Colorado targets car dealer warranty reimbursement parity

The bill would also impose a limit on automakers’ ability to challenge dealership rates for warranty parts and labor “when the rates are substantially different than the charges of other similarly situated line-make dealers.”

Tim Jackson, head of the Colorado Automobile Dealers Association, told Automotive News on Friday that the legislation was needed in part because of the high cost of living in metropolitan Denver, which he said was driving already-scarce technicians away to smaller, less expensive cities.

“The promise of warranty reimbursement at retail is to gain parity on customer pay,” Jackson said, adding that while there is no provision mandating that a dealership pass the additional reimbursement on to technicians, “from a practical standpoint, they do have to pass it through just to stay competitive and retain their technicians.”

Jackson said Colorado has 269 franchised dealerships. He added that “several other states” are pursuing similar legislation. If parity provisions spread wider, they could potentially shift millions of dollars a year from automakers to franchised dealers, given VW’s Illinois experience.

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