Updated car warranty compensation rules advanced

Lawmakers gave first-round approval April 9 to a bill intended to ensure that motor vehicle manufacturers fairly compensate Nebraska new car and truck dealers for warranty service.

Current law requires manufacturers to provide “reasonable” compensation to dealers for diagnostic work as well as repair service, parts and labor. Time allowances for the performance of warranty work must be “reasonable and adequate.”

Whitman Sen. Tanya Storer, sponsor of LB667, said manufacturers have interpreted the law in a way that decreases compensation to dealers, ultimately increasing prices for consumers.

To ensure that rates better reflect the true cost of warranty service, she said, LB667 would strike instances of “reasonable” from current law and instead require that time allowances be adequate for a qualified technician to perform the work or service.

The bill would prohibit franchisors from unreasonably denying a franchisee’s request for a modification of a time allowance for a specific warranty repair or for an additional time allowance for diagnostic or repair work on a specific vehicle covered under warranty.

Storer said the proposal also would exclude nonwarranty service and certain basic maintenance parts, including tires, from rate calculations.

Under a Transportation and Telecommunications Committee amendment, adopted 42-0, a manufacturer could request additional repair orders from a dealer to determine if the dealer’s parts and labor rates are materially different from those that the dealer has declared with the manufacturer.

The manufacturer could adjust the subsequent rates paid to the dealer if it determines that the dealer’s rates charged to customers for nonwarranty work are less than the rates currently being paid by the manufacturer to the dealer for warranty work.

LB667 advanced to select file on a vote of 42-0.