® Maunfacturers and dealers, part 2


The agency relationship
In our fathers' and grandfathers' day, dealers were called "agencies" and that is a good description because it communicates an agreement more than an interdependency. The agency relationship is based on a contract, which is the reason for the dealer's autonomy. The dealer is an independent "agent". Consider that when Honda wants to get rid of a dealer because they have been too much trouble to deal with, or they have sullied the Honda name, Honda has to sue the dealer. Just like in a divorce. They can't just pull the plug. There was a dealer in New York state who was doing many bad things--he allegedly burned down his business in an attempt at insurance fraud. Honda took this dealer to court to severe the relationship--and lost their case. Honda was judged to have no right. The judge added salt to the wound by allowing the dealer to reopen his dealership in a tent. This was prejudicial. By being flagrantly against Honda policy it was clearly meant to punish Honda. Another example. When I went to work for American Honda in the early 80s, the company would not hire me until receiving a written letter of release from the dealer I was employed with at the time. It was Honda's way of protecting the dealer relationship, one that borders on the adversarial.

Adversarial
And sometimes there is no border! At American Honda I was on the six-person team that took complaint calls from customers about Honda dealers. We fielded calls from all over the country, mediating between the customer and dealer. The customer often had a near-new Honda the dealer was refusing him warranty consideration on, or was just plain treating him badly. Sometimes we failed to mediate and had to recommend to the customer that he go to a different dealer, and to smooth the transition we would call ahead to the second dealer and prepare the way. In some states this skirted the line of legality, it being improper at that time for Honda's U.S. headquarters to imply to a customer that one dealer was better than another. You get the point? There's a definite tension there, legally and otherwise. The manufacturer is not connected in any real way to the dealer. The dealer is an independent businessman.

Warranties
Manufacturers are not obligated to provide parts beyond what they estimate are needed to fulfil warranty obligations. In practical terms this means just enough parts for a couple years. And parts availability is changing dramatically. In many cases it is easier to find parts for fifty-year-old Hondas than it is for 20-year-old Hondas. Warranties of course come from the manufacturer. But they are entirely optional. No law requires them. Magnusson-Moss, consumer law enacted in 1975, sets certain standards of what can be in warranties and how they work. But it does not mandate them. However, a manufacturer would be foolish to not offer a warranty--for marketing reasons, not legal ones. A warranty is a selling feature of the vehicle, as much as the kind of brakes and how much power, and how good the suspension is. The outcome then is all warrantable newly-purchase bikes have warranties. It's simply good business. And again thanks to the law, every machine also carries an "implied warranty of merchantability", which simply means even new bikes sold without "express" (i.e. written) warranties have--again thanks to Magnusson-Moss--assumed warranties of 30 days against the bike breaking down. The only machines that have only implied warranties are racebikes, whether asphalt or dirt, as in non-streetable roadracers like the Ninja H2R and serious professonal-level motocross bikes like the KX450R. There is also a third warranty that comes with every new emissions-regulated machine, and that is the emissions warranty, which the government forced on manufacturers in 1978 and which covers all those parts that if failed could affect emissions. For five years. Which is why ignition points disappeared.

Exceptions to warranty
If the dealer sells a bike as new from the factory, it comes with the factory warranty, if a warrantable bike--basically any streetbike and certain offroad models as well. That's the norm. However, if the bike is significantly modified by the dealer the warranty is no longer in effect, unless provision has been made by the manufacturer to retain the warranty despite the modification. Which is extremely rare. Police bikes and other fleet type vehicles (farm-use UTVs) fit this example. A bike can also always, new or used, have aftermarket warranties, commonly called "warranties" when speaking to the public but within the industry called "service contracts". They bear no resemblance to manufacturers' warranties, because among other things they are extremely limited and exclusionary. There are all manner of these, even some offered by the OEMs themselves as add-ons. Thanks in great part to Magnusson-Moss, there is no such thing as "voiding a warranty". The manufacturer can deny warranty assistance on the basis of some breach on the part of the customer, in very special instances regarding specific parts of the motorcycle. But adjudging the whole vehicle as without warranty is not possible. A few new bikes are sold whose use ends up being against policy, such as in the case of rental, racing, or having been sold to a second party. Those special-case bikes have no warranty. But despite the statements by some, putting on an aftermarket exhaust cannot "void" a machine's warranty, necessarily. However, a manufacturer could conceivably and legitimately blame subsequent burnt exhaust valves on that exhaust, after successfully making its case. But that exhaust could not cause leaking fork seals. So even though the valves in this case might be denied, the fork seals couldn't be. They would be covered. Thus the whole machine is not voided. Make sense?

With powersports being a business in which the market is graying--the demographic getting older and thus also shrinking--the OEMs are making a concerted effort in today's consumer era to placate and please the buyer. Most now have significant programs in place to monitor the dealer-to-buyer relationship and promptly act on developing issues. It's quite a balancing act, requiring more investment and energy than all the players in this drama ever dreamed of. It's a brave new world, and the consumer is now empowered more than ever before.


Last updated January 2025
Email me
© 1996-2025 Mike Nixon