TX
Texas House Bill HB4078

Texas 2023 - 88th Regular

Texas House Bill HB4078 Compare Versions

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11 88R24432 DIO-F
22 By: Geren H.B. No. 4078
33 Substitute the following for H.B. No. 4078:
44 By: Canales C.S.H.B. No. 4078
55
66
77 A BILL TO BE ENTITLED
88 AN ACT
99 relating to motor vehicle franchised dealers and the reimbursement
1010 of motor vehicle franchised dealers by manufacturers and
1111 distributors for warranty, recall, and preparation and delivery
1212 work.
1313 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1414 SECTION 1. Section 2301.003, Occupations Code, is amended
1515 by adding Subsection (c) to read as follows:
1616 (c) A manufacturer or distributor may not compel a dealer to
1717 comply, take an adverse action, or initiate an action or proceeding
1818 in response to a dealer not participating in a manufacturer or
1919 distributor program or initiating an action or proceeding,
2020 including an action or proceeding to which the manufacturer or
2121 distributor is a party, to enforce a right or remedy available to
2222 the dealer under law or by agreement.
2323 SECTION 2. Subchapter I, Chapter 2301, Occupations Code, is
2424 amended to read as follows:
2525 SUBCHAPTER I. WARRANTIES AND RECALLS: REIMBURSEMENT OF DEALER
2626 Sec. 2301.4001. DEFINITIONS. In this subchapter:
2727 (1) "Goodwill repair" means a repair made by a seller
2828 for no charge that the seller is not obligated to make.
2929 (2) "Part" includes:
3030 (A) any component, electric vehicle battery,
3131 engine, equipment, fixture, good, part assembly, software, or
3232 transmission for a motor vehicle; and
3333 (B) a replacement for a part listed in Paragraph
3434 (A).
3535 (3) "Routine maintenance" includes replacement of a
3636 belt, bolt, brake pad, bulb, fastener, filter, fluid, internal
3737 combustion engine vehicle battery, nut, or rotor, unless the belt,
3838 bolt, brake pad, bulb, fastener, filter, fluid, internal combustion
3939 engine vehicle battery, nut, or rotor is provided by the
4040 manufacturer or distributor in the course of a repair with an
4141 assigned part number.
4242 Sec. 2301.401. WARRANTY, RECALL, PREPARATION, AND DELIVERY
4343 REQUIREMENTS. (a) On request, a manufacturer or distributor shall
4444 provide to the department a copy of the current requirements the
4545 manufacturer or distributor imposes on its dealers with respect to
4646 the dealer's:
4747 (1) duties under the manufacturer's or distributor's
4848 warranty and under a manufacturer's or distributor's recall; and
4949 (2) vehicle preparation and delivery obligations.
5050 (b) Warranty, recall, or preparation and delivery
5151 requirements placed on a dealer by a manufacturer or distributor
5252 are not enforceable unless the requirements are reasonable.
5353 Sec. 2301.402. RATE OF COMPENSATION. (a) A manufacturer or
5454 distributor shall fairly and adequately compensate its dealers for
5555 warranty, recall, and preparation and delivery work.
5656 (b) A manufacturer or distributor may not pay or reimburse a
5757 dealer an amount of money for warranty or recall work that is less
5858 than the amount the dealer charges a retail customer for similar
5959 nonwarranty work.
6060 (c) In computing the amount of money a dealer charges a
6161 retail customer under Subsection (b) for labor, the manufacturer or
6262 distributor shall use the formula, of the following formulas, that
6363 produces the fewest number of repair orders [the greater of]:
6464 (1) the average labor rate charged during the
6565 preceding six months by the dealer on 100 sequential nonwarranty
6666 repair orders paid by retail customers, exclusive of:
6767 (A) routine maintenance;
6868 (B) tire, wheel, or wheel alignment;
6969 (C) discounts to state agencies, insurers, or
7070 warranty or service contract providers;
7171 (D) state inspections;
7272 (E) goodwill repairs;
7373 (F) accessory installation;
7474 (G) a manufacturer's or distributor's promotion
7575 or service campaign; or
7676 (H) repairs to a vehicle owned by the dealer, an
7777 affiliate of the dealer, or an employee of either the dealer or
7878 affiliate; or
7979 (2) the average labor rate charged for 90 consecutive
8080 days during the preceding six months by the dealer for nonwarranty
8181 repairs paid by retail customers, exclusive of:
8282 (A) routine maintenance;
8383 (B) tire, wheel, or wheel alignment;
8484 (C) discounts to state agencies, insurers, or
8585 warranty or service contract providers;
8686 (D) state inspections;
8787 (E) goodwill repairs;
8888 (F) accessory installation;
8989 (G) a manufacturer's or distributor's promotion
9090 or service campaign; or
9191 (H) repairs to a vehicle owned by the dealer, an
9292 affiliate of the dealer, or an employee of either the dealer or
9393 affiliate.
9494 (d) The average labor rate under Subsection (c) is
9595 determined by dividing the total charges for labor submitted by the
9696 total number of hours charged for the repairs.
9797 (e) In computing the amount of money a dealer charges a
9898 retail customer under Subsection (b) for parts, the manufacturer or
9999 distributor shall use the formula, of the following formulas, that
100100 produces the fewest number of repair orders:
101101 (1) the average parts markup charged during the
102102 preceding six months by the dealer on 100 sequential nonwarranty
103103 repair orders paid by retail customers, exclusive of:
104104 (A) routine maintenance;
105105 (B) tire, wheel, or wheel alignment;
106106 (C) discounts to state agencies, insurers, or
107107 warranty or service contract providers;
108108 (D) state inspections;
109109 (E) goodwill repairs;
110110 (F) accessory installation;
111111 (G) a manufacturer's or distributor's promotion
112112 or service campaign; or
113113 (H) repairs to a vehicle owned by the dealer, an
114114 affiliate of the dealer, or an employee of either the dealer or
115115 affiliate; or
116116 (2) the average parts markup charged for 90
117117 consecutive days during the preceding six months by the dealer for
118118 nonwarranty repairs paid by retail customers, exclusive of:
119119 (A) routine maintenance;
120120 (B) tire, wheel, or wheel alignment;
121121 (C) discounts to state agencies, insurers, or
122122 warranty or service contract providers;
123123 (D) state inspections;
124124 (E) goodwill repairs;
125125 (F) accessory installation;
126126 (G) a manufacturer's or distributor's promotion
127127 or service campaign; or
128128 (H) repairs to a vehicle owned by the dealer, an
129129 affiliate of the dealer, or an employee of either the dealer or
130130 affiliate.
131131 (f) The average parts markup for Subsection (e) is
132132 determined by dividing the total charges for parts submitted by the
133133 total cost of the parts for which charges are submitted.
134134 (g) If a manufacturer or distributor supplies a part to a
135135 dealer at no cost or at a reduced cost for use in a warranty or
136136 recall repair, the manufacturer or distributor shall compensate the
137137 dealer for the dealer's cost for the part, if any, plus an amount
138138 equal to the dealer's prevailing retail parts markup, multiplied by
139139 the fair wholesale value of the part.
140140 (h) For purposes of Subsection (g), the fair wholesale value
141141 of a part is the greater of:
142142 (1) the amount the dealer paid for the part or a
143143 substantially identical part if presently owned by the dealer;
144144 (2) the cost of the part as shown in a current or
145145 previously established price schedule of the manufacturer or
146146 distributor; or
147147 (3) the cost of a substantially identical part shown
148148 in a current or previously established price schedule of the
149149 manufacturer or distributor.
150150 (i) A manufacturer or distributor shall compensate a dealer
151151 in accordance with this subchapter if the dealer assists in or
152152 performs an over-the-air or remote installation, change, repair,
153153 update, or amendment to any part, system, accessory, or function.
154154 Sec. 2301.403. ADJUSTMENT OF RATE FOR WARRANTY WORK [LABOR
155155 RATE]. (a) A dealer may request an adjustment in the dealer's
156156 warranty work [labor] rate. The request must be sent to the
157157 manufacturer or distributor by certified mail, return receipt
158158 requested, and must state the requested labor or parts rate and
159159 include information reasonably necessary to enable the
160160 manufacturer or distributor to adequately evaluate the request as
161161 provided by this subchapter.
162162 (b) Not later than the 60th day after the date of receipt of
163163 a request under this section, the manufacturer or distributor shall
164164 provide written notice to the requesting dealer of the approval,
165165 reduction, claimed material inaccuracy, or disapproval of the
166166 request. If the manufacturer or distributor fails to respond
167167 before the 60th day after the date the request is received, the
168168 submitted rate shall take effect on the 60th day after the date the
169169 manufacturer or distributor receives the request. If the request
170170 is disapproved, reduced, or claimed to be materially inaccurate,
171171 the manufacturer or distributor shall state the reasons for the
172172 disapproval, reduction, or claimed material inaccuracy. The stated
173173 reasons for disapproval, reduction, or claimed material inaccuracy
174174 of the requested labor rate or parts markup must contain:
175175 (1) an explanation of the reasons the request is
176176 disapproved, reduced, or claimed to be materially inaccurate;
177177 (2) evidence that substantiates each stated reason;
178178 (3) if a material inaccuracy is alleged, a copy of the
179179 calculations used by the manufacturer or distributor demonstrating
180180 a material inaccuracy; and
181181 (4) a proposed adjusted labor or parts rate, as
182182 applicable.
183183 (c) A requesting dealer may file a protest with the board if
184184 the manufacturer or distributor[:
185185 [(1)] disapproves or reduces a dealer's request or
186186 claims the request is materially inaccurate[; or
187187 [(2) fails to respond within the time required by this
188188 section].
189189 (d) After a protest is filed, the board may uphold the
190190 manufacturer's or distributor's decision only if the manufacturer
191191 or distributor proves by a preponderance of the evidence that the
192192 disapproval, reduction, or claimed material inaccuracy of the
193193 request [or failure to respond] was reasonable.
194194 (e) If the board does not determine that the disapproval,
195195 reduction, or claimed material inaccuracy of the request [or
196196 failure to respond] was reasonable, the board shall order the
197197 requested rate into effect as of the 60th day after the receipt of
198198 the request by the manufacturer or distributor.
199199 (f) Except by agreement of the parties, a warranty labor
200200 rate or warranty parts rate established under this subchapter may
201201 not be adjusted more often than once a year.
202202 Sec. 2301.404. TIME FOR PAYMENT. (a) A manufacturer or
203203 distributor shall pay a dealer's claim for reimbursement for
204204 warranty work, recall work, or dealer preparation and delivery work
205205 not later than the 30th day after the date of approval of the claim.
206206 (b) A claim that is not disapproved before the 31st day
207207 after the date of receipt is considered approved.
208208 (c) If a claim is disapproved, the manufacturer or
209209 distributor shall provide the dealer written notice explaining [of]
210210 the reasons for the disapproval.
211211 (d) A controversy regarding the payment of a claim under
212212 this subchapter or compliance with the provisions of this
213213 subchapter shall be resolved in accordance with Subchapter Q.
214214 Sec. 2301.405. CHARGE BACK TO DEALER. (a) A manufacturer
215215 or distributor may not charge back to a dealer money paid by the
216216 manufacturer or distributor to satisfy a claim approved and paid
217217 under this chapter [subchapter] unless the manufacturer or
218218 distributor shows that:
219219 (1) the claim was false or fraudulent;
220220 (2) repair work was not properly performed or was
221221 unnecessary to correct a defective condition; or
222222 (3) the dealer who made the claim failed to
223223 substantiate the claim as provided by the manufacturer's or
224224 distributor's requirements that were enforceable under Section
225225 2301.401 at the time the claim was filed.
226226 (b) A manufacturer or distributor may not audit a claim
227227 filed under this chapter [subchapter] after the first anniversary
228228 of the date the claim is submitted unless the manufacturer or
229229 distributor has reasonable grounds to suspect that the claim was
230230 fraudulent.
231231 Sec. 2301.406. PROHIBITED REQUIREMENTS FOR PAYMENT. (a) A
232232 manufacturer or distributor may not require, as a prerequisite to
233233 the payment of a claim for reimbursement, that a dealer file a
234234 statement of actual time spent in performance of labor, unless
235235 actual time is the basis for reimbursement.
236236 (b) A manufacturer or distributor may not recover or attempt
237237 to recover any portion of the compensation due to a dealer for
238238 warranty, recall, or preparation and delivery work by reducing the
239239 amount due by a separate charge, surcharge, like charge, other
240240 charge, supplemental charge, or reduction in return reserve
241241 allowance to the wholesale price paid by the dealer to the
242242 manufacturer or distributor for any product, including motor
243243 vehicles and parts. This subsection does not prohibit a
244244 manufacturer or distributor from increasing prices for a vehicle or
245245 part in the normal course of business.
246246 (c) A manufacturer or distributor may not establish or
247247 implement a special part number for a part used in warranty, recall,
248248 or preparation and delivery work if the result is lower
249249 compensation to the dealer than as calculated under Section
250250 2301.402.
251251 SECTION 3. The changes in law made by this Act apply only to
252252 warranty, recall, or preparation and delivery work under Subchapter
253253 I, Chapter 2301, Occupations Code, as amended by this Act,
254254 commenced on or after the effective date of this Act. Warranty,
255255 recall, or preparation and delivery work commenced before the
256256 effective date of this Act is governed by the law in effect on the
257257 date the work was commenced, and the former law is continued in
258258 effect for that purpose.
259259 SECTION 4. This Act takes effect September 1, 2023.