Current law requires a motor vehicle manufacturer (manufacturer)
to timely compensate a motor vehicle dealer (dealer) for warranty repairs based on the dealer's typical charges for parts and labor if these charges are reasonably consistent with the law governing the setting of these charges. The bill repeals the condition that the charges must be reasonably consistent with this law, requiring the manufacturer to pay the charges even if there is a dispute as to the charges. The law governing the setting of these charges is not repealed, so the charges must continue to comply with the law.
In setting the charges described above, current law prohibits the
manufacturer from establishing unreasonable labor flat rates for the repairs. The bill changes this requirement so that the manufacturers must pay the retail labor rate multiplied by the applicable time allowances prescribed in the labor time guide used by the dealer.
Current law governing these charges allows a manufacturer to
challenge the setting of a labor rate or part markup if either is inaccurate or if either is substantially different than the charges of other similarly situated line-make dealers. The bill repeals the manufacturer's ability to challenge these charges when the rates are substantially different than the charges of other similarly situated line-make dealers.
In order to challenge the setting of a labor rate or part markup as
allowed in current law, the manufacturer is required to provide the dealer a notice that explains why the calculation is subject to contest. The bill changes this requirement, stating instead that the notice must explain why the calculation is materially inaccurate.
