Electric vehicles/sale

AN ACT Relating to manufacturers and vehicle dealers; and 1
amending RCW 46.96.185. 2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:3
Sec. 1. RCW 46.96.185 and 2018 c 296 s 2 are each amended to 4
read as follows: 5
(1) Notwithstanding the terms of a franchise agreement, a 6
manufacturer, distributor, factory branch, or factory representative, 7
or an agent, officer, parent company, wholly or partially owned 8
subsidiary, affiliated entity, or other person controlled by or under 9
common control with a manufacturer, distributor, factory branch, or 10
factory representative, shall not: 11
(a) Discriminate between new motor vehicle dealers by selling or 12
offering to sell a like vehicle to one dealer at a lower actual price 13
than the actual price offered to another dealer for the same model 14
similarly equipped; 15
(b) Discriminate between new motor vehicle dealers by selling or 16
offering to sell parts or accessories to one dealer at a lower actual 17
price than the actual price offered to another dealer;18
(c) Discriminate between new motor vehicle dealers by using a 19
promotion plan, marketing plan, or other similar device that results 20
H-2853.1
HOUSE BILL 2518
State of Washington 69th Legislature 2026 Regular Session
By Representatives Doglio, McEntire, Ley, Penner, Parshley, Marshall,
Kloba, and Zahn
Read first time 01/15/26. Referred to Committee on Consumer
Protection & Business.
p. 1 HB 2518
in a lower actual price on vehicles, parts, or accessories being 1
charged to one dealer over another dealer; 2
(d) Discriminate between new motor vehicle dealers by adopting a 3
method, or changing an existing method, for the allocation, 4
scheduling, or delivery of new motor vehicles, parts, or accessories 5
to its dealers that is not fair, reasonable, and equitable. Upon the 6
request of a dealer, a manufacturer, distributor, factory branch, or 7
factory representative shall disclose in writing to the dealer the 8
method by which new motor vehicles, parts, and accessories are 9
allocated, scheduled, or delivered to its dealers handling the same 10
line or make of vehicles; 11
(e) Discriminate against a new motor vehicle dealer by 12
preventing, offsetting, or otherwise impairing the dealer's right to 13
request a documentary service fee on affinity or similar program 14
purchases. This prohibition applies to, but is not limited to, any 15
promotion plan, marketing plan, manufacturer or dealer employee or 16
employee friends or family purchase programs, or similar plans or 17
programs; 18
(f) Give preferential treatment to some new motor vehicle dealers 19
over others by refusing or failing to deliver, in reasonable 20
quantities and within a reasonable time after receipt of an order, to 21
a dealer holding a franchise for a line or make of motor vehicles 22
sold or distributed by the manufacturer, distributor, factory branch, 23
or factory representative, a new vehicle, parts, or accessories, if 24
the vehicle, parts, or accessories are being delivered to other 25
dealers, or require a dealer to purchase unreasonable advertising 26
displays or other materials, or unreasonably require a dealer to 27
remodel or renovate existing facilities as a prerequisite to 28
receiving a model or series of vehicles; 29
(g) Compete with a new motor vehicle dealer of any make or line 30
by acting in the capacity of a new motor vehicle dealer, or by 31
owning, operating, or controlling, whether directly or indirectly, a 32
motor vehicle dealership in this state. It is not, however, a 33
violation of this subsection for: 34
(i) A manufacturer, distributor, factory branch, or factory 35
representative to own or operate a dealership for a temporary period, 36
not to exceed two years, during the transition from one owner of the 37
dealership to another where the dealership was previously owned by a 38
franchised dealer and is currently for sale to any qualified 39
independent person at a fair and reasonable price. The temporary 40
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operation may be extended for one ((twelve-month)) 12-month period on 1
petition of the temporary operator to the department. The matter will 2
be handled as an adjudicative proceeding under chapter 34.05 RCW. A 3
dealer who is a franchisee of the petitioning manufacturer or 4
distributor may intervene and participate in a proceeding under this 5
subsection (1)(g)(i). The temporary operator has the burden of proof 6
to show justification for the extension and a good faith effort to 7
sell the dealership to an independent person at a fair and reasonable 8
price; 9
(ii) A manufacturer, distributor, factory branch, or factory 10
representative to own or operate a dealership in conjunction with an 11
independent person in a bona fide business relationship for the 12
purpose of broadening the diversity of its dealer body and enhancing 13
opportunities for qualified persons who are part of a group who have 14
historically been underrepresented in its dealer body, or other 15
qualified persons who lack the resources to purchase a dealership 16
outright, and where the independent person: (A) Has made, or within a 17
period of two years from the date of commencement of operation will 18
have made, a significant, bona fide capital investment in the 19
dealership that is subject to loss; (B) has an ownership interest in 20
the dealership; and (C) operates the dealership under a bona fide 21
written agreement with the manufacturer, distributor, factory branch, 22
or factory representative under which he or she will acquire all of 23
the ownership interest in the dealership within a reasonable period 24
of time and under reasonable terms and conditions. The manufacturer, 25
distributor, factory branch, or factory representative has the burden 26
of proof of establishing that the acquisition of the dealership by 27
the independent person was made within a reasonable period of time 28
and under reasonable terms and conditions. Nothing in this subsection 29
(1)(g)(ii) relieves a manufacturer, distributor, factory branch, or 30
factory representative from complying with (a) through (f) of this 31
subsection; 32
(iii) A manufacturer, distributor, factory branch, or factory 33
representative to own or operate a dealership in conjunction with an 34
independent person in a bona fide business relationship where the 35
independent person: (A) Has made, or within a period of two years 36
from the date of commencement of operation will have made, a 37
significant, bona fide capital investment in the dealership that is 38
subject to loss; (B) has an ownership interest in the dealership; and 39
(C) operates the dealership under a bona fide written agreement with 40
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the manufacturer, distributor, factory branch, or factory 1
representative under which he or she will acquire all of the 2
ownership interest in the dealership within a reasonable period of 3
time and under reasonable terms and conditions. The manufacturer, 4
distributor, factory branch, or factory representative has the burden 5
of proof of establishing that the acquisition of the dealership by 6
the independent person was made within a reasonable period of time 7
and under reasonable terms and conditions. The number of dealerships 8
operated under this subsection (1)(g)(iii) may not exceed four 9
percent rounded up to the nearest whole number of a manufacturer's 10
total of new motor vehicle dealer franchises in this state. Nothing 11
in this subsection (1)(g)(iii) relieves a manufacturer, distributor, 12
factory branch, or factory representative from complying with (a) 13
through (f) of this subsection; 14
(iv) A truck manufacturer to own, operate, or control a new motor 15
vehicle dealership that sells only trucks of that manufacturer's line 16
make with a gross vehicle weight rating of 12,500 pounds or more, and 17
the truck manufacturer has been continuously engaged in the retail 18
sale of the trucks at least since January 1, 1993;19
(v) A manufacturer to own, operate, or control a new motor 20
vehicle dealership trading exclusively in a single line make of the 21
manufacturer if (A) the manufacturer does not own, directly or 22
indirectly, in the aggregate, in excess of ((forty-five)) 45 percent 23
of the total ownership interest in the dealership, (B) at the time 24
the manufacturer first acquires ownership or assumes operation or 25
control of any such dealership, the distance between any dealership 26
thus owned, operated, or controlled and the nearest new motor vehicle 27
dealership trading in the same line make of vehicle and in which the 28
manufacturer has no ownership or control is not less than ((fifteen)) 29
15 miles and complies with the applicable provisions in the relevant 30
market area sections of this chapter, (C) all of the manufacturer's 31
franchise agreements confer rights on the dealer of that line make to 32
develop and operate within a defined geographic territory or area, as 33
many dealership facilities as the dealer and the manufacturer agree 34
are appropriate, and (D) as of January 1, 2000, the manufacturer had 35
no more than four new motor vehicle dealers of that manufacturer's 36
line make in this state, and at least half of those dealers owned and 37
operated two or more dealership facilities in the geographic 38
territory or area covered by their franchise agreements with the 39
manufacturer; 40
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(vi) A final-stage manufacturer to own, operate, or control a new 1
motor vehicle dealership; or 2
(vii) A manufacturer that ((held a vehicle dealer license in this 3
state on January 1, 2014 )) produces electric vehicles, as defined in 4
WAC 173-424-110, and has not previously entered into a franchise 5
agreement with an independent dealer , to own, operate, or control a 6
new motor vehicle dealership that sells new vehicles that are only of 7
that manufacturer's makes or lines and that are not sold new by a 8
licensed independent franchise dealer, or to own, operate, or control 9
or contract with companies that provide finance, leasing, or service 10
for vehicles that are of that manufacturer's makes or lines;11
(h) Compete with a new motor vehicle dealer by owning, operating, 12
or controlling, whether directly or indirectly, a service facility in 13
this state for the repair or maintenance of motor vehicles under the 14
manufacturer's new car warranty and extended warranty. Nothing in 15
this subsection (1)(h), however, prohibits a manufacturer, 16
distributor, factory branch, or factory representative from owning or 17
operating a service facility for the purpose of providing or 18
performing maintenance, repair, or service work on motor vehicles 19
that are owned by the manufacturer, distributor, factory branch, or 20
factory representative; 21
(i) Use confidential or proprietary information obtained from a 22
new motor vehicle dealer to unfairly compete with the dealer. For 23
purposes of this subsection (1)(i), "confidential or proprietary 24
information" means trade secrets as defined in RCW 19.108.010, 25
business plans, marketing plans or strategies, customer lists, 26
contracts, sales data, revenues, or other financial information;27
(j)(i) Terminate, cancel, or fail to renew a franchise with a new 28
motor vehicle dealer based upon any of the following events, which do 29
not constitute good cause for termination, cancellation, or 30
nonrenewal under RCW 46.96.060: (A) The fact that the new motor 31
vehicle dealer owns, has an investment in, participates in the 32
management of, or holds a franchise agreement for the sale or service 33
of another make or line of new motor vehicles; (B) the fact that the 34
new motor vehicle dealer has established another make or line of new 35
motor vehicles or service in the same dealership facilities as those 36
of the manufacturer or distributor; (C) that the new motor vehicle 37
dealer has or intends to relocate the manufacturer or distributor's 38
make or line of new motor vehicles or service to an existing 39
dealership facility that is within the relevant market area, as 40
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defined in RCW 46.96.140, of the make or line to be relocated, except 1
that, in any nonemergency circumstance, the dealer must give the 2
manufacturer or distributor at least ((sixty)) 60 days' notice of his 3
or her intent to relocate and the relocation must comply with RCW 4
46.96.140 and 46.96.150 for any same make or line facility; or (D) 5
the failure of a franchisee to change the location of the dealership 6
or to make substantial alterations to the use or number of franchises 7
on the dealership premises or facilities. 8
(ii) Notwithstanding the limitations of this section, a 9
manufacturer may, for separate consideration, enter into a written 10
contract with a dealer to exclusively sell and service a single make 11
or line of new motor vehicles at a specific facility for a defined 12
period of time. The penalty for breach of the contract must not 13
exceed the amount of consideration paid by the manufacturer plus a 14
reasonable rate of interest; 15
(k) Coerce or attempt to coerce a motor vehicle dealer to refrain 16
from, or prohibit or attempt to prohibit a new motor vehicle dealer 17
from acquiring, owning, having an investment in, participating in the 18
management of, or holding a franchise agreement for the sale or 19
service of another make or line of new motor vehicles or related 20
products, or establishing another make or line of new motor vehicles 21
or service in the same dealership facilities, if the prohibition 22
against acquiring, owning, investing, managing, or holding a 23
franchise for such additional make or line of vehicles or products, 24
or establishing another make or line of new motor vehicles or service 25
in the same dealership facilities, is not supported by reasonable 26
business considerations. The burden of proving that reasonable 27
business considerations support or justify the prohibition against 28
the additional make or line of new motor vehicles or products or 29
nonexclusive facilities is on the manufacturer; 30
(l) Require, by contract or otherwise, a new motor vehicle dealer 31
to make a material alteration, expansion, or addition to any 32
dealership facility, unless the required alteration, expansion, or 33
addition is uniformly required of other similarly situated new motor 34
vehicle dealers of the same make or line of vehicles and is 35
reasonable in light of all existing circumstances, including economic 36
conditions. In any proceeding in which a required facility 37
alteration, expansion, or addition is an issue, the manufacturer or 38
distributor has the burden of proof. Except for a program or any 39
renewal or modification of a program that is in effect with one or 40
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more new motor vehicle dealers in this state on June 12, 2014, a 1
manufacturer shall not require, coerce, or attempt to coerce any new 2
motor vehicle dealer by program, policy, standard, or otherwise to 3
change the location of the dealership or construct, replace, 4
renovate, or make any substantial changes, alterations, or remodeling 5
to a new motor vehicle dealer's sales or service facilities, except 6
as necessary to comply with health or safety laws or to comply with 7
technology requirements without which a dealer would be unable to 8
service a vehicle the dealer has elected to sell, before the tenth 9
anniversary of the date of issuance of the certificate of occupancy 10
or the manufacturer's approval, whichever is later, from:11
(i) The date construction of the dealership at that location was 12
completed if the construction was in substantial compliance with 13
standards or plans provided by a manufacturer, distributor, or 14
representative or through a subsidiary or agent of the manufacturer, 15
distributor, or representative; or 16
(ii) The date a prior change, alteration, or remodel of the 17
dealership at that location was completed if the construction was in 18
substantial compliance with standards or plans provided by a 19
manufacturer, distributor, or representative or through a subsidiary 20
or agent of the manufacturer, distributor, or representative;21
(m) Prevent or attempt to prevent by contract or otherwise any 22
new motor vehicle dealer from changing the executive management of a 23
new motor vehicle dealer unless the manufacturer or distributor, 24
having the burden of proof, can show that a proposed change of 25
executive management will result in executive management by a person 26
or persons who are not of good moral character or who do not meet 27
reasonable, preexisting, and equitably applied standards of the 28
manufacturer or distributor. If a manufacturer or distributor rejects 29
a proposed change in the executive management, the manufacturer or 30
distributor shall give written notice of its reasons to the dealer 31
within ((sixty)) 60 days after receiving written notice from the 32
dealer of the proposed change and all related information reasonably 33
requested by the manufacturer or distributor, or the change in 34
executive management must be considered approved; 35
(n) Condition the sale, transfer, relocation, or renewal of a 36
franchise agreement or condition manufacturer, distributor, factory 37
branch, or factory representative sales, services, or parts 38
incentives upon the manufacturer obtaining site control, including 39
rights to purchase or lease the dealer's facility, or an agreement to 40
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make improvements or substantial renovations to a facility. For 1
purposes of this section, a substantial renovation has a gross cost 2
to the dealer in excess of ((five thousand dollars)) $5,000;3
(o) Fail to provide to a new motor vehicle dealer purchasing or 4
leasing building materials or other facility improvements the right 5
to purchase or lease franchisor image elements of like kind and 6
quality from an alternative vendor selected by the dealer if the 7
goods or services are to be supplied by a vendor selected, 8
identified, or designated by the manufacturer or distributor. If the 9
vendor selected by the manufacturer or distributor is the only 10
available vendor of like kind and quality materials, the new motor 11
vehicle dealer must be given the opportunity to purchase the 12
franchisor image elements at a price substantially similar to the 13
capitalized lease costs of the elements. This subsection (1)(o) must 14
not be construed to allow a new motor vehicle dealer or vendor to 15
gain additional intellectual property rights they are not otherwise 16
entitled to or to impair or eliminate the intellectual property 17
rights of the manufacturer or distributor or to permit a new motor 18
vehicle dealer to erect or maintain signs that do not conform to the 19
reasonable intellectual property usage guidelines of the manufacturer 20
or distributor; 21
(p) Take any adverse action against a new motor vehicle dealer 22
including, but not limited to, charge backs or reducing vehicle 23
allocations, for sales and service performance within a designated 24
area of primary responsibility unless that area is reasonable in 25
light of proximity to relevant census tracts to the dealership and 26
competing dealerships, highways and road networks, any natural or 27
man-made barriers, demographics, including economic factors, buyer 28
behavior information, and contains only areas inside the state of 29
Washington unless specifically approved by the new motor vehicle 30
dealer; 31
(q) Require, coerce, or attempt to coerce any new motor vehicle 32
dealer by program, policy, facility guide, standard, or otherwise to 33
order or accept delivery of any service or repair appliances, 34
equipment, parts, or accessories, or any other commodity not required 35
by law, which the dealer has not voluntarily ordered or which the 36
dealer does not have the right to return unused for a full refund 37
within ((ninety)) 90 days or a longer period as mutually agreed upon 38
by the dealer and manufacturer; or 39
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(r) Modify the franchise agreement for any new motor vehicle 1
dealer unless the manufacturer notifies the dealer in writing of its 2
intention to modify the agreement at least ((ninety)) 90 days before 3
the effective date thereof, stating the specific grounds for the 4
modification, and undertakes the modification in good faith, for good 5
cause, and in a manner that would not adversely and substantially 6
alter the rights, obligations, investment, or return on investment of 7
the franchised new motor vehicle dealer under the existing agreement.8
(2) Subsection (1)(a), (b), and (c) of this section do not apply 9
to sales to a motor vehicle dealer: (a) For resale to a federal, 10
state, or local government agency; (b) where the vehicles will be 11
sold or donated for use in a program of driver's education; (c) where 12
the sale is made under a manufacturer's bona fide promotional program 13
offering sales incentives or rebates; (d) where the sale of parts or 14
accessories is under a manufacturer's bona fide quantity discount 15
program; or (e) where the sale is made under a manufacturer's bona 16
fide fleet vehicle discount program. For purposes of this subsection, 17
"fleet" means a group of ((fifteen)) 15 or more new motor vehicles 18
purchased or leased by a dealer at one time under a single purchase 19
or lease agreement for use as part of a fleet, and where the dealer 20
has been assigned a fleet identifier code by the department of 21
licensing. 22
(3) The following definitions apply to this section:23
(a) "Actual price" means the price to be paid by the dealer less 24
any incentive paid by the manufacturer, distributor, factory branch, 25
or factory representative, whether paid to the dealer or the ultimate 26
purchaser of the vehicle. 27
(b) "Control" or "controlling" means (i) the possession of, title 28
to, or control of ((ten)) 10 percent or more of the voting equity 29
interest in a person, whether directly or indirectly through a 30
fiduciary, agent, or other intermediary, or (ii) the possession, 31
direct or indirect, of the power to direct or cause the direction of 32
the management or policies of a person, whether through the ownership 33
of voting securities, through director control, by contract, or 34
otherwise, except as expressly provided under the franchise 35
agreement. 36
(c) "Motor vehicles" does not include trucks that are 14,001 37
pounds gross vehicle weight and above or recreational vehicles as 38
defined in RCW 43.22.335. 39
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(d) "Operate" means to manage a dealership, whether directly or 1
indirectly. 2
(e) "Own" or "ownership" means to hold the beneficial ownership 3
of one percent or more of any class of equity interest in a 4
dealership, whether the interest is that of a shareholder, partner, 5
limited liability company member, or otherwise. To hold an ownership 6
interest means to have possession of, title to, or control of the 7
ownership interest, whether directly or indirectly through a 8
fiduciary, agent, or other intermediary. 9
(4) A violation of this section is deemed to affect the public 10
interest and constitutes an unlawful and unfair practice under 11
chapter 19.86 RCW. A person aggrieved by an alleged violation of this 12
section may petition the department to have the matter handled as an 13
adjudicative proceeding under chapter 34.05 RCW. 14
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