Pub. 2 2020-2021 Issue 2

14 W hen I joined CNCDA in January 2017, one of my first projects was to prepare a comprehensive analysis of potential dis- ruptions facing franchised new car dealer- ships. The list of actors promoting such disruption was extensive — it included familiar names like TrueCar and obscure ones such as Beepi. During this process, I became increasingly frustrated that many “disruptors” (i.e., companies that seek to build market share through the aggressive implementation of unconventional business models) sought to promote changes in business activity through blatant violations of the law. The Silicon Valley adage of “move fast and break things” had arrived in the retail automotive industry. This apathy toward the law was present in the nascent discussions involving vehicle subscription programs. Some proponents of vehicle subscriptions argued that many consumer protection laws were inapplicable to subscriptions, because a “vehicle subscription,” which is not defined by the law, is a unique category distinct from vehicle sales and leases. Some manufacturers were also considering launching such programs with little apparent regard to state franchise laws. Fast forward to March 26, 2018. Rob Robards (attorney at Robards & Sterns) called me and described the rushed and coercive launch of the Care by Volvo program in California. Over the previous weekend, Volvo sent an urgent communication to its dealers demanding that they immediately agree to amend their contracts with Volvo’s captive finance company. The amendment was integral to the launch of the Care by Volvo program, as it transformed Volvo dealers into agents of Volvo. As agents, Volvo dealers would have a perfunctory role in the retail of Care by Volvo vehicles — they would be limited to handling customer delivery, final paperwork and registration. Dealers were barred from working directly with customers, and Care by Volvo denied Volvo dealers trade-in and F&I opportunities. The more we looked at the Care by Volvo program, the worse it got. Although the program was billed as a “subscription” program, it was just a two-year lease Anthony Bento Director of Legal Affairs Volvo Begins to Face the Consequences of Ignoring California Law