HCS HB 699 -- MOTOR VEHICLES

SPONSOR:  Tilley

COMMITTEE ACTION:  Voted "do pass" by the Special Committee on
General Laws by a vote of 7 to 1.

This substitute changes the laws regarding the registration,
licensure, and sale of motor vehicles.

TEMPORARY PERMITS

The substitute removes references to the terms "plate" and "paper
plate" from the temporary permit provision.  The provision which
requires the issuance of temporary permits to nonresidents is
repealed.

IN TRANSIT PLACARDS

The provision which requires dealers to use an "In Transit"
placard when moving a motor vehicle from one dealer to another or
from the manufacturer is repealed.

OUT-OF-STATE CERTIFICATES OF OWNERSHIP

The absence of a prior designation on an out-of-state title that
the vehicle is a reconstructed motor vehicle, motor change
vehicle, specially constructed motor vehicle, or prior salvage
vehicle will not relieve the transferor from exercising due
diligence regarding the title prior to its transfer.  If the
transferor does this, he or she will not be liable even if the
title was not properly designated.

SALES BY DEALERS

Dealers are required to have a certificate of ownership, proof
that the dealer has applied for a certificate of ownership, or
proof that a prior lien has been satisfied by the dealer for
every motor vehicle in the dealer's possession.

UNCLAIMED VEHICLE REPORTS AND STORAGE CLAIMS

Dealers and persons operating garages in which a motor vehicle
remains unclaimed for a period of 15 days may report the
unclaimed vehicle to the Department of Revenue.  Currently,
dealers must report the unclaimed vehicles to the department.
The provision which specifies that dealers who fail to report
unclaimed vehicles will forfeit all claims and liens for storing
the vehicle is repealed.

MOTOR VEHICLE AND TRAILER DEALERS

The substitute revises the definition of "motor vehicle dealer"
by increasing from six or more to 12 or more motor vehicles sold
in a calendar year to be eligible for licensure as a motor
vehicle dealer.  If a dealer fails to sell 12 vehicles, he or she
is prohibited from renewing his or her license for one year.  Any
motor vehicle dealer licensed before August 28, 2007, will be
grandfathered under the prior six vehicle sales requirement.
Similar requirements are established for trailer dealers.

The substitute makes it unlawful for a person to sell six or
more, instead of the current seven or more motor vehicles, in a
calendar year unless the person is licensed or meets other
specified exceptions.  The sale of six or more vehicles within a
calendar year is considered as acting as a motor vehicle dealer
without a license.

BONA FIDE ESTABLISHED PLACES OF BUSINESS

Motor vehicle dealer applications are required to include an
annual certification that the applicant has a bona fide
established place of business for the first three years and only
every other year thereafter.  A bona fide established place of
business for any motor vehicle dealer, boat dealer, wholesale
motor vehicle dealer, trailer dealer, or wholesale or public
auction, in addition to other current legal requirements, must be
a permanent enclosed commercial, nonresidential building, which
must display an exterior sign with the name of the business in
letters that are at least six inches in height.

The photograph that accompanies a dealer application must not be
any smaller than five by seven inches.

DEALER SURETY BONDS

The amount of the corporate surety bond which dealers are
required to file is increased from $25,000 to $30,000.  Every
applicant for a new motor vehicle franchise dealer, a used motor
vehicle dealer, a powersport dealer, a wholesale motor vehicle
dealer, a trailer dealer, or a boat dealer must furnish with the
application a copy of a current dealer garage policy with the
policy number and name of the insurer and the insured and a copy
of a current property and casualty policy with the policy number
and name of the insurer and the insured from an insurance carrier
registered with the Director of the Department of Insurance,
Financial Institutions, and Professional Registration.

USED MOTOR VEHICLE DEALER EDUCATIONAL SEMINARS

Public auto auctions and applicants currently holding a new or
used license for a separate dealership will be exempt from
showing proof of completing an educational seminar when applying
for a used motor vehicle dealer's license.  Current new motor
vehicle franchise dealers and motor vehicle leasing agencies will
not be subject to the educational seminar requirements.

The number of additional plates a new motor vehicle manufacturer
may hold will be limited to no more than 347.  New and used
dealers are limited to one additional plate or certificate of
number per 10-unit transactions annually.

MOTOR VEHICLE SHOWS

Motor vehicle dealers may participate in no more than two motor
vehicle shows and conduct sales away from the dealer's licensed
place of business if the event is conducted for not more than
five consecutive days.  If any show or sale includes a class of
dealers or franchised new vehicle line-make that is also
represented by a same class dealer or a dealer representing the
same line-make outside the city or town limits and is within 10
miles of where the show or sale is to take place, the dealer
outside the city or town limits must be invited to participate in
the show or sale.  The substitute shortens the duration of off-
site sales to five days instead of 10 days and increases the
permit fee for off-site sales from $200 to $550.

ADVERTISING STANDARDS

The terms "invoice price" and "$....below/over invoice" cannot be
used in advertisements as is currently allowed, and the
prohibition on advertisements that offer to match or better a
competitor's price is removed.

FINANCE CHARGES

Motor vehicle dealers are prohibited from assessing a finance
charge on a motor vehicle that results in the difference of more
than 3% between the buy rate and the contract rate.

The provisions regarding the number of additional plates a new
motor vehicle manufacturer may hold become effective January 1,
2008.

FISCAL NOTE:  Estimated Income on General Revenue Fund $3,944 in
FY 2008, FY 2009, and FY 2010.  Estimated Income on Other State
Funds of $24,263 to $34,263 in FY 2008, $26,002 to $36,002 in
FY 2009, and $26,002 to $36,002 in FY 2010.

PROPONENTS:  Supporters say that the bill creates a car owner's
bill of rights.  The increase in the surety bond requirements
updates the legislation passed in l988 that established the
original surety requirements.  The additional amount of surety
better protects car buyers since $25,000 doesn't cover as much
damage as it did 20 years ago.  Currently, some dealers who sell
and finance auto purchases obtain third party financing and
inflate the interest rates for at-risk loans.  By capping at 3%
the interest rate spread dealers are able to charge, car buyers
will not be gouged.  The increased amount that dealers are able
to charge for temporary permits will help dealers cover the
administrative cost associated with the issuance of the permits.

Testifying for the bill were Representative Tilley; Missouri
Automobile Dealers Association; William Kent Scism; and Mike
Kehoe.

OPPONENTS:  Those who oppose the bill say that the buy back
provisions will hurt used car dealers since customers are likely
to cause damage that is in excess of the $500 restocking fee the
dealers are able to charge upon return.  Verification of the
downpayment check by used car dealers takes a minimum of seven
days.  The bill invites car buyers to pay with bad checks and
then exercise their buy-back rights.  Any restrictions on dealer
tags prevent large car dealers from opening new stores since a
start-up requires the transport of 300-500 vehicles to the car
lot.  The $100,000 surety requirement is so oppressive that it
will eliminate automobile dealers because many are not able to
meet the asset limits necessary to purchase such a high surety
bond.

Testifying against the bill were Carey Sommers; Richard Price;
Henry D. W. Burt; Jim Deardorff; Bryan Lowe; Missouri
Professional Automobile Dealers Association; Carmax Auto
Superstores, Incorporated; Missouri Power Sports Dealers
Association; James Barrow; and Phil Gilmore.

OTHERS:  Others testifying say that the bill contains no
mechanisms for the enforcement of the dealer plate provisions.
If a dealer currently has excess dealer plates or accumulates
extra dealer plates, the Department of Revenue will have no way
to enforce the provisions of the bill.

Testifying on the bill was Department of Revenue.

Missouri House of Representatives
94th General Assembly, 1st Regular Session
Last Updated July 25, 2007 at 11:20 am