Car warranty compensation rules updated

Lawmakers approved a bill May 14 intended to ensure that motor vehicle manufacturers fairly compensate Nebraska new car and truck dealers for warranty service.

Previously, manufacturers were required 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 had to be “reasonable and adequate.”

LB667, sponsored by Whitman Sen. Tanya Storer, strikes instances of “reasonable” from the law and instead requires that time allowances be adequate for a qualified technician to perform the work or service.

The bill prohibits 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.

The proposal also excludes nonwarranty service and certain basic maintenance parts, including tires, from rate calculations.

Under the bill, a manufacturer may 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 may 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.

Senators voted 49-0 to pass LB667.