HB3859 - Relating to motor vehicle franchised dealers and the reimbursement of motor vehicle franchised dealers by manufacturers and distributors for warranty, recall, over-the-air, and preparation and delivery work.

  89R10022 AND-F     By: Patterson H.B. No. 3859       A BILL TO BE ENTITLED   AN ACT   relating to motor vehicle franchised dealers and the reimbursement   of motor vehicle franchised dealers by manufacturers and   distributors for warranty, recall, over-the-air, and preparation   and delivery work.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter I, Chapter 2301, Occupations Code, is   amended to read as follows:   SUBCHAPTER I. [ WARRANTIES: ] REIMBURSEMENT OF DEALER           Sec. 2301.4001.  DEFINITIONS. In this subchapter:                 (1)     "Goodwill repair" means a repair made by a seller   for no charge that the seller is not obligated to make.                 (2)  "Part" includes:                       (A)     any component, electric vehicle battery,   engine, equipment, fixture, good, part assembly, software, or   transmission for a motor vehicle; and                       (B)     a replacement for a part listed in Paragraph   (A).                 (3)     "Routine maintenance" includes replacement of a   belt, bolt, brake pad, bulb, fastener, filter, fluid, internal   combustion engine vehicle battery, nut, rotor, or wiper blade, and   any other repair or service described as vehicle maintenance in the   owner information booklet or similar document provided to the   vehicle owner by the manufacturer or distributor.          Sec. 2301.401.  WARRANTY, RECALL, PREPARATION, AND DELIVERY   REQUIREMENTS.  (a)  On request, a manufacturer or distributor shall   provide to the department a copy of the current requirements the   manufacturer or distributor imposes on its dealers with respect to   the dealer's:                (1)  duties under the manufacturer's or distributor's   warranty and under a manufacturer's or distributor's recall ; and                (2)  vehicle preparation and delivery obligations.          (b)  Warranty , recall, or preparation and delivery   requirements placed on a dealer by a manufacturer or distributor   are not enforceable unless the requirements are reasonable.          Sec. 2301.402.  RATE OF COMPENSATION.  (a)  A manufacturer or   distributor shall fairly and adequately compensate its dealers for   warranty , recall, over-the-air, and preparation and delivery work.          (b)  A manufacturer or distributor may not pay or reimburse a   dealer an amount of money for warranty , recall, over-the-air, and   preparation and delivery work that is less than the amount the   dealer charges a retail customer for similar [ nonwarranty ] work.          (c)  In computing the amount of money a dealer charges a   retail customer under Subsection (b) for labor , the manufacturer or   distributor shall use the formula, of the following formulas, that   produces the fewest number of repair orders [ the greater of ]:                (1)  the average labor rate charged during the   preceding six months by the dealer on 100 sequential [ nonwarranty ]   repair orders paid in part by a retail customer , exclusive of :                       (A)   routine maintenance;                       (B)  tire, wheel, or wheel alignment;                       (C)     discounts to state agencies, insurers, or   warranty or service contract providers;                       (D)  state inspections;                       (E)  goodwill repairs;                       (F)  accessory installation;                       (G)     a manufacturer's or distributor's promotion   or service campaign; or                       (H)     repairs to a vehicle owned by the dealer, an   affiliate of the dealer, or an employee of either the dealer or   affiliate;  or                (2)  the average labor rate charged for 90 consecutive   days during the preceding six months by the dealer for   [ nonwarranty ] repairs paid in part by a retail customer , exclusive   of :                       (A)   routine maintenance ;                       (B)  tire, wheel, or wheel alignment;                       (C)     discounts to state agencies, insurers, or   warranty or service contract providers;                       (D)  state inspections;                       (E)  goodwill repairs;                       (F)  accessory installation;                       (G)     a manufacturer's or distributor's promotion   or service campaign; or                       (H)     repairs to a vehicle owned by the dealer, an   affiliate of the dealer, or an employee of either the dealer or   affiliate .           (d)     The average labor rate under Subsection (c) is   determined by dividing the total charges for labor submitted by the   total number of hours charged for the repairs.           (e)     In computing the amount of money a dealer charges a   retail customer under Subsection (b) for parts, the manufacturer or   distributor shall use the formula, of the following formulas, that   produces the fewest number of repair orders:                 (1)     the average parts markup charged during the   preceding six months by the dealer on 100 sequential repair orders   paid in part by a retail customer, exclusive of:                       (A)  routine maintenance;                       (B)  tire, wheel, or wheel alignment;                       (C)     discounts to state agencies, insurers, or   warranty or service contract providers;                       (D)  state inspections;                       (E)  goodwill repairs;                       (F)  accessory installation;                       (G)     a manufacturer's or distributor's promotion   or service campaign; or                       (H)     repairs to a vehicle owned by the dealer, an   affiliate of the dealer, or an employee of either the dealer or   affiliate; or                 (2)     the average parts markup charged for 90   consecutive days during the preceding six months by the dealer for   repairs paid in part by a retail customer, exclusive of:                       (A)  routine maintenance;                       (B)  tire, wheel, or wheel alignment;                       (C)     discounts to state agencies, insurers, or   warranty or service contract providers;                       (D)  state inspections;                       (E)  goodwill repairs;                       (F)  accessory installation;                       (G)     a manufacturer's or distributor's promotion   or service campaign; or                       (H)     repairs to a vehicle owned by the dealer, an   affiliate of the dealer, or an employee of either the dealer or   affiliate.           (f)     The average parts markup for Subsection (e) is   determined by dividing the total charges for parts submitted by the   total cost of the parts for which charges are submitted.           (g)     If a manufacturer or distributor supplies a part to a   dealer at no cost or at a reduced cost for use in a repair, the   manufacturer or distributor shall compensate the dealer for the   dealer's cost for the part, if any, plus an amount equal to the   dealer's prevailing retail parts markup, multiplied by the fair   wholesale value of the part.           (h)     For purposes of Subsection (g), the fair wholesale value   of a part is the greater of:                 (1)     the amount the dealer paid for the part or a   substantially identical part if presently owned by the dealer;                 (2)     the cost of the part as shown in the current price   schedule of the manufacturer or distributor or in a price schedule   issued by the manufacturer or distributor in the 24 months   preceding the date of performance of the repair; or                 (3)     the cost of a substantially identical part shown   in the current price schedule of the manufacturer or distributor or   in a price schedule issued by the manufacturer or distributor in the   24 months preceding the date of performance of the repair.           (i)     A manufacturer or distributor shall compensate a dealer   in accordance with this subchapter if:                 (1)     a customer, manufacturer, distributor, or   third-party requests or seeks assistance from the dealer for an   over-the-air or remote installation, change, repair, update, or   amendment to any part, system, accessory, or function; or                 (2)     the dealer performs an over-the-air or remote   installation, change, repair, update, or amendment to any part,   system, accessory, or function.          Sec. 2301.403.  ADJUSTMENT OF RATE FOR WARRANTY WORK [ LABOR   RATE ].  (a)  A dealer may request an adjustment in the dealer's   warranty work [ labor ] rate.  The request must be sent to the   manufacturer or distributor by certified mail, return receipt   requested, to the address specifically designated by the   manufacturer or distributor for such purpose or electronically if   the manufacturer or distri [Text truncated for display. 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