SENATE BILL REPORT

SB 5502

BYSenators Rinehart, Warnke, Halsan, Lee, Wojahn, Talmadge, Tanner, Bottiger, Bailey, Smitherman, Vognild, Williams, Garrett, Stratton and Moore

Creating enforcement provisions for new motor vehicle warranties.

Senate Committee on Commerce & Labor

Senate Hearing Date(s):February 4, 1987; March 2, 1987

Majority Report:  That Substitute Senate Bill No. 5502 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Warnke, Chairman; Smitherman, Vice Chairman; Anderson, Tanner, Williams, Wojahn.

Senate Staff:Jean Meyn (786-7472)

                  March 3, 1987

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR, MARCH 2, 1987

BACKGROUND:

In 1983, the Legislature established standards regarding express warranties of new motor vehicles.  An express warranty is a written statement arising out of the sale of the motor vehicle.  If a manufacturer provides an express warranty, then it must adhere to the current law.

After a reasonable number of attempts to conform the vehicle to the express warranty, the manufacturer must repurchase the vehicle from the buyer at the original purchase price, minus the amount based on the buyer's use.  A reasonable number of attempts is defined as four or more repair attempts of the same item that does not conform to the warranty.

If the buyer does not choose repurchasing, he or she may choose the assistance of an informal dispute resolution process established by the manufacturer.  Manufacturers are not required to establish such a process, but if they do, then their processes must substantially comply with federal standards.

SUMMARY:

Express warranty is redefined to include written or oral affirmations of fact that become the basis of the bargain for a new motor vehicle.  Implied warranties are included.  Manufacturers are required to provide a warranty of 24 months or 24,000 miles, whichever occurs first.

If a nonconformity remains uncorrected after a reasonable number of attempts to repair, the manufacturer must replace the new motor vehicle with a comparable replacement or repurchase from the buyer.  The repurchase price is the original price paid, minus buyer use after 12,000 miles, plus collateral charges and incidental costs.  A nonconformity is a defect or condition that substantially impairs the use, value or safety of a new motor vehicle.  Reasonable number of attempts to repair is four times for the same nonconformity and two times for a serious safety defect.

The new motor vehicle arbitration board is established to implement a dispute resolution process administered by the Office of the Attorney General.  Statewide hearings will be held.  Testimony and witnesses may be presented and parties have a right to an attorney.  The board may award damages, which may include the monetary losses of the buyer and attorneys' fees.

EFFECT OF PROPOSED SUBSTITUTE:

Trucks 19,000 pounds or more and motorcycles are excluded.  A dealer is not an "authorized agent" of the manufacturer but a person who holds a dealer agreement.  When the manufacturer replaces or repurchases the vehicle, the consumer must compensate for his or her actual miles used.

Arbitration board may reject a request for arbitration if filed in bad faith by the consumer.  Arbitration fee paid by buyers of new motor vehicles increased from $2.00 to $5.00; fee begins June 1, 1987.

Fiscal Note:      available

Senate Committee - Testified: Phillip Nowicki, Syracuse University; John Lea, consumer, Palmer, WA; Milt Harnden, AAA Automobile Club of Washington; Jim Austin, Motor Vehicles Manufacturers Association; Lee Ridgeway, General Motors; Janet Cunningham, Washington State Auto Dealers Association