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Warranty reimbursement provisions softened during fall veto session

October 29, 2021
Illinois legislators on Oct. 28 loosened the provisions passed three months ago on dealership reimbursements for repairs of vehicles under warranty, reducing payouts on engines and transmissions to 30% of what the franchisee paid.
 
Gov. J.B. Pritzker is expected to sign the bill.
 
Strong opposition from the dealer community to House Bill 1769’s initial drafts softened the blows sought by OEMs, including one provision which stated that "no debit reduction or charge back of any item on a warranty repair may be made absent a finding of fraud or illegal actions by the dealer."  Vehicle manufacturers could have manipulated that to deny many warranty claims.
 
Dan Marquardt, a Barrington dealer and CATA director who led efforts to first pass House Bill 3940 in July, said strong dealer outreach as HB 1769 was crafted "shows how critical support and relationships with our legislators is, both state and federal."
 
"At the end of the day," Marquardt said, "the changes to HB 3940 were the reduction of our margin on engines and transmissions to 30% markup, and reimbursement for other warranty parts must be reasonable based on market norms."
 
HB 1769 passed the House last spring but did not initially advance out of the Senate. During the veto session, legislators used it to jump-start the state’s electric vehicle industry by providing major tax credits for electric vehicle manufacturers and for makers of electric vehicle component parts.
 
To win support from the vehicle manufacturers, Pritzker’s office first added language to remove provisions tied to manufacturer reimbursements to dealerships for work performed on vehicles under warranty. The reimbursements are scheduled to take effect Jan. 1, 2022.
 
 

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