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Texas Senate Bill SB1917

Texas 2025 - 89th Regular

Texas Senate Bill SB1917 Compare Versions

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11 89R10022 AND-F
22 By: Middleton S.B. No. 1917
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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, over-the-air, and preparation
1212 and delivery work.
1313 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1414 SECTION 1. Subchapter I, Chapter 2301, Occupations Code, is
1515 amended to read as follows:
1616 SUBCHAPTER I. [WARRANTIES:] REIMBURSEMENT OF DEALER
1717 Sec. 2301.4001. DEFINITIONS. In this subchapter:
1818 (1) "Goodwill repair" means a repair made by a seller
1919 for no charge that the seller is not obligated to make.
2020 (2) "Part" includes:
2121 (A) any component, electric vehicle battery,
2222 engine, equipment, fixture, good, part assembly, software, or
2323 transmission for a motor vehicle; and
2424 (B) a replacement for a part listed in Paragraph
2525 (A).
2626 (3) "Routine maintenance" includes replacement of a
2727 belt, bolt, brake pad, bulb, fastener, filter, fluid, internal
2828 combustion engine vehicle battery, nut, rotor, or wiper blade, and
2929 any other repair or service described as vehicle maintenance in the
3030 owner information booklet or similar document provided to the
3131 vehicle owner by the manufacturer or distributor.
3232 Sec. 2301.401. WARRANTY, RECALL, PREPARATION, AND DELIVERY
3333 REQUIREMENTS. (a) On request, a manufacturer or distributor shall
3434 provide to the department a copy of the current requirements the
3535 manufacturer or distributor imposes on its dealers with respect to
3636 the dealer's:
3737 (1) duties under the manufacturer's or distributor's
3838 warranty and under a manufacturer's or distributor's recall; and
3939 (2) vehicle preparation and delivery obligations.
4040 (b) Warranty, recall, or preparation and delivery
4141 requirements placed on a dealer by a manufacturer or distributor
4242 are not enforceable unless the requirements are reasonable.
4343 Sec. 2301.402. RATE OF COMPENSATION. (a) A manufacturer or
4444 distributor shall fairly and adequately compensate its dealers for
4545 warranty, recall, over-the-air, and preparation and delivery work.
4646 (b) A manufacturer or distributor may not pay or reimburse a
4747 dealer an amount of money for warranty, recall, over-the-air, and
4848 preparation and delivery work that is less than the amount the
4949 dealer charges a retail customer for similar [nonwarranty] work.
5050 (c) In computing the amount of money a dealer charges a
5151 retail customer under Subsection (b) for labor, the manufacturer or
5252 distributor shall use the formula, of the following formulas, that
5353 produces the fewest number of repair orders [the greater of]:
5454 (1) the average labor rate charged during the
5555 preceding six months by the dealer on 100 sequential [nonwarranty]
5656 repair orders paid in part by a retail customer, exclusive of:
5757 (A) routine maintenance;
5858 (B) tire, wheel, or wheel alignment;
5959 (C) discounts to state agencies, insurers, or
6060 warranty or service contract providers;
6161 (D) state inspections;
6262 (E) goodwill repairs;
6363 (F) accessory installation;
6464 (G) a manufacturer's or distributor's promotion
6565 or service campaign; or
6666 (H) repairs to a vehicle owned by the dealer, an
6767 affiliate of the dealer, or an employee of either the dealer or
6868 affiliate; or
6969 (2) the average labor rate charged for 90 consecutive
7070 days during the preceding six months by the dealer for
7171 [nonwarranty] repairs paid in part by a retail customer, exclusive
7272 of:
7373 (A) routine maintenance;
7474 (B) tire, wheel, or wheel alignment;
7575 (C) discounts to state agencies, insurers, or
7676 warranty or service contract providers;
7777 (D) state inspections;
7878 (E) goodwill repairs;
7979 (F) accessory installation;
8080 (G) a manufacturer's or distributor's promotion
8181 or service campaign; or
8282 (H) repairs to a vehicle owned by the dealer, an
8383 affiliate of the dealer, or an employee of either the dealer or
8484 affiliate.
8585 (d) The average labor rate under Subsection (c) is
8686 determined by dividing the total charges for labor submitted by the
8787 total number of hours charged for the repairs.
8888 (e) In computing the amount of money a dealer charges a
8989 retail customer under Subsection (b) for parts, the manufacturer or
9090 distributor shall use the formula, of the following formulas, that
9191 produces the fewest number of repair orders:
9292 (1) the average parts markup charged during the
9393 preceding six months by the dealer on 100 sequential repair orders
9494 paid in part by a retail customer, exclusive of:
9595 (A) routine maintenance;
9696 (B) tire, wheel, or wheel alignment;
9797 (C) discounts to state agencies, insurers, or
9898 warranty or service contract providers;
9999 (D) state inspections;
100100 (E) goodwill repairs;
101101 (F) accessory installation;
102102 (G) a manufacturer's or distributor's promotion
103103 or service campaign; or
104104 (H) repairs to a vehicle owned by the dealer, an
105105 affiliate of the dealer, or an employee of either the dealer or
106106 affiliate; or
107107 (2) the average parts markup charged for 90
108108 consecutive days during the preceding six months by the dealer for
109109 repairs paid in part by a retail customer, exclusive of:
110110 (A) routine maintenance;
111111 (B) tire, wheel, or wheel alignment;
112112 (C) discounts to state agencies, insurers, or
113113 warranty or service contract providers;
114114 (D) state inspections;
115115 (E) goodwill repairs;
116116 (F) accessory installation;
117117 (G) a manufacturer's or distributor's promotion
118118 or service campaign; or
119119 (H) repairs to a vehicle owned by the dealer, an
120120 affiliate of the dealer, or an employee of either the dealer or
121121 affiliate.
122122 (f) The average parts markup for Subsection (e) is
123123 determined by dividing the total charges for parts submitted by the
124124 total cost of the parts for which charges are submitted.
125125 (g) If a manufacturer or distributor supplies a part to a
126126 dealer at no cost or at a reduced cost for use in a repair, the
127127 manufacturer or distributor shall compensate the dealer for the
128128 dealer's cost for the part, if any, plus an amount equal to the
129129 dealer's prevailing retail parts markup, multiplied by the fair
130130 wholesale value of the part.
131131 (h) For purposes of Subsection (g), the fair wholesale value
132132 of a part is the greater of:
133133 (1) the amount the dealer paid for the part or a
134134 substantially identical part if presently owned by the dealer;
135135 (2) the cost of the part as shown in the current price
136136 schedule of the manufacturer or distributor or in a price schedule
137137 issued by the manufacturer or distributor in the 24 months
138138 preceding the date of performance of the repair; or
139139 (3) the cost of a substantially identical part shown
140140 in the current price schedule of the manufacturer or distributor or
141141 in a price schedule issued by the manufacturer or distributor in the
142142 24 months preceding the date of performance of the repair.
143143 (i) A manufacturer or distributor shall compensate a dealer
144144 in accordance with this subchapter if:
145145 (1) a customer, manufacturer, distributor, or
146146 third-party requests or seeks assistance from the dealer for an
147147 over-the-air or remote installation, change, repair, update, or
148148 amendment to any part, system, accessory, or function; or
149149 (2) the dealer performs an over-the-air or remote
150150 installation, change, repair, update, or amendment to any part,
151151 system, accessory, or function.
152152 Sec. 2301.403. ADJUSTMENT OF RATE FOR WARRANTY WORK [LABOR
153153 RATE]. (a) A dealer may request an adjustment in the dealer's
154154 warranty work [labor] rate. The request must be sent to the
155155 manufacturer or distributor by certified mail, return receipt
156156 requested, to the address specifically designated by the
157157 manufacturer or distributor for such purpose or electronically if
158158 the manufacturer or distributor has an established portal
159159 specifically designated for such purpose and the manufacturer or
160160 distributor has given notice to the dealer of the designated
161161 address or portal, as applicable. The request [and] must state the
162162 requested labor or parts rate and include information reasonably
163163 necessary to enable the manufacturer or distributor to adequately
164164 evaluate the request as provided by this subchapter.
165165 (b) Not later than the 60th day after the date of receipt of
166166 a request under this section, the manufacturer or distributor shall
167167 provide written notice to the requesting dealer of the approval,
168168 reduction, claimed material inaccuracy, or disapproval of the
169169 request. If the manufacturer or distributor fails to respond
170170 before the 60th day after the date the request is received, the
171171 submitted rate shall take effect on the 60th day after the date the
172172 manufacturer or distributor receives the request. If the request
173173 is disapproved, reduced, or claimed to be materially inaccurate,
174174 the manufacturer or distributor shall state in writing the reasons
175175 for the disapproval, reduction, or claimed material inaccuracy.
176176 The stated reasons for disapproval, reduction, or claimed material
177177 inaccuracy of the requested labor or parts rate must contain:
178178 (1) an explanation of the reasons the request is
179179 disapproved, reduced, or claimed to be materially inaccurate;
180180 (2) evidence that substantiates each stated reason;
181181 (3) if a material inaccuracy is alleged, a copy of the
182182 calculations used by the manufacturer or distributor demonstrating
183183 a material inaccuracy; and
184184 (4) a proposed adjusted labor or parts rate, as
185185 applicable.
186186 (c) A requesting dealer may file a protest with the board if
187187 the manufacturer or distributor[:
188188 [(1)] disapproves or reduces a dealer's request or
189189 claims the request is materially inaccurate[; or
190190 [(2) fails to respond within the time required by this
191191 section].
192192 (d) After a protest is filed, the board may uphold the
193193 manufacturer's or distributor's decision only if the manufacturer
194194 or distributor proves by clear and convincing [a preponderance of
195195 the] evidence that the disapproval, reduction, or claimed material
196196 inaccuracy of the request [or failure to respond] was reasonable.
197197 (e) If the board does not determine by clear and convincing
198198 evidence that the disapproval, reduction, or claimed material
199199 inaccuracy of the request [or failure to respond] was reasonable,
200200 the board shall order the requested rate into effect as of the 60th
201201 day after the receipt of the request by the manufacturer or
202202 distributor.
203203 (f) Except by agreement of the parties, a warranty labor
204204 rate or warranty parts rate established under this subchapter may
205205 not be adjusted more often than once a year.
206206 Sec. 2301.404. TIME FOR PAYMENT. (a) A manufacturer or
207207 distributor shall pay a dealer's claim for reimbursement for
208208 warranty [work], recall, over-the-air, or [dealer] preparation and
209209 delivery work not later than the 30th day after the date of approval
210210 of the claim.
211211 (b) A claim that is not disapproved before the 31st day
212212 after the date of receipt is considered approved.
213213 (c) If a claim is disapproved, the manufacturer or
214214 distributor shall provide the dealer written notice explaining [of]
215215 the reasons for the disapproval.
216216 Sec. 2301.405. CHARGE BACK TO DEALER. (a) A manufacturer
217217 or distributor may not charge back to a dealer money paid by the
218218 manufacturer or distributor to satisfy a claim approved and paid
219219 under this subchapter unless the manufacturer or distributor shows
220220 that:
221221 (1) the claim was false or fraudulent;
222222 (2) repair work was not properly performed or was
223223 unnecessary to correct a defective condition; or
224224 (3) the dealer who made the claim failed to
225225 substantiate the claim as provided by the manufacturer's or
226226 distributor's requirements that were enforceable under Section
227227 2301.401 at the time the claim was filed.
228228 (b) A manufacturer or distributor may not audit a claim
229229 filed under this subchapter after the first anniversary of the date
230230 the claim is submitted unless the manufacturer or distributor has
231231 reasonable grounds to suspect that the claim was fraudulent.
232232 Sec. 2301.406. PROHIBITED REQUIREMENTS FOR PAYMENT. (a) A
233233 manufacturer or distributor may not require, as a prerequisite to
234234 the payment of a claim for reimbursement, that a dealer file a
235235 statement of actual time spent in performance of labor, unless the
236236 manufacturer or distributor intends to reimburse the dealer based
237237 on the actual time spent on the repair in accordance with this
238238 subchapter and the manufacturer or distributor has given timely
239239 notice to the dealer that actual time is the basis for
240240 reimbursement.
241241 (b) A manufacturer or distributor may not recover or attempt
242242 to recover any portion of the compensation due to a dealer for
243243 warranty, recall, over-the-air, or preparation and delivery work by
244244 reducing the amount due by a separate charge, surcharge, like
245245 charge, other charge, supplemental charge, or a reduction in return
246246 reserve allowance to the wholesale price paid by the dealer to the
247247 manufacturer or distributor for any product, including motor
248248 vehicles and parts. A manufacturer or distributor may not add any
249249 additional charge to a dealer for a service such as an information
250250 system or for the dealer's obtaining technical information and
251251 repair assistance from the manufacturer or distributor. This
252252 subsection does not prohibit a manufacturer or distributor from
253253 increasing prices for a vehicle or part in the normal course of
254254 business.
255255 (c) A manufacturer or distributor may not establish or
256256 implement a special part number for a part used in warranty, recall,
257257 over-the-air, or preparation and delivery work if the result is
258258 lower compensation to the dealer than as calculated under Section
259259 2301.402. This subsection does not prohibit a manufacturer or
260260 distributor from establishing or implementing a special part number
261261 for recall tracking if required by federal law.
262262 (d) Except as otherwise provided by this subsection,
263263 compensation to a dealer for a part used in the performance of a
264264 recall must be calculated using the price for the part listed in the
265265 current parts catalog of the manufacturer or distributor or a parts
266266 catalog issued by the manufacturer or distributor in the 24 months
267267 preceding the date of the performance of the recall work, whichever
268268 results in greater compensation to the dealer. If the part,
269269 irrespective of the part number, is in a dealer's current
270270 inventory, the compensation to a dealer must be calculated using
271271 the price for the part from the manufacturer's or distributor's
272272 parts catalog at the time the part was purchased for the dealer's
273273 inventory.
274274 SECTION 2. The changes in law made by this Act apply only to
275275 warranty, recall, over-the-air, or preparation and delivery work
276276 under Subchapter I, Chapter 2301, Occupations Code, as amended by
277277 this Act, that commences on or after the effective date of this Act.
278278 Warranty, recall, over-the-air, or preparation and delivery work
279279 that commences before the effective date of this Act is governed by
280280 the law in effect on the date the work was commenced, and the former
281281 law is continued in effect for that purpose.
282282 SECTION 3. This Act takes effect September 1, 2025.