Dealers, do you know where your 2009 Corvette ZR1 allocation letters are? We heard the letters were promised in “early May” and being so close to the date that the system will start accepting orders for the 2009 models, it’s unusual that they haven’t shown up yet. We already know that yearly production will be 2,000 units according to Chief Engineer Tadge Juechter, so what’s the holdup in letting dealers know their preliminary allocation numbers? It could very have something to do with pending legislation in Florida that would cause a ripple effect across the country for not only allocations of the Corvette ZR1 but the Z06 as well.
On May 1st, the Florida Legislature approved a bill pertaining to Motor Vehicle Dealers and their relationship with the licensees (ie manufactures) and sent it to the desk of Governor Charlie Crist for his signature. The 17 page bill, titled “CS for SB 2582” contains language that prohibits certain actions that licensees can take against a dealer including coercion to improve or relocate facilities or punishing dealers for selling motor vehicles knowingly to customers who intend to export them.
However, there are two sections of this bill that deal with fairness of allocations. It is specifically these two clauses that could effect the allocation of a limited production car like the 2009 Corvette ZR1. The worst case scenario is that no Florida Chevrolet dealers will receive the ZR1 because if GM makes one available to any dealer in Florida, than technically it would have to make one available to all dealers in the state, which is what it seems the bill requires.
The two clauses in “CS for SB 2582″ dealing with allocations are below with the relevant passages highlighted:
(18) The applicant or licensee has established a system of motor vehicle allocation or distribution or has implemented a system of allocation or distribution of motor vehicles to one or more of its franchised motor vehicle dealers which reduces or alters allocations or supplies of new motor vehicles to the dealer to achieve, directly or indirectly, a purpose that is prohibited by State Statute 320.60-320.70, or which otherwise is unfair, inequitable, unreasonably discriminatory, or not supportable by reason and good cause after considering the equities of the affected motor vehicles dealer or dealers. An applicant or licensee shall maintain for 3 years records that describe its methods or formula of allocation and distribution of its motor vehicles and records of its actual allocation and distribution of motor vehicles to its motor vehicle dealers in this state. As used in this subsection, “unfair” includes, without limitation, the refusal or failure to offer to any dealer an equitable supply of new vehicles under its franchise, by model, mix, or colors as the licensee offers or allocates to its other same line-make dealers in the state.
(22) The applicant or licensee has refused to deliver, in reasonable quantities and within a reasonable time, to any duly licensed motor vehicle dealer who has an agreement with such applicant or licensee for the retail sale of new motor vehicles and parts for motor vehicles sold or distributed by the applicant or licensee, any such motor vehicles or parts as are covered by such agreement. Such refusal includes the failure to offer to its same line-make franchised motor vehicle dealers all models manufactured for that line-make, or requiring a dealer to pay any extra fee, require a dealer to execute a separate franchise agreement, purchase unreasonable advertising displays or other materials, or relocate, expand, improve, remodel, renovate, or recondition, or alter the dealer’s existing facilities, or provide exclusive facilities as a prerequisite to receiving a model or series of vehicles. However, the failure to deliver any motor vehicle or part will not be considered a violation of this section if the failure is due to an act of God, work stoppage, or delay due to a strike or labor difficulty, a freight embargo, product shortage, or other cause over which the applicant or licensee has no control. An applicant or licensee may impose reasonable requirements on the motor vehicle dealer, other than the items listed above, including, but not limited to, the purchase of special tools required to properly service a motor vehicle and the undertaking of sales person or service person training related to the motor vehicle.
As the Corvette ZR1 is considered its own model, any dealer not allocated a ZR1 could technically invoke these clauses and force a claim against GM for violations. While the clauses would also apply to the Corvette Z06 because its also considered a “model”, our understanding of the bill is that special editions like the Indy 500 Pace Car replicas would be exempt as they are technically an option on a convertible or coupe, and not considered its own “model”.
It’s easy to see the dilemma that GM faces. General Motors has a mathematical formula for which of the 4,000+ Chevrolet dealers that would be able to sell the 2,000 Corvette ZR1s (not taking into consideration that some of that number is planned for export) and if this legislation is passed, GM may be forced to exclude the Sunshine state altogether from its ZR1 allocations unless they want to offer one to every Florida-based dealer first. As you can see, this decision could cause a ripple across the US with thousands of dollars of profit per ZR1 at stake.
We’ll be watching MyFlorida.com for announcement on whether this bill will be signed or vetoed.