Two bills of interest to dealerships stand on the precipice of passing through the Illinois General Assembly. But if they are to do so, it must happen by month’s end, when lawmakers will adjourn their spring session.

 

Senate Bill 58 would abolish the $10,000 limit on the trade-in credit allowance for first division vehicles, a limit that took effect in 2020. House Bill 3940 would amend the Illinois Motor Vehicle Franchise Act to redefine how manufacturers must compensate dealers for repairs of vehicles under warranty.

 

Both bills have been approved by one chamber of the General Assembly and are nearly through the other. HB 3940 is being considered by the Senate Executive Committee, and SB 58 awaits a vote by the full House. Dealers and their employees are urged to contact their lawmakers now to help get the bills across the finish line.

 

Dan Marquardt, a Buick-GMC dealer who leads the CATA’s Government Relations Committee, noted that few constituents ever contact their lawmakers on pending legislation, so if supporters of the two bills prod their legislators to pass these, it will have an impact.

 

Automakers consider different time guides for the same repair when technicians fix a car under warranty versus the longer time considered when customers pay for the work. The bill requires manufacturers to compensate dealerships for warranty work in the same manner that retail customers pay for retail work, in terms of time allowances, labor rates, and parts prices.

 

Mechanics Local 701, the union representing area technicians at dealerships, is working with the CATA to advance the legislation. Supporters say HB 3940 would bring a fairness to the payment process that could attract new technicians to dealerships. Wisconsin has had similar policy in place for more than a decade.

 

In addition to establishing an equitable compensation scheme for warranty work, the bill would prevent manufacturers from imposing cost recovery fees or surcharges to overcome the bill’s effect. For manufacturers, it would preserve their right to approve or disapprove dealership claims, and it ensures manufacturers have a way to charge back any false or unsubstantiated claims they paid.

 

Capping the trade-in credit increases the cost of new vehicles and used vehicles bought at retail. Gov. J.B. Pritzker has voiced his backing of SB 58. The cap took effect in 2020 following moves to find funding for Pritzker’s multibillion dollar state capital infrastructure plan.

 

Under SB 58, infrastructure projects would instead be funded, in part, by increasing the sales tax charged in private vehicle sales. For instance, the current $390 sales tax on a 1-year-old vehicle sold privately for less than $15,000 would increase to $465. If the same vehicle sells for $15,001-$20,000, the sales tax would be increased from $750 to $850. 

 

The tax rates for private transactions haven’t changed in more than 30 years, and the modest increases are much less impactful than a trade-in credit cap, which costs consumers hundreds of dollars and harms dealers statewide.