Luxury vehicle dealer’s honesty assumed over customer’s intent to export and resell

Luxury auto manufacturers are seeing an uptick in sales, and these U.S.-made vehicles are prized commodities in some foreign countries. However, the cost of the vehicle may be several times more than in the U.S. creating somewhat of a black market where people are making purchases here and reselling them for export.

Manufacturers see their overseas dealers losing sales and will take punitive action against local dealerships if it is learned that a customer is a reseller.

Rep. Jenifer Loon

The House passed HF2954 128-0 on Wednesday, which would prohibit the punishment. Sponsored by Rep. Jenifer Loon (R-Eden Prairie), the bill now moves to the Senate with Sen. Bobby Joe Champion (DFL-Mpls) as its sponsor.

WATCH Floor debate on the bill on YouTube

Amber Backhaus, director of government affairs at the Minnesota Automobile Dealers Association, told the House Commerce and Regulatory Reform Committee earlier this year that China, Russia and Brazil are prime targets for reselling new autos. While the practice is not illegal, she said offending dealers are slapped with stiff penalties from the manufacturers and could see their franchise license terminated.

The bill would prohibit manufacturers from taking any adverse action against a dealer when a new vehicle is sold and exported to a foreign country, unless it can be proven that, at the time of sale, the dealer knew or reasonably should have known of the purchaser’s intent to export or resell the vehicle.