MOTOR VEHICLE MANUFACTURERS AS DEALERS

SB0022

SENATE BILL 22

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Harold Pope

AN ACT

RELATING TO MOTOR VEHICLES; ALLOWING MOTOR VEHICLE
MANUFACTURERS TO BE LICENSED AS MOTOR VEHICLE DEALERS UNDER
CERTAIN CONDITIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 57-16-3 NMSA 1978 (being Laws 1973,
Chapter 6, Section 3, as amended) is amended to read:

"57-16-3. DEFINITIONS.--As used in Chapter 57, Article 16
NMSA 1978:

A. "current price" means an amount equal to the
price listed in the manufacturer's or distributor's printed
price list in effect when the franchise is terminated, less
applicable trade and cash discounts;

B. "dealer cost" means an amount equal to the sum
of the original invoice price that the dealer paid for
inventory and the cost of the delivery of the inventory from
the manufacturer or distributor to the dealer, less applicable
discounts;

C. "designated family member" means a spouse,
child, grandchild, parent, brother or sister of a deceased or
incapacitated dealer who is entitled to inherit the dealer's
ownership interest in the dealership under the terms of a will
or the laws of intestate succession in this state. In the case
of an incapacitated dealer, the term means the person appointed
by a court as the legal representative of the dealer's
property. The term also includes the appointed and qualified
personal representative and the testamentary trustee of a
deceased dealer. However, the term shall be limited to mean
only that individual designated by a dealer in a written
document filed with the manufacturer, distributor or
representative in the event that such a document has been
filed;

D. "distributor" means any person who distributes
or sells new or used motor vehicles to dealers and who is not a
manufacturer;

E. "do not drive order" means a notice advising a
motor vehicle dealer or an owner of a motor vehicle not to
drive the vehicle until the vehicle has been repaired because
the vehicle has a safety defect, fails to comply with a federal
motor vehicle safety standard or fails to comply with a federal
requirement;

F. "former franchisee":

(1) means a dealer that has entered into a
franchise agreement with a manufacturer and that has:

(a) entered into a termination agreement
or deferred termination agreement with the manufacturer related
to the franchise; or

(b) has had the franchise canceled,
terminated or otherwise ended; and

(2) includes the designated successor of the
former franchisee in the event the former franchisee is
deceased or disabled;

G. "franchise" means an oral or written arrangement
for a definite or indefinite period in which a manufacturer,
distributor or representative grants to a motor vehicle dealer
a license to use a trade name, service mark or related
characteristic and in which there is a community of interest in
the marketing of motor vehicles or services related to
marketing, service or repair of motor vehicles at wholesale,
retail, leasing or otherwise;

H. "fraud" includes, in addition to its normal
legal connotation, the following:

(1) a misrepresentation in any manner, whether
intentionally false or due to gross negligence, of a material
fact;

(2) a promise or representation not made
honestly and in good faith; and

(3) an intentional failure to disclose a
material fact;

I. "inventory" means new or unused motorcycles,
motor vehicles, motorcycle attachments and motorcycle and motor
vehicle repair parts that are provided by a manufacturer or
distributor to a dealer under a franchise agreement and that
are purchased within thirty-six months of the termination of
the franchise or are listed in the manufacturer's or
distributor's current sales manual or price list at the time
that the franchise is terminated;

J. "line-make" means a motor vehicle that is
offered for sale, lease or distribution under a common name,
trademark, service mark or brand name of the manufacturer of
that same motor vehicle;

[
J.
]
K.
"manufacturer" means any person who
manufactures or assembles new motor vehicles either within or
outside of this state and may include a predecessor
manufacturer or a successor manufacturer;

[
K.
]
L.
"motorcycle" means any motor vehicle used
on or off a public highway that has an unladen weight of less
than one thousand five hundred pounds;

[
L.
]
M.
"motor vehicle" means every self-propelled
vehicle, having two or more wheels, by which a person or
property may be transported on a public highway and includes
recreational vehicles;

[
M.
]
N.
"motor vehicle dealer" or "dealer" means a
person who sells or solicits or advertises the sale of new or
used motor vehicles and is licensed as a dealer pursuant to the
Motor Vehicle Code. "Motor vehicle dealer" or "dealer" shall
not include:

(1) receivers, trustees, administrators,
executors, guardians or other persons appointed by or acting
under judgment, decree or order of any court;

(2) public officers while performing their
duties as such officers;

(3) persons making casual sales of their own
vehicles duly registered and licensed to them by the state; or

(4) finance companies, banks and other lending
institutions covering sales of repossessed vehicles;

[
N.
]
O.
"person" means every natural person,
partnership, corporation, association, trust, estate or any
other legal entity;

[
O.
]
P.
"predecessor manufacturer" means a
manufacturer that is acquired, succeeded by or assumed by a
successor manufacturer;

[
P.
]
Q.
"prospective purchaser" means a person who
has a bona fide written agreement to purchase a franchise;

[
Q.
]
R.
"recall claim" includes a claim for
reimbursement for the parts and labor required for a dealer to
repair a motor vehicle subject to a do not drive order or stop
sale order;

[
R.
]
S.
"recreational vehicle" means any motor
vehicle with a camping body that either has its own motive
power or is drawn by another vehicle;

[
S.
]
T.
"relevant market area" means an area of a
size specified in this subsection around an existing motor
vehicle dealer's place of business. The size of the area shall
be the greater of the area of responsibility specified in the
dealer's franchise or a circle with a center at the dealer's
place of business and a radius of:

(1) seven miles, if the population of the
county in which the dealership is located is two hundred fifty
thousand or more;

(2) fifteen miles, if the population of the
county in which the dealership is located is less than two
hundred fifty thousand but is thirty-five thousand or more; or

(3) twenty miles in all other cases.

If the existing and proposed dealerships are in different
counties, the lesser of the applicable mileage limitations
shall be used. For purposes of this subsection, the population
of any area shall be determined in accordance with the most
recent decennial census or the most recent population update
from the national planning data corporation or other similar
recognized source, whichever is later;

[
T.
]
U.
"representative" means any person who is or
acts as an agent, employee or representative of a manufacturer
or distributor and who performs any duties in this state
relating to promoting the distribution or sale of new or used
motor vehicles or contacts dealers in this state on behalf of a
manufacturer or distributor;

[
U.
]
V.
"sale" includes:

(1) the issuance, transfer, agreement for
transfer, exchange, pledge, hypothecation or mortgage in any
form, whether by transfer in trust or otherwise, of any motor
vehicle or interest therein or of any franchise related
thereto; and

(2) any option, subscription or other contract
or solicitation looking to a sale or offer or attempt to sell
in any form, whether spoken or written. A gift or delivery of
any motor vehicle or franchise with respect thereto with, or
as, a bonus on account of the sale of anything shall be deemed
a sale of such motor vehicle or franchise;

[
V.
]
W.
"stop sale order" means a notice
prohibiting a motor vehicle dealer from leasing or selling and
delivering at wholesale or retail a used motor vehicle in the
inventory of the dealer until the vehicle has been repaired
because the vehicle has a safety defect, fails to comply with a
federal motor vehicle safety standard or fails to comply with a
federal requirement;

[
W.
]
X.
"successor manufacturer" means a motor
vehicle manufacturer that, on or after January 1, 2010,
acquires, succeeds to or assumes any part of the business of a
predecessor manufacturer as the result of:

(1) a change in ownership, operation or
control of the predecessor manufacturer;

(2) the termination, suspension or cessation
of all or a part of the business operation of the predecessor
manufacturer;

(3) the discontinuance of the sale of a
product line; or

(4) a change in the distribution system by the
predecessor manufacturer, whether through a change in
distributor or the predecessor manufacturer's decision to cease
conducting business through a distributor; and

[
X.
]
Y.
"value of the used motor vehicle" means the
average trade-in value indicated in an independent third party
guide for a used motor vehicle of the same year, make and
model."

SECTION 2.
Section 57-16-5 NMSA 1978 (being Laws 1973,
Chapter 6, Section 5, as amended) is amended to read:

"57-16-5. UNLAWFUL ACTS--MANUFACTURERS--DISTRIBUTORS--
REPRESENTATIVES.--It is unlawful for a manufacturer,
distributor or representative to:

A. coerce or attempt to coerce a dealer to order or
accept delivery of a motor vehicle, appliances, equipment,
parts or accessories therefor or any other commodity that the
motor vehicle dealer has not voluntarily ordered;

B. coerce or attempt to coerce a dealer to order or
accept delivery of a motor vehicle with special features,
appliances, accessories or equipment not included in the list
price of the motor vehicles as publicly advertised by the
manufacturer;

C. coerce or attempt to coerce a dealer to order
for any person any parts, accessories, equipment, machinery,
tools, appliances or any commodity whatsoever;

D. refuse to deliver, in reasonable quantities and
within a reasonable time after receipt of
a
dealer's order, to
a motor vehicle dealer having a franchise or contractual
arrangement for the retail sale of motor vehicles sold or
distributed by the manufacturer, distributor or representative,
those motor vehicles, parts or accessories covered by the
franchise or contract specifically publicly advertised by the
manufacturer, distributor or representative to be available for
immediate delivery; provided, however, the failure to deliver a
motor vehicle, parts or accessories shall not be considered a
violation of Chapter 57, Article 16 NMSA 1978 if the failure is
due to an act of God, work stoppage or delay due to a strike or
labor difficulty, shortage of materials, freight embargo or
other cause over which the manufacturer, distributor or
representative or an agent thereof has no control;

E. coerce or attempt to coerce a motor vehicle
dealer to enter into an agreement with the manufacturer,
distributor or representative or to do any other act
prejudicial to the dealer by threatening to cancel a franchise
or a contractual agreement existing between the manufacturer,
distributor or representative and the dealer; provided,
however, that notice in good faith to a motor vehicle dealer of
the dealer's violation of the terms or provisions of the
franchise or contractual agreement does not constitute a
violation of Chapter 57, Article 16 NMSA 1978;

F. terminate or cancel the franchise or selling
agreement of a dealer without due cause. "Due cause" means a
material breach by a dealer, due to matters within the dealer's
control, of a lawful provision of a franchise or selling
agreement. As used in this subsection, "material breach" means
a contract violation that is substantial and significant. In
determining whether due cause exists under this subsection, the
court shall take into consideration only the dealer's sales in
relation to the business available to the dealer; the dealer's
investment and obligations; injury to the public welfare; the
adequacy of the dealer's sales and service facilities,
equipment and parts; the qualifications of the management,
sales and service personnel to provide the consumer with
reasonably good service and care of new motor vehicles; the
dealer's failure to comply with the requirements of the
franchise; and the harm to the manufacturer or distributor.
The nonrenewal of a franchise or selling agreement, without due
cause, shall constitute an unfair termination or cancellation
regardless of the terms or provisions of the franchise or
selling agreement. The manufacturer, distributor or
representative shall notify a motor vehicle dealer in writing
by registered mail of the termination or cancellation of the
franchise or selling agreement of the dealer at least sixty
days before the effective date thereof, stating the specific
grounds for termination or cancellation; and the manufacturer,
distributor or representative shall notify a motor vehicle
dealer in writing by registered mail at least sixty days before
the contractual term of the dealer's franchise or selling
agreement expires that it will not be renewed, stating the
specific grounds for nonrenewal in those cases where there is
no intention to renew, and in no event shall the contractual
term of a franchise or selling agreement expire without the
written consent of the motor vehicle dealer involved prior to
the expiration of at least sixty days following the written
notice. During the sixty-day period, either party may in
appropriate circumstances petition a district court to modify
the sixty-day stay or to extend it pending a final
determination of proceedings on the merits. The court may
grant preliminary and final injunctive relief;

G. use false, deceptive or misleading advertising
in connection with the manufacturer's, distributor's or
representative's business;

H. offer to sell or to sell a motor vehicle to a
motor vehicle dealer in this or any other state of the United
States at a lower actual price than the actual price offered to
any other motor vehicle dealer in this state for the same model
vehicle similarly equipped or to utilize devices, including
sales promotion plans or programs that result in a lesser
actual price; provided, however, the provisions of this
subsection do not apply to sales to a motor vehicle dealer for
resale to a unit of the United States government, the state or
its political subdivisions; and provided, further, the
provisions of this subsection do not apply to sales to a motor
vehicle dealer of a motor vehicle ultimately sold, donated or
used by the dealer in a driver education program; and provided,
further, that the provisions of this subsection do not apply if
a manufacturer, distributor or representative offers to sell or
sells new motor vehicles to all motor vehicle dealers at an
equal price. As used in this section, "actual price" means the
price to be paid by the dealer less any incentive paid by the
manufacturer, distributor or representative, whether paid to
the dealer or the ultimate purchaser of the vehicle. This
provision does not apply to sales by the manufacturer,
distributor or representatives to the United States government
or its agencies. The provisions of this subsection dealing
with vehicle prices in another state and defining actual price
do not apply to a manufacturer or distributor if all of the
manufacturer's or distributor's dealers within fifty miles of a
neighboring state are given all cash or credit incentives
available in the neighboring state, whether the incentives are
offered by the manufacturer or distributor or a finance
subsidiary of either, affecting the price or financing terms of
a vehicle;

I. willfully discriminate, either directly or
indirectly, in price between different purchasers of a
commodity of like grade or quality where the effect of the
discrimination may be to lessen substantially competition or
tend to create a monopoly or to injure or destroy the business
of a competitor;

J. offer to sell or to sell parts or accessories to
a motor vehicle dealer for use in the dealer's own business for
the purpose of repairing or replacing the same or a comparable
part or accessory at a lower actual price than the actual price
charged to any other motor vehicle dealer for similar parts or
accessories for use in the dealer's own business; provided,
however, in those cases where motor vehicle dealers have a
franchise to operate and serve as wholesalers of parts and
accessories to retail outlets or other dealers, whether or not
the dealer is regularly designated as a wholesaler, nothing in
this section prevents a manufacturer, distributor or
representative from selling to the motor vehicle dealer who
operates and serves as a wholesaler of parts and accessories
such parts and accessories as may be ordered by the motor
vehicle dealer for resale to retail outlets at a lower actual
price than the actual price charged a motor vehicle dealer who
does not operate or serve as a wholesaler of parts and
accessories;

K. prevent or attempt to prevent by contract or
otherwise a motor vehicle dealer from changing the capital
structure of the dealer's dealership or the means by or through
which the dealer finances the operation of the dealership, if
the dealer at all times meets any reasonable capital standards
agreed to between the dealer and the manufacturer, distributor
or representative, and if the change by the dealer does not
result in a change in the executive management control of the
dealership;

L. prevent or attempt to prevent by contract or
otherwise a motor vehicle dealer or an officer, partner or
stockholder of a motor vehicle dealer from selling or
transferring a part of the interest of any of them to any other
person or party; provided, however, that no dealer, officer,
partner or stockholder shall have the right to sell, transfer
or assign the franchise or power of management or control
thereunder without the consent of the manufacturer, distributor
or representative except that the manufacturer, distributor or
representative shall not withhold consent to the sale, transfer
or assignment of the franchise to a qualified buyer capable of
being licensed in New Mexico and who meets the manufacturer's
or distributor's uniformly applied requirement for appointment
as a dealer. Uniform application shall not prevent the
application of a separate standard of consent for sale,
transfer or assignment to minority or women dealer candidates,
and shall not require the application of an identical standard
to all persons in all situations. The requirement of uniform
application shall be met if the manufacturer applies the same
set of standards, which takes into account business performance
and experience, financial qualifications, facility requirements
and other relevant characteristics; provided that, if two
dealers, persons or situations are identical, given the
characteristics considered in the standards, the two dealers,
persons or situations shall be treated identically, except as
provided in this subsection. Upon request, a manufacturer or
distributor shall provide its dealer with a copy of the
standards that are normally relied upon by the manufacturer or
distributor to evaluate a proposed sale, transfer or
assignment. A manufacturer, distributor or representative
shall send a letter by certified mail approving or withholding
consent within sixty calendar days of receiving the completed
application forms and related information requested by a
manufacturer or distributor as provided below. A manufacturer,
distributor or representative shall send its existing motor
vehicle dealer the necessary application forms and identify the
related information required within twenty calendar days of
receiving written notice from the existing motor vehicle dealer
of the proposed sale or transfer. No manufacturer, distributor
or representative shall require any information not requested
in the twenty-day period, and submission of the information
requested within that period together with a completed form of
the application provided shall constitute a completed
application form. A request for consent shall be deemed
granted, and the manufacturer, distributor or representative
shall be estopped from denying the consent, if the consent has
not been expressly withheld during the applicable sixty-day
period;

M. obtain money, goods, services, anything of value
or any other benefit from any other person with whom the motor
vehicle dealer does business on account of or in relation to
the transactions between the dealer and the other person,
unless the benefit is promptly accounted for and transmitted to
the motor vehicle dealer;

N. require a motor vehicle dealer to assent to a
release, assignment, novation, waiver or estoppel that would
relieve a person from liability imposed by Chapter 57, Article
16 NMSA 1978;

O. require a motor vehicle dealer to provide
installment financing with a specified financial institution;

P. establish an additional franchise, including any
franchise for a warranty or service facility outside of the
relevant market area of the dealer establishing the facility,
but excluding the relocation of existing franchises, for the
same line-make in a relevant market area where the same line-make is presently being served by an existing motor vehicle
dealer if such addition would be inequitable to the existing
dealer; provided, however, that the sales and service needs of
the public shall be given due consideration in determining the
equities of the existing dealer. The sole fact that the
manufacturer, distributor or representative desires further
penetration of the market is not grounds for establishing an
additional franchise; provided, further, that the manufacturer,
distributor or representative shall give a ninety-day written
notice by registered mail to all same line-make dealers in a
relevant market area of its intention to establish an
additional franchise;

Q. offer to sell or lease or to sell or lease a new
motor vehicle to a person, except a distributor, at a lower
actual price therefor than the actual price offered and charged
to a motor vehicle dealer for the same model vehicle similarly
equipped or to utilize any device that results in a lower
actual price;

R. sell, lease or provide motorcycles, parts or
accessories to a person not a dealer or distributor for the
line-make sold, leased or provided. The provisions of this
subsection do not apply to sales, leases or provisions of motor
vehicles, parts or accessories by a manufacturer, distributor
or representative to the United States government or its
agencies or the state or its political subdivisions;

S. offer a finance program, either directly or
through an affiliate, based on the physical location of the
selling dealer or the residence of the buyer. The provisions
of this subsection do not apply to a manufacturer or
distributor that has no dealer within fifty miles of a state
line or if all of the manufacturer's or distributor's dealers
within that fifty miles are given all cash or credit incentives
available in the neighboring state, whether the incentives are
offered by the manufacturer or the distributor or a finance
subsidiary of either, affecting the price or financing terms of
a vehicle;

T. force a dealer to sell or relocate a franchise
with another manufacturer located at the same physical location
or consider the existence of another line-make at a dealership
for product allocation, successorship, location approval and
capitalization; provided that a manufacturer or distributor may
require that the dealer:

(1) meet the manufacturer's capitalization
requirements;

(2) meet the manufacturer's facilities
requirements; and

(3) not have committed fraudulent acts;

U. enforce a right of first refusal or option to
purchase the dealership by a manufacturer or distributor or to
require a dealer to grant a right or option to a manufacturer
or distributor;

V. be licensed as a dealer or perform warranty or
other service or own an interest, directly or indirectly, in a
person licensed as a dealer or performing warranty or other
service; provided that a manufacturer:

(1)
or distributor may own a person licensed
as a dealer for a reasonable time in order to dispose of an
interest acquired as a secured party or as part of a dealer
development program;
and

(2) may be licensed as a dealer and may

perform warranty and other service, directly or indirectly,

through a wholly owned entity; provided that the manufacturer:

(a) does not have any independent

franchise dealers in the state; and

(b) sells and services only the line-make of motor vehicles that the manufacturer manufactures;

W. fail to recognize and approve the transfer of a
dealership to a person named as a successor, donee, beneficiary
or devisee in a valid testamentary or trust instrument;
provided that a manufacturer or distributor may impose
standards or criteria used in a transfer;

X. impose capitalization requirements not necessary
to assure that the dealer can meet its financial obligations;

Y. compel a dealer through a finance subsidiary of
the manufacturer or distributor to agree to unreasonable
operating requirements or directly or indirectly to terminate a
dealer, except as allowed by Subsection F of this section,
through the actions of a finance subsidiary of the manufacturer
or distributor. This subsection shall not limit the right of a
financing entity to engage in business practices in accordance
with the usage of the trade in which it is engaged;

Z. require a dealer or the dealer's successor to
[
(1)
] construct a new dealership, require the relocation of an
existing dealership or substantially change, alter or remodel:

(1)
a dealer's facility except as necessary to
comply with health or safety laws or to comply with technology
requirements necessary to sell or service vehicles; or

(2) [
construct a new dealership, require
relocation of an existing dealership or substantially change,
alter or remodel
] an existing dealership before the tenth
anniversary of the date that the construction or change,
alteration or remodel of the dealership at that location was
completed if the construction was in substantial compliance
with standards or plans provided by a manufacturer, distributor
or representative;

AA. unreasonably withhold approval for a dealer to
purchase substantially similar goods or services related to the
construction, alteration, remodel or renovation of a dealership
facility from vendors of the dealer's choice. This subsection
shall not be construed to allow a dealer or vendor to infringe
upon or impair a manufacturer's trademark rights or to erect or
maintain a sign that does not conform to the manufacturer's
reasonable fabrication specifications and trademark usage
guidelines;

BB. use an unreasonable, arbitrary or unfair sales
or other performance standard in determining a franchise motor
vehicle dealer's compliance with a franchise agreement. The
manufacturer has the burden of proving the reasonableness of
its performance standards;

CC. fail to compensate a motor vehicle dealer for
labor and parts required for a dealer to perform necessary
repairs on an affected new or used motor vehicle pursuant to a
recall, do not drive order or stop sale order, if the dealer
holds a franchise of the same line-make as the subject vehicle;

DD. fail to compensate a motor vehicle dealer as
prescribed by Chapter 57, Article 16 NMSA 1978 for a delay in
delivering parts or equipment needed to perform recall-related
repairs on an affected used motor vehicle in the dealer's
inventory that is subject to a do not drive order or stop sale
order, if the dealer holds a franchise of the same line-make as
the vehicle;

EE. subject to the manufacturer's audit rights
provided in Section 57-16-7 NMSA 1978, reduce compensation to a
motor vehicle dealer, process a charge back to a dealer, reduce
the amount of compensation that the manufacturer otherwise owes
to an individual dealer under an incentive program or remove an
individual dealer from an incentive program solely because the
motor vehicle dealer submitted a claim or received compensation
for a claim. This subsection does not prohibit a manufacturer
from modifying or discontinuing an incentive program
prospectively or from making ordinary business decisions; or

FF. use data, calculations or statistical
determinations of the sales performance of a motor vehicle
dealer to take adverse action against the motor vehicle dealer
for any period of time during which the dealer has at least
five percent of its total new and used motor vehicle inventory
subject to a stop sale order or do not drive order; provided
that the motor vehicle dealer's performance, as reflected in
the data, calculations or statistical determinations, is
adversely affected by the stop sale order or do not drive
order."

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