IADA contacted Ford Motor Company leadership to request that Ford modify its proposed Model e Program (view letter here). The Program is scheduled to start on January 1, 2024, but dealers must decide whether to enroll by December 2, 2022. As currently constructed, the Program requires Ford dealers to elect one of the following options by December 2d:
Certified Elite
Certified
Internal Combustion Engine
Certified Elite dealers will be able to stock and sell Ford's current and future EVs, although allocation is expected to be limited. In exchange, Certified Elite dealers will be required to install multiple electric vehicle chargers, some of which must be available for public use, and invest in additional EV infrastructure and employee training at an estimated cost of $1.2 Million, regardless of the size or sales volume of the dealership.
Certified dealers will be able to sell, but not stock nor advertise, a limited number of Ford EVs. Certified dealers will be required to install one EV charger, which must be accessible to the public, and invest in additional EV infrastructure and employee training at an estimated cost of $500,000, regardless of the size or sales volume of the dealership.
Internal Combustion Engine only dealers, including dealers who have already made manufacturer-required investments to sell the current EV products, will not be permitted to sell EVs on or after January 1, 2024, but will not be required to invest in EV infrastructure or training.
Dealers who elect to continue selling EVs will be required to set no-haggle prices for Ford EVs, which must be posted on Ford's website. Ford claims that customers will be able to conduct EV purchases completely online without entering a dealership, although most states, including Illinois, still require wet ink signatures on several documents that will make online vehicle purchases a little more complicated than a typical online clothing order. For additional information about remote sales, please see our May 20, 2020 IADA Bulletin.
In short, Ford is attempting to use its Model e Program to control or take over many of the functions that the dealer network currently performs. As you can see in IADA's attached letter to Ford, the Model e Program impacts hard-earned dealer rights and consumer protections under the Illinois Motor Vehicle Franchise Act. IADA is trying to open a dialogue with Ford to persuade them to fix its flaws before Ford dealers need to exercise their rights under the Franchise Act.
DIRECT SALE LAWSUIT-TIMELINE & HEARING UPDATE
The dealer direct sale lawsuit against Rivian, Lucid, and the Secretary of State was filed in March of 2021 and was fully briefed by all parties by October 2021. After close to a year without any feedback from the judge, the dealers requested a status hearing, which was held on October 17th. The judge set a follow-up status hearing for December 15th, but said that he expected to rule on the Rivian, Lucid, and SOS motions to dismiss the dealer lawsuit before the December 15 status hearing. The announcement of expected action on our direct sales lawsuit is welcome news and we will keep you posted on further developments. A full timeline of the lawsuit is included with the materials. Read more
NADA GUIDANCE ON LEASE-END PURCHASES
NADA recently reminded dealers that when a lease customer exercises an option to purchase a leased vehicle at lease-end for a stated price, the Consumer Leasing Act requires the selling dealer to honor the purchase price in the lease contract. The selling dealer is permitted to charge official fees such as sales tax and license and registration fees on top of the contractual selling price. However, doc fees are not official fees, meaning that the selling dealer is most likely not permitted to charge doc fees in a lease buyout unless the amount of the doc fee was included in the original lease contract. Because the Illinois doc fee changes every year and other states have different doc fees, it is unlikely that a doc fee was itemized in the original lease contract for a customer who exercises a buyout option. NADA has A Dealer Guide to Federal Consumer Leasing Act Requirementshas additional information about lease buyouts.
From the NADA Guide:
If a lease does not disclose the documentary fee as a purchase option fee, charging a documentary fee in addition to the lease purchase option price risks a claim that the initial disclosure of the lease option price was not accurate and thus violated Reg M. It also risks a claim that the lease holder breached the original lease agreement by charging more than the agreed to lease option price.
Lease-end buyouts have become more common recently because of the scarcity of used vehicles and the surge in used vehicle values. These factors, combined with increased regulation of motor vehicle dealerships by the Federal Trade Commission make it a good time to review your practices related to lease-end buyouts.
IT'S HERE!
WE ARE EXCITED TO SHARE OUR NEW WWW.ILLINOISDEALERS.COM INTERACTIVE WEBSITE ALONG WITH A NEW LOGO AND VIDEOS THAT TELL OUR STORY.
A customer brought their vehicle into an auto dealership for service, which required their tires to be taken off the vehicle and replaced. After returning the vehicle to the customer, it was driven less than five miles when one of the tires came off and struck an oncoming vehicle. The vehicle that was struck by the customer's tire sustained physical damage and the driver was injured. The investigation revealed that the technician who completed the repairs to the customer's vehicle was in a hurry and failed to use a torque wrench when replacing the lug nuts on the tires. (Read on)
