Two bills in Springfield — one in the House of Representatives, the other in the Senate — that have been championed by the CATA, the Illinois Automobile Dealers Association, and others are gaining bipartisan support as the General Assembly nears the May 31 end of its spring legislative session.

 

Dealers, their employees, and other supporters of the bills are urged to convey that support to their senators and representatives.

 

One measure, House Bill 3940, would amend the Illinois Motor Vehicle Franchise Act to redefine how manufacturers must compensate dealers for repairs of vehicles under warranty. 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. 

 

Both bills have advanced out of their chamber of origin. SB 58 passed the Senate unanimously in March and on April 28 was assigned to the House Revenue & Finance Committee. HB 3940 reached the Senate April 21 and at this newsletter’s deadline was awaiting assignment to a committee.

 

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.

 

If the General Assembly passes SB 58, the change to restore the full trade-in allowance on First Division vehicles would take effect 120 days after the governor signs the bill. As currently written, the trade-in credit cap exempts Second Division vehicles.

 

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.