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Minutes for SB39 - Committee on Transportation
Short Title
Compensation for warranty services under the vehicle dealers and manufacturers licensing act.
Minutes Content for Thu, Jan 31, 2019
The Chairperson opened the hearing on SB39.
Assistant Revisor Adam Siebers explained that the bill addresses a new-car dealer’s warranty work and the obligation of the manufacturer to reimburse the dealer for warranty work on vehicles sold by the dealer. Under current law, the dealer must accept the manufacturer’s labor rate for warranty work. This bill will allow the dealer to establish the labor rate and will require the manufacturer to reimburse the dealer based on the dealer’s retail labor rate. He stated that the law will apply to both manufacturer and to any second-stage manufacturer.
Don McNeely, President, Kansas Automobile Dealers Association, spoke as a proponent for the bill. Noting that 43 other states have similar statutes, he explained that, without this bill, the manufacturer under a franchise agreement can, subject to neither negotiations nor appeal, set its own reimbursement rate for warranty work. He stated that SB39 is modeled after an Iowa statute and clearly sets forth how to calculate the retail rate for warranty work. He further noted that43 states have such provisions and that out-of-state investors who might be interested in purchasing a dealership in Kansas are dissuaded because Kansas lacks these warranty-reimbursement protections (Attachment 1).
Mr. McNeely responded to members’ questions:
- The proposed law also applies to recreational-vehicle dealers.
- Manufacturers have no incentive to enter into separate contracts with dealers.
- Often third-party services administer the warranty-reimbursement process for a dealer.
The Chairperson closed the hearing on SB39.
The meeting was adjourned at 8:55 a.m. The next meeting is scheduled for Tuesday, February 5, at 8:30 a.m.
