A federal judge in Milwaukee has shot down a challenge to a General Motors plan to impose a surcharge on all new vehicles sold to Wisconsin dealerships that opt for higher-than-contractual reimbursement rates for warranty labor and parts.
U.S. District Judge Pamela Pepper ruled Sept. 24 that GM has the right to collect surcharges for stores that choose to use a state law that lets them claim reimbursement based on their own retail markup for parts — sometimes more than 100 percent — and on labor rates that use third-party time guides that allow more time than GM's own labor time guides.
GM's standard reimbursement structure is a store's retail labor rate plus a 40 percent markup on parts, a compensation structure that the automaker calls "generous," according to court documents.
In 2016, GM announced plans to impose a surcharge of $219 per vehicle for stores that choose the higher parts reimbursement option and of $389 per vehicle for stores that request both higher parts and labor reimbursement.
Dealerships that choose the more generous option — 35 of them in Wisconsin — "cost GM millions of dollars per year more than anticipated to deliver warranty service to customers," the automaker argued in court papers. "As a result, GM seeks to increase the wholesale price of the vehicles it sells to the 35 dealers that are contributing to those costs."