Dealers have derailed a Virginia bill, pushed by auto manufacturers, to reduce warranty reimbursements.
General Motors, Ford Motor Co. and the Alliance of Automobile Manufacturers sought terms in the bill more favorable to the factories on a number of warranty issues.
The Virginia Automobile Dealers Association, calling the proposed changes 'predatory and unfair,' led a successful campaign to derail the legislation earlier this month.
Automakers and retailers wrangle regularly over warranty items at individual dealerships and in dealer council meetings. But the automakers raised the stakes by moving the dispute to the Virginia assembly in January.
The timing of the bill was unusual. In recent months, both GM and Ford have tried to improve relations with dealers.
'I don't think there is any greater issue going on in the life of dealers right now than in the area of warranty,' said Donald Hall, CEO of the Virginia dealers association. 'It is one of the few areas that keep a dealership afloat, so warranty standards and how they are applied are a critical issue.'
Seven lobbyists, including five representing GM and Ford, sought the warranty changes, which dealers characterized as punitive, Hall said. One lobbyist represented the Washington-based alliance, a multinational group of auto companies manufacturing in the United States. The remaining lobbyist represented Volkswagen, Hall said. The alliance was not available for comment by deadline.
The dealer group attacked three items in the legislation, proposed in the state assembly Jan. 24. Hall said the legislation would have:
Applied manufacturers' repair time guidelines to all work, whether warranty or retail. Currently, dealers use manufacturers' time studies on warranty work but not necessarily on retail repairs. Manufacturers' time guidelines are typically lower than other industry time standards.
No longer required factories to pay dealerships for warranty repairs that do not meet all of the terms of the manufacturer's policy.
Allowed factories to pay a handling fee and furnish parts to dealers for warranty repairs rather than using a designated markup on parts in dealer stock.
'Warranty work is about one thing and only one thing,' Hall said. 'It is about the dealer fixing the problems that the manufacturer has produced. The manufacturer has this notion that the dealer ought to be paid considerably less to repair their mistakes.'
The Virginia legislation was tabled, effectively killing the controversy. The Virginia Department of Motor Vehicles also opposed the changes.