NPDA News

May 23, 2024

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Dealers - via emails, phone calls and in-person conversations with staff and Board members at the National Powersports Dealer Association - have expressed a litany of concerns in 2024 about perceived overreach by their Original Equipment Manufacturer (OEM) business partners, with recurring themes centering on:

● Excessive inventory requirements exceeding market demand.

 

● Mandates to procure costly displays and fixtures.

 

● OEM intrusion into dealer-operated platforms such as websites, Dealer Management Systems, and CRMs.

 

● Compulsory investments in facilities for designated OEM display areas.

 

● Mandatory disclosure of comprehensive financial data beyond brand-specific metrics.

 

● Imposition of sales targets based on arbitrary market share benchmarks, often unsupported by verifiable data.

 

These demands, among others, are consolidated into overarching certification frameworks intricately linked to incentive schemes positioned above the vehicle margin— the delta between dealer invoice and Manufacturer's Suggested Retail Price (MSRP). Dealers opting for non-compliance with these program prerequisites find themselves at a financial disadvantage compared to their conforming counterparts.

When confronted with such challenges, NPDA's initial guidance to dealers emphasizes a thorough grasp of franchise laws governing each state. These legislative frameworks delineate the parameters within which OEMs operate across the national landscape, with nuances varying from state to state. Transgressions against these laws risk forfeiture of market access within the affected jurisdictions.

 

Legal scrutiny has revealed divergences such as:

 

● Classification of vehicles under motor-vehicle statutes, varying between states. In some states an ATV or side-by-side might be covered under motor-vehicle statutes, while in others they are excluded.

 

● The exclusion of powersports vehicles from lemon law provisions (many vehicles now cost more than cars, why should they not be held to the same standard).

● OEM prerogatives to offer exclusive dealership privileges selectively (dealers receiving limited edition models only when they complete other tasks).

● Reimbursement standards for parts and labor utilized in warranty repairs, among other considerations.

 

A pervasive challenge lies in OEMs' occasional disregard for established legal norms. While such conduct may be ethically contentious, dealers bear the onus of familiarizing themselves with pertinent statutes and holding errant vendors accountable. Regrettably, many dealers only discern violations post hoc, when resources such as legal recourse become prohibitively costly, often leaving them at a disadvantage vis-à-vis better-funded OEMs.

 

The linchpin of dealer protection resides in robust state Dealer Associations. Presently, approximately 13 states boast standalone powersports dealer associations or affiliations with broader auto dealer associations. While NPDA's jurisdiction is advisory rather than legislative, plans are underway to equip dealers via the formation of an NPDA State Council for each state that does not have an existing powersports dealer association. This initiative will furnish a blueprint of best practices alongside recommended statutes for advocacy, distilled from an analysis of states with robust dealer protections.

Ongoing discussions with dealers point to consistent violations of state laws. Some of them that we’ve already identified:

 

● Disparate treatment of dealers through multi-tiered systems. In offering bonuses to some dealers while withholding them from others, consumers and dealers may be harmed.

 

● Coercion of dealers into purchasing superfluous and overpriced equipment.

 

● When dealers complete warranty and recall repairs, failing to reimburse dealers at

standard labor rates and MSRP for parts.

 

While legislative language varies, the aforementioned violations have been documented across multiple states.

 

NPDA's principal recourse in resolving disputes entails serving as a clearinghouse between dealers and OEMs. Preferably, collaborative dialogues with industry stakeholders yield mutually beneficial programs that drive progress while ensuring parity among dealers and adherence to state statutes.

 

Our preference is to achieve win/win solutions. The NPDA will continue to facilitate these conversations in an effort to provide dealers with methods of achieving sustainable profitability. Dealers and OEM representatives who are eager to join in the conversation should contact Dave McMahon, NPDA Executive Director, at dave@npda.org.