The brief suspension of a Michigan car dealership over its handling of loaner vehicle sales is sparking debate over a decades-old state law: Regulators say the 1949 measure protects consumers, but dealers say it mandates unnecessary red tape.

The law requires autos titled and registered by dealerships to be sold as used, regardless of mileage or the amount of time a so-called courtesy vehicle has been available for use by customers. Regulators last week cited LaFontaine Chevrolet Buick GMC of St. Clair Inc., for example, for titling as new loaner vehicles that had been used for as little as about 500 miles or as much as 6,100 miles.

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