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“Colorado Adopts Warranty Parity Legislation”

This article discusses a new piece of legislation in Colorado that would force automakers to reimburse dealers for warranty work at the higher rates that dealers charge to retail customers. This legislation is similar to an Illinois law that was passed in 2021 and went into effect in January 2022. Volkswagen Group of America filed a federal suit against the state of Illinois claiming that the law had cost it over $10 million in additional reimbursements to its network of 28 VW and 12 Audi stores in the state. The Colorado bill would amend the state’s existing franchise law, which currently prevents automakers from establishing “unreasonable labor flat rates” for warranty repairs, to mandate that manufacturers pay the retail labor rate multiplied by the applicable time allowances prescribed in the labor time guide used by the dealer. It would also impose a limit on automakers’ ability to challenge dealership rates for warranty parts and labor. Tim Jackson, head of the Colorado Automobile Dealers Association, said the legislation was needed in part because of the high cost of living in metropolitan Denver, which was driving already-scarce technicians away to smaller, less expensive cities. He also said that “several other states” are pursuing similar legislation.

The power struggle between franchised dealers and automakers is becoming increasingly evident. Automakers are now facing the potential for millions of dollars to be shifted from them to franchised dealers if parity provisions spread wider. Colorado’s new legislation is a result of this growing power struggle and is an example of how dealers are pushing for more rights and better reimbursement rates.

The legislation is a response to the high cost of living in metropolitan Denver and the need to retain technicians. Automakers will now be forced to reimburse dealers at the higher rates that they charge to retail customers. This will help to ensure that dealers will be able to offer competitive wages to their technicians and retain them. It will also help to ensure that dealers are fairly compensated for their work.

The Colorado bill is just one example of how dealers are pushing back against automakers and gaining more rights. It is likely that more states will follow suit and pass similar legislation. This could potentially shift millions of dollars from automakers to franchised dealers. This is a testament to the power of dealers in the automotive industry and the need for automakers to take their rights and needs into consideration. It is clear that dealers are now an integral part of the automotive industry and their rights and needs must be taken into consideration in order for the industry to thrive.


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