During these hard times, I always want to start my articles first by saying that we at KPA are here for you. This article will be a little different than some of our recent ones; we will focus entirely on the regulatory/legislative front regarding the status of vehicle sales in California. Since our last newsletter, there were so many updates in this area that we need to take time to address them. This article will broadly cover the DMV’s recent memorandum regarding online sales and remote deliveries as well as the status of in-person sales at dealerships in California.
DMV Memorandum OLIN 2020-04 on Online Sales and Remote Deliveries
The DMV recently issued a memorandum regarding Online Vehicle Sales and Off-Site Delivery. It confirms that dealers in California may sell vehicles online and deliver them off-site to customers so long as dealers follow the requirements under California law.
The California Vehicle Code requires that vehicles offered for sale must be at the dealership or able to be sent to the dealer directly from the manufacturer. Dealers are permitted to deliver these vehicles to customers at an off-site location to complete the sale through their licensed location (i.e., the brick and mortar dealership location).
The DMV clarifies additional requirements for online vehicle sales and remote deliveries. Here are some of the highlights that we wanted to point out:
- All products must be contracted for, and all terms of the transaction must be agreed upon, before delivery of the vehicle. In other words, no negotiating can occur when the vehicle is being delivered.
- Anyone engaged in these negotiations must be a licensed salesperson. Remember, his or her license must also be displayed at the dealership.
- All Regulation Z disclosures must be provided to the customer, and the customer must be given an opportunity to review them, prior to the execution of sales-related documents.
- A copy of all notices to the consumer required by the Vehicle Code and the Civil Code must be provided before the customer executes all sales-related documents.
I wanted to flesh out the last bullet point a bit. When thinking about all these different notices, a good place to start would be the required signage in your showroom, which includes the No Cooling-Off, Foreign Language Translation, Service Bulletin, Vehicle Inspection, and Warranty-Presale Availability signs, to name a few. In an online sale and remote delivery context, the DMV requires that these notices be provided to customers before they execute any sales related documents. Accordingly, you will want to create policies and procedures for distributing these notices to customers, perhaps, for example, an electronic PDF copy or a link to all the notices posted online, as soon as negotiations have started. Of course, we highly recommend you contact competent dealer counsel when creating or modifying your online sales and remote delivery policies, especially in light of this DMV memorandum.
Status of In-Person Vehicle Sales in California
Perhaps the even bigger news is that California dealers can once again conduct in-person sales at their brick and mortar locations. Dealers, however, must observe all state and local health requirements (more on this shortly) and must also adhere to any local social distancing and hygiene protocols. Showrooms should have capacity limits low enough to ensure proper physical distancing, and in no circumstance can the showroom be at more than 50% maximum occupancy.
However, a reminder for you Bay Area dealerships (i.e., Alameda, Contra Costa, Marin, Santa Clara, San Mateo, San Francisco counties), that in-person sales can only be conducted if your dealership qualifies as an “outdoor business.” Please refer to the San Francisco Health Order FAQs for a more detailed discussion regarding what qualifies as an “outdoor business.” Again, before reopening for in-person sales, we highly recommend that dealers consult with competent local counsel regarding the status of local orders and health requirements.
COVID-19 Industry Guidance for Auto Dealers
As many of you may be aware, cities and counties throughout California have adopted various health and safety protocols and restrictions, including wearing face coverings, social distancing requirements, employee health screening, and the like. In this connection, before you open shop again, you must ensure that your dealership follows these local health requirements. Check your city and/or county websites for further details.
Additionally, on May 7, 2020, the state of California released statewide operation and health requirements specific to automobile dealerships. Before opening to the public, dealerships must also follow these requirements, which include:
- Creating of a worksite-specific COVID-19 prevention plan.
- Training employees on, among other things, how to prevent the spread of COVID-19, proper hygiene and sanitization techniques, social distancing, detection of possible symptoms of COVID-19, and proper use of face coverings.
- Installing temperature checks and symptom screening for employees, and other disease-spreading control measures such as face coverings and wearing appropriate protective equipment.
- Creating and installing cleaning and disinfecting protocols.
- Implementing physical distancing measures.
For a more detailed discussion about these requirements, please read our article on How California Auto Dealers Can Get Back to Work: Cal/OSHA & CDPH Guidelines. You can also access the California COVID-19 Industry Guidance for auto dealers here. Additionally, do not forget the accompanying COVID-19 General Checklist for auto dealers, which can be accessed here. The checklist is intended to help dealers implement their COVID-19 prevention plans and should be posted at dealerships to evidence compliance.
We know that these times are hard, and everyone everywhere has been affected by this global pandemic. We are all in this together, and this too shall pass. Hotline clients are invited to contact us at (800) 785-2880 (then press “4” for hotline) or [email protected]. We are here to answer any questions you may have.