Newspaper article THE JOURNAL RECORD

Auto Marketing Developments May Prompt Changes in Law

Newspaper article THE JOURNAL RECORD

Auto Marketing Developments May Prompt Changes in Law

Article excerpt

Changes in automobile marketing and distribution may force changes in Oklahoma laws governing auto dealers, according to the chairman of the Oklahoma Motor Vehicle Commission.

Although no formal proposal was presented to the commission during its regular monthly meeting Tuesday, Chairman Jack Clark said changes soon will be required in Commission Rule 15, which prohibits satellite dealerships.

That rule now allows new cars to be sold only at the principal place of business for a franchised dealer. If a dealer wants multiple locations for one brand of motor vehicle, then the manufacturer must sign franchise agreements for each location.

Under the satellite form of distribution, the manufacturer grants one franchise which would cover multiple dealerships within a large geographic area, Clark said.

At least three manufacturers use this form of distribution. Toyota has awarded one franchise and plans another in Oklahoma for the Lexus, its luxury car line, while Nissan has franchised the entire state to one dealer for the Infiniti luxury line. Saturn Corp., the General Motors Corp. subsidiary, is expected to franchise a large metropolitan area to a single dealer when that company's car reaches the market next fall.

If the rule is changed to allow satellite operations, dealers would be granted a license based upon the franchise agreement. Any subsequent satellite operations would be covered under that umbrella license, Clark said.

However, a satellite operation would not be allowed within five miles of an existing like-brand dealership, he said.

"Our purpose here is to serve the public," Clark said. "If we have only one Infiniti dealer in the state and that happens to be in Oklahoma City, then we are not serving the people of Tulsa if they want to buy an Infiniti.

"This is not something which has to be done immediately, but we must start thinking about it so that when this comes up we'll have a solution for it. We don't want to wait until then to start thinking about it."

Changes in commission regulations require about a year because of the Administrative Procedures Act requiring review by several agencies, including the Oklahoma Legislature, according to Noel Kruger, commission executive director.

"Just look how long it's taken to change Rule 10 (dealing with the sale of conversion vans) and it's just now going to be adopted," he said. "If we wait until the question comes up, it will just add about a year to the process."

The commission voted in June to repeal Rule 10 which allows van converters to franchise an independent dealership network, without considering which chassis manufacturer the dealer represented. …

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