Governor Spares Auto Dealers' Favorite Agency (cont'd)

One intriguing aspect of the board is that its appellate authority is concealed behind its more widely used and worthwhile (if still controversial) job — mediating disputes between dealers and manufacturers.In fact, I first learned of the board in connection with its mediating function, when a City of Commerce development official I know described the obstacle course his municipality must navigate to develop an auto mall.Stanley Smalewitz, director of the city's Department of Community Development, discovered that the moment you propose a new auto dealership anywhere in California, all dealers of the same brand located within 10 miles of your site can try to block it. The body with ultimate responsibility for ruling on such disputes is the New Motor Vehicle Board."I've been told that that if our dealers are within 10 miles of any others, the others are going to try to extort money from us," Smalewitz says.

That, of course, is a harsh way of putting it. And not surprisingly, dealers scoff. The whole point of the board, they say, is to level the playing field between themselves and car manufacturers, which are generally the driving force in establishing new locations.

In the days before the board, they add, the big auto companies weren't above punishing dealers they didn't like by plunking a new showroom down the street and giving the new guy all the hot models.

The board's fans say the goal is simply to give any abused dealer the right to petition for redress — not to extract remuneration from honest competitors.

On the other hand, Tom Novi, the board's executive director, acknowledges that most such disputes end up settled without board action.Often these settlements, which are generally confidential, require the manufacturer to mollify the complainant with something of value: a pumped-up advertising allowance, say, or a special allocation of a popular model or — who knows? — even cash.

Michael Sieving, who represents dealers in dispute matters, accurately observes that if not for the board, many such conflicts might end up before state judges, who have better things to do. He points out that the dealer members aren't allowed to participate in manufacturer dispute cases (although they do participate in the DMV appeals), and he adds that the board is entirely financed by assessments on dealers, not taxpayers.Still, even if one concedes that the board's mediation role is useful, its DMV override seems to be what the dealers really value. When state Sen. Debra Bowen (D-Marina del Rey) tried to abolish the board's appellate authority last year while leaving its mediation role intact, her bill died on the Senate floor.

And for all that the dealer community likes to suggest that the board helps out the DMV by giving the agency the benefit of its deep understanding of the car business, they must know that it's a remarkably potent weapon to wield against any regulator.

"If I were the DMV director," says Sieving, a former administrative law judge for the board, "I probably wouldn't like it either."