There has been a lot of activity in Washington recently on issues that could have a significant impact on automobile dealers. NADA continues to stay involved on behalf of franchised dealers and is working to protect the franchise system and the interests of dealers nationwide.
Chinese OEM Entry into the U.S. Market
On April 29, Sen. Bernie Moreno (R-Ohio) and Sen. Elissa Slotkin (D-Mich.) introduced the Connected Vehicle Security Act (S. 4429). The bill would prohibit the importation, sale and operation of vehicles manufactured in China and would also ban Chinese-developed connected vehicle technology, including software and data systems, from use on American roads.
According to Sen. Moreno’s office, the legislation would phase in over several years, with software and vehicle restrictions beginning in 2027 and hardware restrictions taking effect in 2030. The goal is to give U.S. manufacturers time to strengthen domestic supply chains while addressing national security concerns associated with connected vehicle technology.
NADA supports efforts to prevent Chinese automakers from entering the U.S. market. This legislation follows bipartisan letters sent to the administration expressing concerns about allowing Chinese OEMs access to the American market and urging action to prevent their entry.
NADA is currently working with Sens. Moreno and Slotkin on the legislation and will continue advocating for policies that protect the American automotive industry.
So-Called “Right to Repair” Legislation
On May 21, the House Energy and Commerce Committee passed H.R. 7389, the Motor Vehicle Modernization Act, which included the REPAIR Act (H.R. 1566), but in name only. The entire bill was stripped down to three provisions: codifying the 2014 light-duty Memorandum of Understand and the 2015 heavy-duty truck Memorandum of Understanding, and an FTC study on this issue that is due in 2030. NADA supported these modifications.
Thanks to NADA’s grassroots advocacy, the committee withdrew its problematic draft of the REPAIR Act and replaced it with a significantly scaled-back version.
The bill preserves the current, functional repair system without introducing new liabilities on dealers, opening warranty and recall work to third parties, or threatening state franchise law — all of which were provisions in previous versions of the bill.
NADA anticipates proponents of so-called “right to repair” will try to restore their dropped language when the bill moves to the House floor, potentially later this month. I will keep you posted on further developments.
Volkswagen and Scout Motors Litigation
There have also been important legal developments involving Volkswagen and Scout Motors.
On March 30, a federal court denied Volkswagen and Scout Motors’ motion to dismiss a lawsuit filed by the California New Car Dealers Association. The case alleges that Scout’s direct-to-consumer model constitutes unlawful competition with franchised dealers. The court’s decision allows the lawsuit to move forward.
Separately, two Volkswagen dealers filed a class-action lawsuit in Virginia against Scout Motors, Scout Motors Sales LLC, Volkswagen Group of America and Volkswagen AG. That case alleges contractual violations related to dealer agreements.
Because it is a class action, all Volkswagen dealers in the United States are automatically included unless they choose to opt out. Neither NADA nor the Virginia Automobile Dealers Association is involved in that litigation.
Looking Ahead
While these issues are very different, they all have one thing in common: They affect the future of the franchise dealer system. NADA will continue monitoring developments in Congress, federal agencies, and the courts and will keep dealers informed as these matters move forward.
