Originally created 02/18/99

Dealership law encourages competition



ATLANTA -- Georgia's car dealers claimed victory Wednesday after the state House voted to limit car manufacturers' ability to buy dealers out or open dealerships nearby.

Supporters of the bill, which passed with a 127-48 vote, said it eventually could increase competition, meaning consumers could pay less for automobiles.

"It gives some strength to our local Georgia dealers," said Rep. Dubose Porter, D-Dublin, the bill's sponsor. "It keeps a higher number of dealers out there. That keeps the market competitive."

The bill now goes to the Senate.

The car dealers' state trade association began to push for the legislation a few weeks after Ford Motor Co. expressed interest in buying into several of its north Atlanta dealerships.

Porter said if car makers are able to come in and reduce the number of dealers, "there are fewer places to kick the tires, fewer places to get the deals."

The bill would prohibit a manufacturer from operating a dealership that it partly owns. It also would limit to one year the amount of time a car maker can own a dealership that has gone out of business.

Also, a manufacturer would not be allowed to open up a new dealership within 10 miles of another dealer in a county with more than 100,000 people or within 20 miles in a county with less than 100,000 people.

Porter said all neighboring states except South Carolina have similar laws.

Bob Cucchi, Ford's regional director for governmental affairs, said the bill would ultimately hurt consumers.

"While it is perhaps a dispute between dealers and manufacturers ... the consumer is a real loser," he said. "This bill really gives the existing dealers a lock on the marketplace."

House supporters of the bill, some of whom talked during the 90-minute debate about working in the automobile industry and buying their first car, argued that the legislation would prevent manufacturers from having a monopoly and would protect family dealerships in small towns.

"Those are the people who are the backbone of the community," said Bill Morie, president of the Georgia Automobile Dealers Association, of which most of the state's 600 dealers are members. "To be able to preserve the traditional franchise ... it would be a victory."

Opponents said the bill would increase prices, provide fewer choices and prohibit customers from buying directly from manufacturers through the Internet. Sponsors said the measure would not restrict Internet sales.

"Blocking out manufacturers will mean we block in consumers," said Rep. Kathy Ashe, R-Atlanta. "This may be a fight between the dealer and manufacturers, but our constituents are the innocent bystanders who pay the price."

Ms. Ashe co-sponsored an amendment, which failed with a 65-109 vote, that would have allowed manufacturers to own dealerships as long as they compete fairly with other dealers.