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Motor Vehicle Dealer And Manufacturer Service Rates

Concerning the rates a motor vehicle dealer charges a motor vehicle manufacturer for work performed by the dealer in accordance with a warranty obligation.
2018 Regular Session
Business & Economic Development
Bill Summary

The bill requires motor vehicle manufacturers to fulfill warranty obligations. A manufacturer must compensate each of its motor vehicle dealers in accordance with a set of standards designed to reflect the current market rate for labor and the profit margin on parts the dealer can expect to obtain. Dealers must submit certain repair orders to the manufacturer as required by the bill to establish compensation rates.

The manufacturer may contest the rates charged by the dealer. If the manufacturer does not contest the rates within 15 days, the amounts take effect. If the manufacturer timely contests the rates and the manufacturer and dealer cannot agree on the amount charged, the dealer may obtain a determination by a court. The manufacturer has the burden of proving the rates are inaccurate. The dealer may request a modification of rates from a manufacturer only semiannually.

A manufacturer is:

  • Prohibited from lowering the retail labor rate below the rate the manufacturer was paying before the bill takes effect;
  • Prohibited from eliminating flat-rate times for labor or establishing unreasonable flat-rate times for labor;
  • Required to establish reasonable flat-rate times for labor for new models;
  • Required to calculate the retail parts markup percentage from the dealer's wholesale cost for the part;
  • Prohibited from reducing the suggested retail or list price to provide the dealer lower compensation;
  • Prohibited from establishing different part numbers for warranty repairs to pay the dealer lower compensation;
  • Prohibited from attempting to recover the costs of paying the dealer from the dealer using other methods;
  • Prohibited from taking action against the dealer for asserting the dealer's rights under the bill;
  • Prohibited from forcing the dealer to change prices for nonwarranty repairs;
  • Prohibited from requiring a dealer to use any method that is unduly burdensome or time-consuming to account for the retail prices set under the bill;
  • Required to reduce the motor vehicle dealer's cost for a part by the same percentage that the manufacturer reduces the retail cost of a part.
    (Note: This summary applies to this bill as introduced.)


Became Law


Bill Text