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Infiniti can't impose surcharge on dealers for warranty parts, circuit court rules

January 4, 2013
Infiniti’s practice of charging Illinois dealers a "Warranty Supplemental Cost Recovery" on each of its vehicles violates Section 6 of the Illinois Motor Vehicle Franchise Act, a Cook County circuit court judge ruled in December.
Judge Mary Mikva said the cost recovery mechanism developed in 2001, which allows dealers to seek reimbursement for warranty parts at retail rates, can be  invoked only when a manufacturer and most of its dealers in the state have arrived at a side agreement on warranty parts. Infiniti has no such agreements with its Illinois dealers.
As defined in the state act, a manufacturer must have written agreements with a majority of its Illinois franchisees for a uniform warranty reimbursement policy before it can surcharge those dealers who do not agree to the bargained rate, and thus recover its cost of complying with the retail rate provisions of the Illinois Motor Vehicle Franchise Act.
Dennis O’Keefe, the Chicago Automobile Trade Association’s general counsel, said the ruling, although subject to appeal, validates the efforts in 2001 of the CATA and the Illinois Automobile Dealers Association to amend the state act.
The suit was brought forward by Fields Infiniti.