This “You Auto Know”© ran in March 2015 when the 130th General Assembly amended Ohio’s sale and display of motor vehicle law. I thought presenting this article again is timely inasmuch as there have been incidences of aggressive enforcement officers citing dealers for offsite vehicle displays. I must caution you that if you are invited to display a vehicle by an organization who claims it is an auto show, ask whether that organization has received the necessary authorization from the Ohio BMV. Many times, the organizations are unaware that they are required to obtain the authorization and unwittingly tell the dealers that they have approval to hold the “auto show” when in fact they do not.
It happens in every city in every state: you see single dealer vehicle displays in front of swanky venues, big box shopping stores, civic centers, museums, sporting venues, schools, the list is endless. I often get a call from a same line dealer complaining about the display, but before the appropriate state department can investigate, the vehicles have been removed. However, with the help of today’s technology, there has been more enforcement than ever against these illegal displays. Every state has laws prohibiting and/or providing guidelines for offsite vehicle displays and auto shows.
The Ohio General Assembly recently addressed the issue by amending the law to make it much easier for an Ohio dealer to comply with the guidelines and display vehicles offsite. House Bill No. 318, including its amendments, is 14 pages long and this article does not address all the changes, but rather will highlight two very important amendments.
The first is contained in Section 4517.03(B)(1)(b), which states, “A new motor vehicle dealer does not violate division (B)(1) of this section if a customer of a new motor vehicle dealer executes purchase or lease documentation at a location other than the new motor vehicle dealer’s established place of business.” The previous version only permitted sales at an established place of business that is used exclusively for the purpose of selling, displaying, offering for sale, or dealing in motor vehicles. This amendment brings the law into the 21st century recognizing commonly used technology, specifically Internet sales, by allowing salespeople to execute sales documents at a location other than the physical dealership premises.
For those of you with a heavy-duty truck franchise, Section (B)(1)(c) provides, “[I]f the sale or lease [of a heavy-duty truck] is negotiated and the documents are executed at the customer’s business location,” then the law will deem that the sale took place at the dealer’s established place of business.
The second important amendment, which is generating the most interest, is the ability of dealers to display vehicles offsite. Previously, an Ohio dealer could not display offsite without inviting the participation of other same line and competitive dealers to participate in the display or show. Despite the threat of the penalty of a fourth-degree criminal prosecution, this prohibition was rarely followed and rarely enforced. The impetus for modifying the law was simply this lack of compliance and enforcement. An additional consideration is the fact that many manufacturers encourage dealer advertising associations and dealers to promote and participate in offsite displays, particularly to benefit charitable organizations.
For motor vehicle shows, the law has been amended at Section 4517.22(5). “Motor vehicle show” is now defined as the “display of new motor vehicles that lasts not more than ten days by more than one motor vehicle dealer.” Previous law did not have a time limit. To comply with the changes, the sponsor of the show must execute an affidavit in the form provided by the Registrar of Motor Vehicles to be submitted 30 days before the planned show. The law remains unchanged with respect to sales: at the motor vehicle show no contracts or deposits shall be taken or sales consummated.
For individual dealers, the law was modified under Section H of Section 4517.221 of the Revised Code. That section states that a display away from a dealer’s established place of business can be held for charitable or civic purposes, being defined as, “(b) A benevolent, philanthropic, patriotic, educational, humane, scientific, public health, environmental conservation, or civic objective or any objective that benefits law enforcement personnel, firefighters, or other persons who protect the public safety.” The law further provides charitable or civic purposes not limited to those purposes for which contributions are tax deductible.
At such shows, the individual dealer can display motor vehicles in order to provide the general public the opportunity to look at the vehicles including their safety features and new technology. However, the displaying dealer can only display his vehicles in that area of responsibility assigned by the manufacturer. Pursuant to the amendment the dealer cannot display more than six vehicles that can be utilized for test drives; and the dealer has the ability to have an unlimited number of displays throughout the year. The only caveat is that the dealer must file an affidavit with the Bureau of Motor Vehicles at a minimum three days prior to the date of display with adequate proof that the display is within the dealer’s area of responsibility. The affidavit will also contain the beginning and ending dates of the display and affirmations that to the best of the dealer’s knowledge no other dealer will display a vehicle at that location and that no contracts or deposits will be taken and that the display is for either charitable or civic purposes.
In addition, a dealer does have the ability to display outside of its area of responsibility. Again, the dealer must provide an affidavit to the Registrar of Motor Vehicles within three days of the display and provide the same information. However, the dealer must get permission from the dealer whose area of responsibility has been assigned to that display area, no test drives are permissible, and display outside a dealer’s area of responsibility is limited to six calendar days.
It is interesting to note that the law changed on March 23, 2015, but the old penalty of a fourth-degree misdemeanor will remain until September 23, 2015. However, after that date, there will be a monetary penalty of $1,000 per violation per day. It must be noted that this law applies only to single dealer displays and does not amend the requirements for state or county fairs or big box shows.
There are pros and cons to the amendments of the Ohio law dealers should consider. That being said, the amendments to the Ohio law should level the playing field for all dealers. It is imperative to remember before responding to an invitation to display vehicles offsite, the dealership needs to know the law in its state.
Robert A. Poklar, Esq.
Weston Hurd LLP
The Tower at Erieview
1301 East 9th Street, Suite 1900
Cleveland, Ohio 44114-1862
Cleveland, Ohio 44114-1862
p: 216.687.3243; f: 216.621.8369