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Auto-dealer bill prompts requests to protect direct EV sales model for new manufacturers
Summary
A hearing on House Bill 2127A, which updates franchise rules between manufacturers and dealers, included industry witnesses supporting dealer protections and testimony from new electric vehicle maker Scout Motors urging an amendment to preserve direct-to-consumer sales by EV startups.
House Bill 2127A, offered by the Oregon Auto Dealers Association and reported from the House with 55 aye votes, was heard by the Senate Committee on Labor and Business on April 15. The measure would revise the legal framework governing franchise agreements between vehicle manufacturers, distributors and franchise dealers, setting standards for allocation fairness, consumer choice for delivery, facility upgrades, and protection against direct manufacturer competition with dealer investments.
Greg Remensberger, executive vice president of the Oregon Auto Dealers Association, told the committee the bill draws on model language used in other states (notably California) to protect rural and smaller dealers and to ensure consumer choice in dealer delivery when customers configure vehicles online. “The requirement the legislation requires the manufacturer to demonstrate that fairness,” Remensberger said, describing allocation and facility provisions.
Scout Motors, a new electric-vehicle maker, asked the committee to amend the bill to preserve its direct-sales model. Shannon Fender and Sim Singh, who described Scout’s planned U.S. manufacturing facility and business model, said current Oregon law permits some direct EV sales but that the bill’s affiliate language could be read to force new EV makers into franchise-dealer relationships. Fender said Scout “does not, has never, and will never use franchise dealerships,” and that affiliate language in section 1 could prevent Scout from selling directly to Oregon customers; Scout requested removing or narrowing references to “affiliate” so the statute cannot be read to extend dealer franchise rights to an unrelated EV startup.
Dealers objected to the requested amendment. Remensberger said the bill’s franchise language mirrors California’s statute and is intended to protect investments dealers make in facilities, tools and staffing. He also disputed the claim that direct sales necessarily lower consumer cost, noting trade association studies that show franchise dealers internalize facility and service costs.
Committee members sought clarifying language options. Scout representatives proposed two possible fixes: (1) remove “affiliate” from the definition of manufacturer or (2) add a parenthetical limiting language stating a subsidiary, affiliate, branch or division must be “directly controlled by” the stated manufacturer to be covered. Dealers said they would object to removing affiliate language and that California’s version was adopted intentionally.
No committee vote was taken. Committee staff noted a small, technical amendment requested by a manufacturer (Toyota) was being prepared by staff and that sponsors expect a committee amendment will be ready if negotiations conclude. The committee closed the public hearing and moved to other agenda items.
