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Wednesday, 26 September 2012 16:57

Gov. Brown Vetoes SB 750, Overturning BMW-sponsored bill

CAWA is claiming a victory for consumers and the automotive aftermarket alike as a bill aimed at attempting to lock out the industry from important information relative to key replacement in certain automobiles has been vetoed by Governor Jerry Brown. SB 750 by Senator Hernandez, which was sponsored by BMW, sought to exempt automakers from providing electronic key code information to locksmiths, requiring motorists to contact the automaker to get a replacement key for their vehicle.

SB 750 would have deleted the January 1, 2013, sunset provision exempting automakers from providing electronic key code information to locksmiths so long as the manufacturer operates a 24 hours a day, 7 day a week (24/7) request line whereby vehicle owners can request replacement keys and receive them within one day of the request or via the next overnight delivery.

Arguing in support of this bill, the sponsor, BMW, noted that the January 1, 2013, sunset provision was included to allow BMW to continue the process of providing a 24/7 key replacement request line while it determined if additional technology could be developed that provided the same level of security and accommodates customer needs.  BMW reports that since the effective date of SB 1542, they have replaced 4,397 keys and in only one instance was the key not delivered to the owner consistent with the provisions of that bill.  

Therefore, BMW concluded that operation of the 24/7 key replacement request line is as a suitable alternative to providing key code information to locksmiths and that this alternative means of providing key code information should be allowed to continue indefinitely.

BMW said their preference to continue the 24/7 key replacement request line rather than provide key code information to locksmiths because BMWs are one of the most frequently stolen vehicles.  BMW contends that releasing key code information, despite existing security measures, could result in increased theft risks, to the detriment of BMW owners.

BMW also contended that very few locksmiths possess the sophisticated equipment necessary to create electronic keys for BMWs and other high-end vehicles and therefore, most BMW owners  would need to use the 24/7 key replacement request line anyway.  

Arguing in opposition, the Auto Clubs contend that this bill would benefit only a narrow group of foreign special interests and weaken the landmark, bi-partisan consumer protection legislation that was approved by the California Legislature and supported by consumer groups, police and fire departments, cities, insurance companies, and other civic, taxpayer, and business organizations.   

The Auto Clubs also contend that the exemption and sunset clause included in SB 1542 was provided to give sufficient lead time for auto manufactures to come into compliance with the law.  They note that even though they were given this lead time, BMW has failed come into compliance, despite the fact that over 90% of auto manufacturers now provide key code information as required by the legislation.   

Arguing in opposition, the California Locksmiths Association (CLA) said claims by BMW that very few locksmiths possess the equipment necessary to create keys for high-end vehicles such as BMWs are untrue.  CLA contends that a large number of locksmiths (particularly in metropolitan areas) possess the appropriate equipment and can provide replacement keys or similar device for high-end vehicles within 1-2 hours at a cost ranging from $100 to $400.  

The CLA also noted that locksmiths carry a $1 million liability bond along with other insurance and that for some vehicles, such as Volvo and Lexus, the transfer of key code data is done wirelessly in such a way that the locksmith is not able to view or have access to the key code information at any time.  CLA also notes that transmittal of key code data is tracked, so if a code were to be used by an unscrupulous locksmith to create a duplicate key, such activity would be easily traced and the perpetrator easily identified.   Automotive wholesalers and the automotive after-market industry, also arguing in opposition to the bill, contend that in some cases key code information is utilized to affect vehicle repair since information contained in electronic keys are used to communicate with a vehicle's on-board diagnostic system.  These groups claim that if the key code information is faulty or missing, technicians must create a new key or similar device to properly diagnose problems and perform repairs.  It is argued that currently, this process cannot be accomplished for BMWs because the key code information is not released.  

Therefore, opponents of this bill contend that by withholding key code information, BMW is essentially forcing BMW owners to have their vehicles serviced at dealerships, thereby eliminating the option for consumers to have their cars serviced at independent repair shops.  The automotive repair industry claims that this practice violates existing law, SB 1146 (Burton), Chapter 1077, Statutes of 2000, that ensures essential service, repair information, parts, and tools are made available by vehicle manufacturers so that vehicle owners have continued access to a competitive marketplace for automotive service needs.  The automotive repair industry has expressed concerns that if this bill passes, other vehicle manufacturers may choose to operate 24/7 key replacement request lines which would broaden the exemption to other manufacturers, to the detriment of consumers and the automotive industry.   

CAWA and AAIA, working in collaboration with industry coalition partners including AAA, CARE, ASCCA, CalABC, advocates were successful in communicating concerns to the Governor about motorists being inconvenienced and often stranded in dangerous situations because of the inability to obtain a replacement key from a locksmith due to automakers refusal to provide this information which helped convince the Governor to veto SB 750.

Members of these organizations who wrote letters, sent faxes and email and made phone calls urging a veto of the bill.

"This is a tremendous legislative victory for the aftermarket with an unbelievable final push to urge the Governor to veto this anti-consumer, anti-aftermarket bill" stated Rodney K. Pierini, CAWA President & CEO. "The industry rallied with letters, faxes and emails to the Governor's office. This grassroots lobbying effort, along with our professional lobbying effort is what made the difference for victory in this long drawn-out battle."

"While the veto of SB 750 is a victory for the independent repair industry and for locksmiths, it is most of all a victory for the state's consumers who will have convenient access to the key codes for their vehicles just as the state legislature had mandated in 2006." stated Aaron Lowe, AAIA Vice President of Government Affairs.

John Burton, Chair of CADEM sent a letter supporting the veto, which read in part:

"In 2000, I authored SB 1146 that allowed independent repair shops to have the information necessary to service their customers’ vehicles. This measure was strongly opposed by the auto industry and dealers that were benefiting from the exclusivity they had to deal with motor vehicles computer access codes, etc. It is no secret that the manufacturers and dealers have a vested interest in keeping these motor vehicles computer access codes and tools to themselves because they have a captive customer base.

"Statement of policy for SB 1146 was that it was important “to encourage competition so that consumers have choices available to them in the service, repair, and parts used in the service or repair of motor vehicles.”

"The bill took almost two years to pass, and there were several negotiations with manufacturers, including protection for certain proprietary information.

"In 2006, Senator Migden passed SB 1542, which was sponsored by the Automobile Clubs, to provide vehicles effective means of obtaining replacement ignition keys in a secure and convenient manner. Given that more and more vehicles were designed with “smart keys,” it made it necessary for locksmiths to have the key code information from the manufacturers.

"The proponents of SB 1542 presented numerous examples in which customers were greatly inconvenienced when locksmiths were unable to create keys because the manufacturers refused to provide them with key code information.

"In some situations, vehicles owners were left stranded in unsafe situations or forced to have their vehicles towed to dealerships, sometimes at great distance and expenses, for replacement keys. In many of these examples, vehicle owners had to wait a long time for their keys to be made by manufacturers and were forced to pay exceptionally high prices.

"BMW sought an exemption to exempt certain manufacturers until 2013 from the requirement to provide key information for locksmiths as long as the manufacturers provide a 24/7 telephone or electronic request line in which the owners could request the keys within one day via overnight delivery. The manufacturers who qualified for the exemption were all foreign manufacturers - BMW, Mercedes-Benz, Jaguar, Land Rovers, and Porsche.

"The three-year exemption for the foreign manufacturers was to give them lead time to perfect their processes in order to comply with the law. 90% of the automakers had complied with the law. Only it seems that BMW has refused to do so.

"If I were locked out of my car or lost my key, I would rather have an immediate locksmith on duty as opposed to waiting 24 hours to wait for a UPS or FedEx package to come to me. A locksmith costs between $100 to $400 for the replacement. The cost of a dealership replacement key is from $300 to $500 plus towing charges. Locksmith association notes that locksmiths carry a $1 million liability bond alone and other insurance. For vehicles such as Volvo and Lexus, the key code transfer is done wirelessly. The locksmith does not view or have access to the code information.

"The total elimination of the sunset provides BMW with, if you would pardon the pun, a lock on all of its customers who may have lost their keys. I personally don’t think this is fair. Also, waiting for your keys to be Fed Ex’ed in 24 hours versus having a locksmith show up within a half an hour or an hour is an easy call.

"BMW does claim that out of over 400 something people who lost their keys, only one did not receive their keys within 24 hours. Again, that seems to be no reason to give BMW a monopoly for replacement keys. Also individual car owners would have the ability to go with the 24-hour key replacement, including the possibility of having the automobile towed at a pretty stiff cost, or to call a locksmith. Again, this is a customer’s free choice. I would respectfully request that this measure be vetoed.


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