Bill
SB 1939
The bill strengthens the Motor Vehicle Franchise Act by banning direct-to-consumer vehicle distribution that bypasses authorized franchised dealers and clarifies enforcement agains
Status and timeline
- Introduced: March 5, 2025 (Sen. Ram Villivalam)
- Passed both chambers: May 23, 2025 (Senate and House actions in April–May)
- Sent to Governor: May 27, 2025
- Signed by Governor: June 20, 2025
- Effective: June 20, 2025 (immediate)
- Companion bill: HB 4905
Primary purpose
- To amend the Illinois Motor Vehicle Franchise Act to (1) strengthen prohibitions on manufacturers, distributors, wholesalers, or related entities from distributing new motor vehicles directly to consumers in a way that bypasses an established dealer network and (2) clarify/expand definitions and scope of prohibited unfair practices under the Act.
Key provisions and changes
- Definitions (815 ILCS 710/2): revises and clarifies multiple statutory definitions including “manufacturer,” “common entity,” “motor vehicle dealer,” “relevant market area” (10-mile radius in counties >300,000 population; 15 miles otherwise), “late model vehicle,” “factory repurchase vehicle,” and others. Notable changes:
- “Manufacturer” and related terms are broadened to capture common entities, affiliates, parents/subsidiaries, and entities that directly or indirectly control or participate in distribution or servicing activities that are subject to the Act.
- “Common entity” is defined to include entities with shared control, equity, management, or significant contractual relationships that create alignment of interests or operational control.
- Unfair competition and practices (815 ILCS 710/4): expressly deems it a violation for manufacturers, distributors, wholesalers, factory branches, or their representatives to engage in actions that:
- Distribute new motor vehicles directly to consumers in a manner that circumvents franchise distribution obligations; or
- Sell, lease, or service new motor vehicles in ways that bypass or compete with a manufacturer's established franchise dealer network in Illinois.
- The provision reaffirms that courts can be guided by FTC Act interpretations when construing unfair or deceptive acts.
- Conforming and related edits to Section 6 (text truncated in available copy) and other housekeeping changes to align terminology and enforcement coverage.
- Floor amendments: two Senate floor amendments (filed April 4 and April 9) adjusted specific language; one later amendment (Apr. 9, SA002) replaces a line to read, in context, “before January 1, 2022, shall not own or operate a dealership or directly …” (the full surrounding context is not in the available excerpt).
Who is affected
- Primary: automobile manufacturers (including their branches, distributors, affiliates, and “common entities”), distributor/wholesaler networks, and franchised motor vehicle dealers in Illinois.
- Secondary: consumers (potentially affecting direct-sales models, retail availability, and service options), independent distributors, and financial/auction markets handling factory repurchase vehicles.
- Regulatory/administrative: Motor Vehicle Review Board and Illinois courts (for enforcement and adjudication of alleged violations).
Enforcement and likely impact
- The bill treats circumvention of franchise obligations and direct-to-consumer distribution that undermines franchised dealers as unlawful “unfair competition” or deceptive practices, creating a basis for dealer claims and administrative or judicial remedies under the Motor Vehicle Franchise Act.
- Practical effects may include limits on manufacturers’ direct-sales strategies (notably for manufacturers that historically sought to sell direct to consumers), reinforcement of franchise dealers’ territorial protections (relevant market area), and increased legal exposure for manufacturers and related entities that operate sales or service channels that compete with franchisees.
- The broadened “manufacturer/common entity” language may extend liability to corporate parents, affiliates, or entities with aligned operational control.
Sponsorship and movement
- Principal sponsor listed as Juan “Chuy” Hinojosa (record lists multiple co-sponsors and added co-sponsors in both chambers during floor action). Passed both chambers and enacted in mid-2025.
Note: This summary is based on the bill text and amendment excerpts provided (Sections 2 and 4 are extensively revised; Section 6 references appear in the bill but full text was truncated). The April 9 amendment (SA002) alters a line referencing ownership/operation prior to January 1, 2022; full effect depends on its placement in the statutory text.
Compiled from official sources — confirm details with the bill’s official record.
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