Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 345, S.D. 1, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to strengthen laws regulating the business of selling new and used motor vehicles, by providing that any person who engages in the business of selling five or more vehicles within a calendar year shall be considered a dealer subject to licensing and other provisions of the Motor Vehicle Industry Licensing Act.

Testimony in support of this measure was submitted by the Hawaii Independent Auto Dealers Association, the Hawaii Insurers Council, and a concerned individual. The Motor Vehicle Industry Licensing Board submitted testimony in support of the intent of this measure. The Department of Commerce and Consumer Affairs (DCCA) submitted comments.

Your Committee finds that requiring dealer licensing for persons who engage in the business of selling more than a certain number of new or used vehicles within a calendar year, will aid in detecting and prosecuting persons engaged in illegal sales activity, and assist in decreasing auto fraud and unscrupulous acts.

Your Committee finds that currently there is no statutory cutoff for licensing. The criteria used by DCCA's Regulated Industries Complaints Office (RICO) to determine when unlicensed motor vehicle investigation and enforcement activities will be initiated, is a three-car sales threshold. If the threshold is raised by statute to the sale of five vehicles in a calendar year, RICO faces a significantly higher evidentiary burden in cases involving unlicensed motor vehicle activity.

Your Committee defers to RICO's expertise and existing administrative practice, and has accordingly amended this bill by decreasing, from five to three, the number of car sales that trigger the dealer licensing requirement. Your Committee also notes that cars used by an individual for personal or business purposes may be sold in an unlimited number, so long as the sales do not constitute a motor vehicle sales business.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 345, S.D. 1, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 345, S.D. 1, H.D. 2.