Bill Text: TX HB4078 | 2023-2024 | 88th Legislature | Comm Sub

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Bill Title: Relating to motor vehicle franchised dealers and the reimbursement of motor vehicle franchised dealers by manufacturers and distributors for warranty, recall, and preparation and delivery work.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Introduced - Dead) 2023-05-06 - Postponed 10/22/23 4:00 AM [HB4078 Detail]

Download: Texas-2023-HB4078-Comm_Sub.html

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88R24432 DIO-F
By: Geren H.B. No. 4078
Substitute the following for H.B. No. 4078:
By: Canales C.S.H.B. No. 4078

A BILL TO BE ENTITLED
AN ACT
relating to motor vehicle franchised dealers and the reimbursement
of motor vehicle franchised dealers by manufacturers and
distributors for warranty, recall, and preparation and delivery
work.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2301.003, Occupations Code, is amended
by adding Subsection (c) to read as follows:
(c) A manufacturer or distributor may not compel a dealer to
comply, take an adverse action, or initiate an action or proceeding
in response to a dealer not participating in a manufacturer or
distributor program or initiating an action or proceeding,
including an action or proceeding to which the manufacturer or
distributor is a party, to enforce a right or remedy available to
the dealer under law or by agreement.
SECTION 2. Subchapter I, Chapter 2301, Occupations Code, is
amended to read as follows:
SUBCHAPTER I. WARRANTIES AND RECALLS: REIMBURSEMENT OF DEALER
Sec. 2301.4001. DEFINITIONS. In this subchapter:
(1) "Goodwill repair" means a repair made by a seller
for no charge that the seller is not obligated to make.
(2) "Part" includes:
(A) any component, electric vehicle battery,
engine, equipment, fixture, good, part assembly, software, or
transmission for a motor vehicle; and
(B) a replacement for a part listed in Paragraph
(A).
(3) "Routine maintenance" includes replacement of a
belt, bolt, brake pad, bulb, fastener, filter, fluid, internal
combustion engine vehicle battery, nut, or rotor, unless the belt,
bolt, brake pad, bulb, fastener, filter, fluid, internal combustion
engine vehicle battery, nut, or rotor is provided by the
manufacturer or distributor in the course of a repair with an
assigned part number.
Sec. 2301.401. WARRANTY, RECALL, PREPARATION, AND DELIVERY
REQUIREMENTS. (a) On request, a manufacturer or distributor shall
provide to the department a copy of the current requirements the
manufacturer or distributor imposes on its dealers with respect to
the dealer's:
(1) duties under the manufacturer's or distributor's
warranty and under a manufacturer's or distributor's recall; and
(2) vehicle preparation and delivery obligations.
(b) Warranty, recall, or preparation and delivery
requirements placed on a dealer by a manufacturer or distributor
are not enforceable unless the requirements are reasonable.
Sec. 2301.402. RATE OF COMPENSATION. (a) A manufacturer or
distributor shall fairly and adequately compensate its dealers for
warranty, recall, and preparation and delivery work.
(b) A manufacturer or distributor may not pay or reimburse a
dealer an amount of money for warranty or recall work that is less
than the amount the dealer charges a retail customer for similar
nonwarranty work.
(c) In computing the amount of money a dealer charges a
retail customer under Subsection (b) for labor, the manufacturer or
distributor shall use the formula, of the following formulas, that
produces the fewest number of repair orders [the greater of]:
(1) the average labor rate charged during the
preceding six months by the dealer on 100 sequential nonwarranty
repair orders paid by retail customers, exclusive of:
(A) routine maintenance;
(B) tire, wheel, or wheel alignment;
(C) discounts to state agencies, insurers, or
warranty or service contract providers;
(D) state inspections;
(E) goodwill repairs;
(F) accessory installation;
(G) a manufacturer's or distributor's promotion
or service campaign; or
(H) repairs to a vehicle owned by the dealer, an
affiliate of the dealer, or an employee of either the dealer or
affiliate; or
(2) the average labor rate charged for 90 consecutive
days during the preceding six months by the dealer for nonwarranty
repairs paid by retail customers, exclusive of:
(A) routine maintenance;
(B) tire, wheel, or wheel alignment;
(C) discounts to state agencies, insurers, or
warranty or service contract providers;
(D) state inspections;
(E) goodwill repairs;
(F) accessory installation;
(G) a manufacturer's or distributor's promotion
or service campaign; or
(H) repairs to a vehicle owned by the dealer, an
affiliate of the dealer, or an employee of either the dealer or
affiliate.
(d) The average labor rate under Subsection (c) is
determined by dividing the total charges for labor submitted by the
total number of hours charged for the repairs.
(e) In computing the amount of money a dealer charges a
retail customer under Subsection (b) for parts, the manufacturer or
distributor shall use the formula, of the following formulas, that
produces the fewest number of repair orders:
(1) the average parts markup charged during the
preceding six months by the dealer on 100 sequential nonwarranty
repair orders paid by retail customers, exclusive of:
(A) routine maintenance;
(B) tire, wheel, or wheel alignment;
(C) discounts to state agencies, insurers, or
warranty or service contract providers;
(D) state inspections;
(E) goodwill repairs;
(F) accessory installation;
(G) a manufacturer's or distributor's promotion
or service campaign; or
(H) repairs to a vehicle owned by the dealer, an
affiliate of the dealer, or an employee of either the dealer or
affiliate; or
(2) the average parts markup charged for 90
consecutive days during the preceding six months by the dealer for
nonwarranty repairs paid by retail customers, exclusive of:
(A) routine maintenance;
(B) tire, wheel, or wheel alignment;
(C) discounts to state agencies, insurers, or
warranty or service contract providers;
(D) state inspections;
(E) goodwill repairs;
(F) accessory installation;
(G) a manufacturer's or distributor's promotion
or service campaign; or
(H) repairs to a vehicle owned by the dealer, an
affiliate of the dealer, or an employee of either the dealer or
affiliate.
(f) The average parts markup for Subsection (e) is
determined by dividing the total charges for parts submitted by the
total cost of the parts for which charges are submitted.
(g) If a manufacturer or distributor supplies a part to a
dealer at no cost or at a reduced cost for use in a warranty or
recall repair, the manufacturer or distributor shall compensate the
dealer for the dealer's cost for the part, if any, plus an amount
equal to the dealer's prevailing retail parts markup, multiplied by
the fair wholesale value of the part.
(h) For purposes of Subsection (g), the fair wholesale value
of a part is the greater of:
(1) the amount the dealer paid for the part or a
substantially identical part if presently owned by the dealer;
(2) the cost of the part as shown in a current or
previously established price schedule of the manufacturer or
distributor; or
(3) the cost of a substantially identical part shown
in a current or previously established price schedule of the
manufacturer or distributor.
(i) A manufacturer or distributor shall compensate a dealer
in accordance with this subchapter if the dealer assists in or
performs an over-the-air or remote installation, change, repair,
update, or amendment to any part, system, accessory, or function.
Sec. 2301.403. ADJUSTMENT OF RATE FOR WARRANTY WORK [LABOR
RATE]. (a) A dealer may request an adjustment in the dealer's
warranty work [labor] rate. The request must be sent to the
manufacturer or distributor by certified mail, return receipt
requested, and must state the requested labor or parts rate and
include information reasonably necessary to enable the
manufacturer or distributor to adequately evaluate the request as
provided by this subchapter.
(b) Not later than the 60th day after the date of receipt of
a request under this section, the manufacturer or distributor shall
provide written notice to the requesting dealer of the approval,
reduction, claimed material inaccuracy, or disapproval of the
request. If the manufacturer or distributor fails to respond
before the 60th day after the date the request is received, the
submitted rate shall take effect on the 60th day after the date the
manufacturer or distributor receives the request. If the request
is disapproved, reduced, or claimed to be materially inaccurate,
the manufacturer or distributor shall state the reasons for the
disapproval, reduction, or claimed material inaccuracy. The stated
reasons for disapproval, reduction, or claimed material inaccuracy
of the requested labor rate or parts markup must contain:
(1) an explanation of the reasons the request is
disapproved, reduced, or claimed to be materially inaccurate;
(2) evidence that substantiates each stated reason;
(3) if a material inaccuracy is alleged, a copy of the
calculations used by the manufacturer or distributor demonstrating
a material inaccuracy; and
(4) a proposed adjusted labor or parts rate, as
applicable.
(c) A requesting dealer may file a protest with the board if
the manufacturer or distributor[:
[(1)] disapproves or reduces a dealer's request or
claims the request is materially inaccurate[; or
[(2) fails to respond within the time required by this
section].
(d) After a protest is filed, the board may uphold the
manufacturer's or distributor's decision only if the manufacturer
or distributor proves by a preponderance of the evidence that the
disapproval, reduction, or claimed material inaccuracy of the
request [or failure to respond] was reasonable.
(e) If the board does not determine that the disapproval,
reduction, or claimed material inaccuracy of the request [or
failure to respond] was reasonable, the board shall order the
requested rate into effect as of the 60th day after the receipt of
the request by the manufacturer or distributor.
(f) Except by agreement of the parties, a warranty labor
rate or warranty parts rate established under this subchapter may
not be adjusted more often than once a year.
Sec. 2301.404. TIME FOR PAYMENT. (a) A manufacturer or
distributor shall pay a dealer's claim for reimbursement for
warranty work, recall work, or dealer preparation and delivery work
not later than the 30th day after the date of approval of the claim.
(b) A claim that is not disapproved before the 31st day
after the date of receipt is considered approved.
(c) If a claim is disapproved, the manufacturer or
distributor shall provide the dealer written notice explaining [of]
the reasons for the disapproval.
(d) A controversy regarding the payment of a claim under
this subchapter or compliance with the provisions of this
subchapter shall be resolved in accordance with Subchapter Q.
Sec. 2301.405. CHARGE BACK TO DEALER. (a) A manufacturer
or distributor may not charge back to a dealer money paid by the
manufacturer or distributor to satisfy a claim approved and paid
under this chapter [subchapter] unless the manufacturer or
distributor shows that:
(1) the claim was false or fraudulent;
(2) repair work was not properly performed or was
unnecessary to correct a defective condition; or
(3) the dealer who made the claim failed to
substantiate the claim as provided by the manufacturer's or
distributor's requirements that were enforceable under Section
2301.401 at the time the claim was filed.
(b) A manufacturer or distributor may not audit a claim
filed under this chapter [subchapter] after the first anniversary
of the date the claim is submitted unless the manufacturer or
distributor has reasonable grounds to suspect that the claim was
fraudulent.
Sec. 2301.406. PROHIBITED REQUIREMENTS FOR PAYMENT. (a) A
manufacturer or distributor may not require, as a prerequisite to
the payment of a claim for reimbursement, that a dealer file a
statement of actual time spent in performance of labor, unless
actual time is the basis for reimbursement.
(b) A manufacturer or distributor may not recover or attempt
to recover any portion of the compensation due to a dealer for
warranty, recall, or preparation and delivery work by reducing the
amount due by a separate charge, surcharge, like charge, other
charge, supplemental charge, or reduction in return reserve
allowance to the wholesale price paid by the dealer to the
manufacturer or distributor for any product, including motor
vehicles and parts. This subsection does not prohibit a
manufacturer or distributor from increasing prices for a vehicle or
part in the normal course of business.
(c) A manufacturer or distributor may not establish or
implement a special part number for a part used in warranty, recall,
or preparation and delivery work if the result is lower
compensation to the dealer than as calculated under Section
2301.402.
SECTION 3. The changes in law made by this Act apply only to
warranty, recall, or preparation and delivery work under Subchapter
I, Chapter 2301, Occupations Code, as amended by this Act,
commenced on or after the effective date of this Act. Warranty,
recall, or preparation and delivery work commenced before the
effective date of this Act is governed by the law in effect on the
date the work was commenced, and the former law is continued in
effect for that purpose.
SECTION 4. This Act takes effect September 1, 2023.