealers have developed storage lots that are separate and apart from their dealership facilities. Licensees, the Pennsylvania Independent Automobile Dealers Association (PIADA) and law enforcement agents have asked the Board to promulgate a regulation further defining ''used solely for the storage of vehicles'' so that dealers may comply with the act and law enforcement agents may enforce the act. The Board's proposed rulemaking would define storage of vehicles in relation to engaging in the business of a vehicle dealer in a way that is consistent with public protection concerns that prohibit a dealer from conducting sales activity at an unlicensed location.
Single Vehicle Display
Individual licensees and PIADA have asked the Board to clarify whether the placement of a single vehicle at an unlicensed location is always the display of that vehicle for sale, and therefore prohibited, or whether the placement of a single vehicle at an unlicensed location may, under certain circumstances, be considered permissible activity. The licensees' concern arises because many shopping malls approach licensees to place automobiles in the shopping mall. PIADA has informed the Board that this type of vehicle display is permitted in states surrounding this Commonwealth and that Commonwealth dealers believe they are at a competitive disadvantage because the act requires vehicles to be displayed at licensed locations. Some surrounding states permit single vehicle displays at unlicensed locations provided the dealer is issued a special permit for the display. The Board proposes to make a distinction between display for sale which may only occur at a licensed location and other single vehicle display. This distinction will permit a licensed dealer to place a single vehicle at an unlicensed location.
Section 19(34) of the act (63 P. S. § 818.19(34)) authorizes the Board to discipline a dealer who ''conducts its business . . . at any other location than that authorized by its license.'' Under section 2 of the act (63 P. S. § 818.2), a dealer is a person ''who is engaged in the business of buying, selling or exchanging new or used vehicles or an interest in new or used vehicles.'' Section 2 of the act also defines ''buying, selling or exchanging'' to ''include listing, offering, auctioning, advertising, representing or soliciting, offering or attempting to solicit or negotiate on behalf of another a sale, purchase or exchange or any similar or related activity.''
With those definitions in mind, clearly the General Assembly did not intend to prohibit all advertising at a location other than the licensed location; a ban would prohibit highway billboards, sideboard advertisements at sporting events and adboards on buses and subways. The General Assembly must have intended to prohibit only activities directly related to buying, selling or exchanging vehicles at locations other than the dealer's licensed location.
Section 19.18(a)(3) (relating to established place of business for dealers) defines a dealer's display area as a place ''where the public is permitted and invited in the regular course of business to inspect or test drive . . . vehicles . . . offered for sale.'' Section 19.18(a)(3) goes on to describe what requirements a ''display area'' must meet. These requirements include, among other things: adequate space to display and show no fewer than five vehicles; grading, surface and lighting requirements; requirements that the area be separated from other businesses; and requirements that the area have a telephone line, a sign showing the licensed name of the dealer and conspicuously posted business hours. Clearly, places such as a mall or someone's front yard are not ''display areas'' under the Board's regulations. Proposed § 19.5(c) reinforces the distinction between ''display areas'' as defined by § 19.18(a)(3) and an area where a vehicle is parked for use as an advertisement.
The Board has set the display limit at one vehicle to reduce consumer confusion. A consumer encountering one car on display at the county fairgrounds or local shopping mall is likely to consider that car an advertisement and will not be confused, disappointed or surprised to find that the car cannot be ''inspected'' as it could at a licensed location. By comparison, a consumer encountering several cars on display at a county fairground or shopping mall may reasonably expect to be able to inspect the displayed vehicles. This expectation is reasonable because several cars displayed together resemble a sales lot, whereas one car resembles a three-dimensional billboard.
The Board is cognizant of the concern expressed by many dealers that the prohibition against conducting business at other than the licensed location places Commonwealth dealers at a competitive disadvantage compared with dealers in other states. Dealers wish to display vehicles in high traffic areas, such as shopping malls, or at special events, such as fairs, which draw large numbers of potential customers. The Board must balance the needs of this Commonwealth's licensed dealers with the needs of consumers and must resolve all disputes in light of its primary mission: to protect the public. Allowing a dealer to place a single vehicle at an unlicensed location, provided that no sales activity is conducted at that location, would not conflict with statutory requirements because the dealer would not be conducting business at the unlicensed location. In addition, restricting dealers to placing a single vehicle at an unlicensed location would not undermine the purposes of the act. The Board therefore proposes to amend its regulations to permit a dealer to place a single vehicle at an unlicensed location, with specific conditions to ensure that no sales activity occurs at the unlicensed location.
Description of Proposed Rulemaking
Storage of Vehicles
The proposed rulemaking defines storage of vehicles in contrast to the display or offer for sale of vehicles. A location is used solely for storage if it is identified as a storage-only lot, if no salespersons are present at the lot to converse with potential customers, if the vehicles are not demonstrated for customers at the lot, if the public is not permitted access to the vehicles, if the dealer does not advertise his or her name or other, licensed, locations at the lot and if potential customers may not acquire sales literature at the lot and cannot communicate with the dealer or his representative from the lot.
Single Vehicle Display
The proposed rulemaking requires that an unlicensed area used for display of a single vehicle may not contain the following: (1) more than one vehicle and the vehicle displayed must be locked at all times; (2) salespeople; (3) a sales office; and (4) sales agreement forms or other documents routinely used in vehicle sales transactions. This list reinforces the definition of ''display area'' given in § 19.18(a)(3) in two ways. First, by not permitting inspection or test-driving of vehicles or dissemination of sales literature, this proposed rulemaking strives to reduce consumer confusion. A consumer encountering a car in a mall is more likely to consider the car an advertisement and not an item for sale if that consumer is unable to enter the vehicle or obtain sales information. Second, by clearly spelling out what may not be present in an area if the dealer wishes to display a car without licensing the area, § 19.5(c) clarifies the rather lengthy definitions in § 19.18(a)(3).
Fiscal Impact and Paperwork Requirements
The proposed rulemaking will have no adverse fiscal impact on the Commonwealth or its political subdivisions. The proposed rulemaking will impose no additional paperwork requirements upon the Commonwealth, political subdivisions or the private sector.
Sunset Date
The Board continuously monitors the effectiveness of its regulations. Therefore, no sunset date has been assigned.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on February 12, 2003, the Board submitted a copy of this proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the Senate Consumer Protection and Professional Licensure Committee and the House Professional Licensure Committee. In addition to submitting the proposed rulemaking, the Board has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Board. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed rulemaking, it will notify the Board within 30 days of the close of the Committees' public comment period. The notification shall specify the regulatory review criteria that have not been met by the portion of the proposed rulemaking to which an objection is made. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Board, the General Assembly and the Governor of objections raised.
Public Comment
Interested persons are invited to submit written comments, suggestions or objections regarding this proposed rulemaking to Teresa Woodall, Administrative Assistant, State Board of Vehicle Manufacturers, Dealers and Salespersons, P. O. Box 2649, Harrisburg, PA 17105-2649, vehicle@pados.state.pa.us within 30 days following publication of this proposed rulemaking in the Pennsylvania Bulletin.
EDWARD J. CERNIC, Jr.,
ChairpersonFiscal Note: 16A-605. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 49. PROFESSIONAL AND VOCATIONAL STANDARDS
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL AND OCCUPATIONAL AFFAIRS
CHAPTER 19. STATE BOARD OF VEHICLE
MANUFACTURERS, DEALERS AND SALESPERSONS
GENERAL PROVISIONS § 19.5. Branch lots.
(a) Facility. Unless otherwise exempted by the act or this chapter, any location where a licensed vehicle dealer displays or offers vehicles for sale shall be licensed and comply with the facilities requirements set forth in the act and § 19.18 (relating to established place of business for dealers).
(b) Storage of vehicles. The storage of vehicles by a licensed vehicle dealer at an unlicensed location will not be considered to be the display or offer for sale of vehicles at that location if:
(1) The lot is used solely for the storage of vehicles.
(2) The lot is identified by a sign with the dealership name and a designation that the lot is for ''storage only.'' The area may not otherwise be identified.
(3) No salesperson is present at the lot other than as necessary to repair, recondition, inspect or move any of the vehicles.
(4) No salesperson engages in any demonstration or discussion of product features of the vehicles or discusses any terms of sale.
(5) The public is not permitted access to any of the vehicles at the lot and the vehicles are not capable of being entered or operated (other than by criminal acts).
(6) No sign or other marking at the lot or on any of the vehicles at the lot (except for a Federally-mandated manufacturer's price sticker) indicates that any of the vehicles at the lot are available for sale at any other location.
(7) No literature, such as business cards or brochures, is available for potential customers to remove from the lot.
(8) Potential customers are not able to communicate with a representative of the dealer from the lot, by telephone, e-mail, computer or otherwise, to negotiate the sale of, to obtain additional information concerning, or to otherwise discuss the vehicles at the unlicensed lot or other vehicles available for sale by the dealer.
(c) Single vehicle display.
(1) The placement of a single vehicle before the public will not be considered the buying, selling or exchanging of the vehicle, as defined in section 2 of the act (63 P. S. § 818.2), if:
(i) The placement is by a vehicle dealer licensed in this Commonwealth.
(ii) No more than one vehicle is placed at the location.
(iii) A salesperson present at the location does not discuss the features of the vehicle or other vehicles handled by the dealership and does not negotiate or conclude the sale of the vehicle or another vehicle of the dealer.
(iv) There is no sales office at the location.
(v) There are no sales agreement forms or other documents routinely used in vehicle sales transactions present at the location.
(vi) The vehicle is locked or otherwise not capable of being entered or operated by potential customers or others (other than by criminal acts).
(vii) The location is not at the licensed premises of any vehicle dealer or vehicle auction.
(2) This subsection applies to the placement of automobiles, light trucks and motorcycles, but does not apply to the placement of recreational vehicles, mobile homes, manufactured housing and other vehicles not identified in this subsection.
[Pa.B. Doc. No. 03-352. Filed for public inspection February 28, 2003, 9:00 a.m.]
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