Removes certain limitations on manufacturers regarding direct sale of zero emission light-duty trucks to consumers.

A2450

ASSEMBLY, No. 2450

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblywoman TENNILLE R. MCCOY

District 14 (Mercer and Middlesex)

SYNOPSIS

���� Removes certain limitations on manufacturers
regarding direct sale of zero emission light-duty trucks to consumers.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
concerning the sale of zero emission motor vehicles,
amending P.L.1999, c.45 and amending and supplementing P.L.1985, c.361.�

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 5 of P.L.1999,
c.45 (C.56:10-7.4) is amended to read as follows:

���� 5.��� It shall be a violation
of P.L.1971, c.356 (C.56:10-1 et seq.) for any motor vehicle franchisor,
directly or indirectly, through any officer, agent or employee, to engage in
any of the following practices:

���� a.���� To impose unreasonable
standards of performance or unreasonable facilities, financial, operating or
other requirements upon a motor vehicle franchisee.

���� b.��� To base the disapproval
of the transfer, sale or assignment of a motor vehicle franchise, or any
interest therein, on the ground that the proposed transferee is not a natural
person.

���� c.���� To fail to compensate a
motor vehicle franchisee for all reasonable costs incurred by the franchisee in
complying with the requirements imposed on the franchisee by the franchisor
relating to a product recall.

���� d.��� To utilize an arbitrary
or unreasonable formula or other calculation or process intended to gauge
performance as a basis for making any decision or taking any action governed by
P.L.1971, c.356 (C.56:10-1 et seq.).

���� e.���� Except as provided
pursuant to section 6 of P.L.2015, c.24 (C.56:10-27.1)
and section 5 of
P.L.��� , c.�� (C.�������� ) (pending before the Legislature as this bill)

, to own or operate or enter into an agreement with a person, other than an
existing motor vehicle franchisee, to operate a retail facility for the
servicing of motor vehicles, which is authorized to perform warranty service on
motor vehicles manufactured or distributed by the motor vehicle franchisor.�
The establishment, relocation, reopening or reactivation of such a facility
pursuant to an agreement with a motor vehicle franchisee shall be subject to
the provisions of P.L.1982, c.156 (C.56:10-16 et seq.), except that paragraph
(3) of subsection b. of section 8 of that act (C.56:10-23) shall not be
applicable.� Notice shall be given to motor vehicle franchisees in the same
line make or makes within six miles of the proposed retail facility for the
servicing of motor vehicles which is authorized to perform warranty service on
motor vehicles manufactured or distributed by the motor vehicle franchisor.

���� f.���� To require an
unconditional release from a motor vehicle franchisee without permitting the
franchisee to except from the release any claims for outstanding financial
obligations of the motor vehicle franchisor to the motor vehicle franchisee for
which payment will not be made at or before the giving of the release.

���� g. (1) To require or attempt
to require a motor vehicle franchisee to order or purchase a new or used motor
vehicle, or any accessory or equipment thereof not required by law; or (2) to
require or attempt to require a motor vehicle franchise to accept delivery of
any motor vehicle, or any accessory or equipment thereof not required by law,
which is not as ordered by the motor vehicle franchisee; or (3) to take or
withhold or threaten to take or withhold any action, impose or threaten to
impose any penalty, or deny or threaten to deny any benefit, as a result of the
motor vehicle franchisee's failure or refusal to purchase, order or accept
delivery of any such motor vehicle, accessory or equipment. This subsection
shall not prevent a motor vehicle franchisor from requiring that a motor
vehicle franchisee carry a representative inventory of models offered for sale
by the motor vehicle franchisor.

���� h.��� To fail or refuse to
sell or offer to sell to all motor vehicle franchisees in a line make every
motor vehicle sold or offered for sale to any motor vehicle franchisee of the
same line make, or to fail or refuse to sell or offer to sell such motor vehicles
to all motor vehicle franchisees at the same price for a comparably equipped
motor vehicle, on the same terms, with no differential in discount, allowance,
credit or bonus, and on reasonable, good faith and non-discriminatory
allocation and availability terms.� However, the failure to deliver any such
motor vehicle shall not be considered a violation of this section if the
failure is not arbitrary and is due to a lack of manufacturing capacity or to a
strike or labor difficulty, a shortage of materials, a freight embargo or other
cause over which the franchisor has no control.� A motor vehicle franchisor
shall not require a motor vehicle franchisee to purchase unreasonable
quantities of advertising materials, purchase special tools not required to
properly service a motor vehicle or undertake sales person or service person
training unrelated to the motor vehicle or meet unreasonable display
requirements as a condition of receiving a motor vehicle.

���� i.���� Unless compelled by law
or legal process, (1) if the customer has objected thereto in writing, to
require a motor vehicle franchisee to publish, release, convey or otherwise
provide information obtained with respect to any customers, contracts,
products, services or other transactions of the motor vehicle franchisee which
is not necessary for the motor vehicle franchisor to meet its obligations to
consumers or the motor vehicle franchisee, including vehicle recalls or other
requirements imposed by State or federal law, or for complying with the duties
or obligations of the respective parties under the franchise; or (2) to release
such information which has been provided to it by the motor vehicle franchisees
to any third party.

���� j.���� To impose or attempt to
impose any requirement, limitation or regulation on, or interfere or attempt to
interfere with, the manner in which a motor vehicle franchisee utilizes the
facilities at which a motor vehicle franchise is operated, including, but not
limited to, requirements, limitations or regulations as to the line makes of
motor vehicles that may be sold or offered for sale at the facility, or to take
or withhold or threaten to take or withhold any action, impose or threaten to
impose any penalty, or deny or threaten to deny any benefit, as a result of the
manner in which the motor vehicle franchisee utilizes his facilities, except
that the motor vehicle franchisor may require that the portion of the
facilities allocated to or used for the motor vehicle franchise meets the motor
vehicle franchisor's reasonable, written space and volume requirements as
uniformly applied by the motor vehicle franchisor.� The provisions of this
subsection shall not apply if the motor vehicle franchisor and the motor vehicle
franchisee voluntarily agree to the requirement and separate and valuable
consideration therefor is paid.

���� k.��� To require or attempt to
require a motor vehicle franchisee, or the owner or landlord of property on
which a motor vehicle franchise is operated, to give a motor vehicle franchisor
or any person under the control of the motor vehicle franchisor an interest in
or option with respect to the real property on which the motor vehicle
franchise is operated, to restrict the uses to which the facility at which the
motor vehicle franchise is operated may be put during or after the term of the
franchise, or to take or withhold or threaten to take or withhold any action,
impose or threaten to impose any penalty, or deny or threaten to deny any
benefit, as a result of the failure or refusal of a motor vehicle franchisee,
property owner, or landlord to agree to or comply with any such demand or
restriction.� Nothing in this subsection shall be deemed to bar a voluntary
agreement between a motor vehicle franchisor and a motor vehicle franchisee, or
the owner or landlord of property on which a motor vehicle franchise is operated,
to give the motor vehicle franchisor or the person under the control of the
motor vehicle franchisor an interest in or option with respect to the real
property on which a motor vehicle franchise is operated, or to restrict the
uses to which the facility at which the motor vehicle franchise is operated is
put, provided that separate and valuable consideration is paid for such
interest, option or restriction.

���� l.���� To require or attempt
to require a motor vehicle franchisee to relocate his franchise or to implement
any facility or operational modification or to take or withhold or threaten to
take or withhold any action, impose or threaten to impose any penalty, or deny
or threaten to deny any benefit as a result of the failure or refusal of such
motor vehicle franchisee to agree to any such relocation or modification,
unless the motor vehicle franchisor can demonstrate that: (1) funds are
generally available to the franchisee for the relocation or modification on
reasonable terms; and (2) the motor vehicle franchisee will be able, in the
ordinary course of business as conducted by such motor vehicle franchisee, to
earn a reasonable return on his total investment in such facility or from such
operational modification, and the full return of his total investment in such
facility or from such operational modifications within 10 years; or (3) the
modification is required so that the motor vehicle franchisee can effectively
sell and service a motor vehicle offered by the motor vehicle franchisor based
on the specific technology of the motor vehicle.� This subsection shall not be
construed as requiring a motor vehicle franchisor to guarantee that the return
as provided in paragraph (2) of this subsection will be realized.

���� m.�� Directly, or through any
financial institution having any commonality of ownership with the motor
vehicle franchisor, to require or attempt to require, or to take or withhold or
threaten to take or withhold any action, impose or threaten to impose any penalty,
or deny or threaten to deny any benefit, as a result of the failure or refusal
of a motor vehicle franchisee to maintain working capital, equity, floor plan
financing or other indications of financial condition, greater than the lesser
of (1) the minimum required to operate the motor vehicle franchise based on the
operations of the franchise over the prior 12-month period; or (2) an increase
of no more than 5% over the prior calendar year, unless the motor vehicle
franchisor, or the financial institution having any commonality of ownership
with a motor vehicle franchisor, can establish that such failure or refusal
prevents the franchisee from operating the franchise in the ordinary course of
business.� This subsection shall not apply if the working capital, equity,
floor plan financing or other indication of financial condition is the result
of an accommodation by the motor vehicle franchisor, or financial institution
with a commonality of ownership with the motor vehicle franchisor, to the motor
vehicle franchisee, containing specific terms and deadlines for the restoration
of the motor vehicle franchisee's working capital, inventory, floor plan
financing or other indication of financial condition, which accommodation is
agreed to in writing by the motor vehicle franchisee.

���� n.��� To impose or attempt to
impose any conditions on the approval of the transfer of a motor vehicle
franchise, except as provided in section 6 of P.L.1971, c.356 (C.56:10-6).

���� o.��� To amend or modify the
franchise of a motor vehicle franchisee, or any lease or agreement ancillary or
collateral to such franchise, including in connection with the renewal of a
franchise, if such amendment or modification is not in good faith, is not for
good cause, or would adversely and substantially alter the rights, obligations,
investment or return on investment of the motor vehicle franchisee.

���� p.��� To take or withhold or
threaten to take or withhold any action, impose or threaten to impose any
penalty, or deny or threaten to deny any benefit, because the motor vehicle
franchisee sold or leased a motor vehicle to a customer who exported the
vehicle to a foreign country or who resold the vehicle, unless the motor
vehicle franchisor can establish that the motor vehicle franchisee knew or
reasonably should have known, prior to the sale or lease, that the customer
intended to export or resell the motor vehicle; provided, however, that it
shall be presumed that the motor vehicle franchisee did not know or should not
have reasonably known that the vehicle would be exported if the vehicle is
titled or registered in any state or the District of Columbia.

���� q.��� To require a motor
vehicle franchisee, at the time of entering into a franchise arrangement, any
lease or agreement ancillary or collateral to a motor vehicle franchise, or any
amendment, modification, renewal or termination thereof, to assent to a release,
assignment, novation, waiver or estoppel, which would relieve any person from
liability imposed by P.L.1971, c.356 (C.56:10-1 et seq.); provided that nothing
in this subsection shall be deemed to prohibit a voluntary agreement between
the motor vehicle franchisor and the motor vehicle franchisee which contains a
release, assignment, novation, waiver or estoppel for which separate and
valuable consideration is paid by the motor vehicle franchisor to the motor
vehicle franchisee.

���� r.���� To provide any term or
condition in any motor vehicle franchise, in any lease or other agreement
ancillary or collateral to a motor vehicle franchise or in any renewal,
amendment or modification thereof, which term or condition directly or
indirectly violates P.L.1971, c.356 (C.56:10-1 et seq.).

���� s.���� To allocate vehicles to
or evaluate the performance of a motor vehicle franchise based on, or offer any
discount, incentive, bonus, program, allowance or credit that differentiates
between vehicle sales by a motor vehicle franchisee within a territory or
geographic area assigned to the motor vehicle franchisee and vehicle sales
outside of such territory or geographic area.

(cf: P.L.2015, c.24, s.2)

���� 2.��� Section 1 of P.L.1985,
c.361 (C.56:10-26) is amended to read as follows:

���� 1.��� As used in this act:

���� "Consumer" means the
purchaser, other than for resale, of a motor vehicle.

���� "Franchise" means a
written arrangement for a definite or indefinite period in which a motor
vehicle franchisor grants a right or license to use a trade name, trademark,
service mark or related characteristics and in which there is a community of
interest in the marketing of new motor vehicles at retail, by lease, agreement
or otherwise.

���� "Motor vehicle"
means and includes all vehicles propelled otherwise than by muscular power, and
motorcycles, trailers and tractors, excepting: (1) those vehicles as run only
upon rails or tracks, motorized bicycles, and buses, including school buses;
and (2) those motor vehicles not designed or used primarily for the
transportation of persons or property and only incidentally operated or moved
over a highway.�

���� "Motor vehicle
franchisee" means a person to whom a franchise is granted by a motor
vehicle franchisor and who or which holds a current valid motor vehicle
dealer's license issued pursuant to R.S.39:10-19 and has an established place
of business.�

���� "Motor vehicle
franchisor" means a person engaged in the business of manufacturing,
assembling or distributing new motor vehicles, or importing into the United
States new motor vehicles manufactured or assembled in a foreign country, who
will under normal business conditions during the year, manufacture, assemble,
distribute or import at least 10 new motor vehicles.�

���� "New motor vehicle"
means a newly manufactured motor vehicle.

���� "Person" means a
natural person, corporation, partnership, trust, or other entity and, in the
case of an entity, it shall include any other entity which has a majority
interest in that entity or effectively controls that other entity as well as
the individual officers, directors, and other persons in active control of the
activities of each such entity.�

���� "Place of business"
means a fixed geographical location at which the motor vehicle franchisor's
motor vehicles
or zero emission light-duty trucks
are offered for sale
and sold, but shall not include an office, a warehouse, a place of storage, a
residence or a vehicle.

����
�Zero emission light-duty
truck� means a truck that has a gross vehicle rating of 8,500 pounds or less
and is certified as a zero emission vehicle pursuant to the California Air
Resources Board zero emission vehicle standards for the applicable model year,
but shall not include an advanced technology partial zero emission light-duty
truck, a partial emission light-duty truck, or a hybrid electric light-duty
truck.

���� "Zero emission
vehicle" means a motor vehicle certified as a zero emission vehicle
pursuant to the California Air Resources Board zero emission vehicle standards
for the applicable model year, but shall not include an advanced technology
partial zero emission vehicle, a partial zero emission vehicle, or a hybrid
electric vehicle.

(cf: P.L.2015, c.24, s.3)

���� 3.��� Section 2 of P.L.1985,
c.361 (C.56:10-27) is amended to read as follows:

���� 2.��� Except as provided
pursuant to section 6 of P.L.2015, c.24 (C.56:10-27.1)
and section 5 of
P.L.��� , c.�� (C.������� ) (pending before the Legislature as this bill)
,
it shall be a violation of this act for any motor vehicle franchisor, directly
or indirectly, through any officer, agent, employee, broker or any shareholder
of the franchisor, except a shareholder of 1% or less of the outstanding shares
of any class of securities of a franchisor which is a publicly traded
corporation, or other person, to offer to sell or sell motor vehicles, to a
consumer, other than an employee of the franchisor, except through a motor
vehicle franchisee.

(cf: P.L.2015, c.24, s.4)

���� 4.��� Section 3 of P.L.1985,
c.361 (C.56:10-28) is amended to read as follows:

���� 3.��� Except as provided
pursuant to section 6 of P.L.2015, c.24 (C.56:10-27.1)
and section 5 of
P.L.��� , c.�� (C.������� ) (pending before the Legislature as this bill)
,
it shall be a violation of this act for a motor vehicle franchisor, directly or
indirectly, through any officer, agent, employee, broker or any shareholder of
the franchisor, except a shareholder of 1% or less of the outstanding shares of
any class of securities of a franchisor which is a publicly traded corporation,
or other person, to own or operate a place of business as a motor vehicle
franchisee, except that this section shall not prohibit the ownership or
operation of a place of business by a motor vehicle franchisor for a period,
not to exceed 24 consecutive months, during the transition from one motor
vehicle franchisee to another; or the investment in a motor vehicle franchisee
by a motor vehicle franchisor if the investment is for the sole purpose of
enabling a partner or shareholder in that motor vehicle franchisee to acquire
an interest in that motor vehicle franchisee and that partner or shareholder is
not otherwise employed by or associated with the motor vehicle franchisor and
would not otherwise have the requisite capital investment funds to invest in
the motor vehicle franchisee, and has the right to purchase the entire equity
interest of the motor vehicle franchisor in the motor vehicle franchisee within
a reasonable period of time not to exceed 10 years.�

(cf: P.L.2015, c.24, s.5)

���� 5.��� (New section)�
Notwithstanding the provisions of any law, rule, or regulation to the contrary,
a motor vehicle franchisor licensed pursuant to R.S.39:10-19 may buy from and
sell, offer to sell, or deal to a consumer a zero emission light-duty truck,
provided that the franchisor owns or operates, directly or indirectly:

���� (1)�� no more than four places
of business in the State; and

���� (2)�� at least one retail
facility for the servicing, including warranty servicing, of zero emission
light-duty trucks sold, offered for sale, or otherwise distributed in this
State.� This facility shall be furnished with all the equipment required to
service a zero-emission light duty truck.

���� A franchisor shall not be
required to establish or operate a place of business at a retail facility for
the servicing of zero-emission light duty trucks.

���� 6.��� This act shall take
effect immediately.�

STATEMENT

���� This bill allows a
manufacturer (�franchisor,� as defined in current law) to directly buy from or
sell to consumers a zero emission light-duty truck at a maximum of four
locations in New Jersey.� In addition, the bill requires a manufacturer of zero
emission light-duty trucks to own or operate at least one retail facility in
New Jersey for the servicing of its vehicles.� The manufacturer�s direct sale
locations are not required to also serve as a retail service facility.�

���� The bill amends current law to
allow any zero emission light-duty truck manufacturer to directly or indirectly
buy from and directly sell, offer to sell, or deal to a consumer a zero
emission light-duty truck.� This bill provides that zero emission light-duty
trucks may be directly sold by manufacturers and preempts any rule or
regulation that restricts sales exclusively to franchised dealerships.�

���� The bill defines �zero
emission light-duty truck� to mean a truck that has a gross vehicle rating of
8,500 pounds or less and is certified as a zero emission vehicle pursuant to
the California Air Resources Board zero emission vehicle standards for the
applicable model year, but not an advanced technology partial zero emission
light-duty truck, a partial emission light-duty truck, or a hybrid electric
light-duty truck.