Pennsylvania Warranty Reimbursement Law

Sec. 818.307 of Chapter 22A of Title 63. Reimbursement for parts and services required by the manufacturer or distributor; reimbursement audits.

(a) Manufacturers or distributors to notify dealers of their obligations.–

(1) Each new vehicle manufacturer or distributor shall specify in writing to each of its new vehicle dealers licensed in this Commonwealth the dealer’s obligations for predelivery preparation and warranty service on its products, shall compensate the new vehicle dealer for service required of the dealer by the manufacturer or distributor and shall provide the dealer with a schedule of compensation to be paid the dealer for parts, work and service, and the time allowance for the performance of such work and service.

(2) Compensation for parts, including major assemblies used in warranty service, shall be at the dealer’s retail rate. The following shall apply:

(i) The dealer’s retail rate for parts shall be established by the dealer’s submitting to the manufacturer or distributor a declaration of the average percentage markup which shall be the lesser of the following orders which cover repairs made no more than 180 days before the submission:

(A) One hundred sequential nonwarranty customer-paid service repair orders which contain parts that are used in warranty-like service or repair.

(B) Ninety consecutive days of nonwarranty customer-paid service repair orders which contain parts that are used in warranty-like service or repair.

(ii) The declaration under subparagraph (i) shall be presumed to be reasonable, except that a manufacturer or distributor may, not later than 60 days after submission, rebut the presumption by substantiating that the declaration is unreasonable or materially inaccurate.

(iii) The retail rate shall go into effect 60 days following the declaration under subparagraph (i), unless the franchisor audits the submitted repair orders and a rebuttal under subparagraph (ii) occurs.

(iv) If the declared retail rate is rebutted, the manufacturer or distributor shall propose an adjustment of the markup based on the rebuttal no later than 60 days after submission.

(v) A manufacturer shall provide written support to the dealer for the rebuttal retail rate that is proposed. If the dealer does not agree with the proposed markup, the dealer may file a protest after receipt of the proposal by the manufacturer or distributor. If a protest is filed, the board shall inform the manufacturer or distributor that a protest has been filed and that a hearing will be held on the protest. In a hearing held under this subparagraph, the manufacturer or distributor shall have the burden of proving that:

(A) the retail rate declared by the dealer was unreasonable or materially inaccurate;  and

(B) the manufacturer’s or distributor’s proposed adjustment of the markup is reasonable.

(3) Compensation for labor used in warranty service shall be at the dealer’s retail rate. The following shall apply:

(i) The dealer’s hourly retail rate for labor shall be established by submitting the following to the manufacturer or distributor:

(A) A declaration of the average labor rate calculated by dividing the amount of the dealer’s total labor sales by the number of total labor hours that generated the sales.

(B) The lesser of the following orders which cover repairs made no more than 180 days before the submission:

(I) One hundred sequential nonwarranty customer-paid service repair orders.

(II) Ninety consecutive days of nonwarranty customer-paid service repair orders.

(ii) The declaration under subparagraph (i)(A) shall be presumed to be reasonable, except that a manufacturer or distributor may, no later than 60 days after submission, rebut the presumption by substantiating that the rate is unreasonable or materially inaccurate.

(iii) The average labor rate shall go into effect 60 days following the declaration under subparagraph (i)(A), unless the franchisor audits the submitted repair orders and a rebuttal under subparagraph (ii) occurs.

(iv) If the declared rate is rebutted, the manufacturer or distributor shall propose an adjustment of the labor rate based on the rebuttal not later than 60 days after submission.

(v) A manufacturer shall provide written support to the dealer for the rebuttal rate that is proposed. If the dealer does not agree with the proposed labor rate, the dealer may file a protest after receipt of the proposal by the manufacturer or distributor. If a protest is filed, the board shall inform the manufacturer or distributor that a protest has been filed and that a hearing will be held on the protest. In a hearing held under this subparagraph, the manufacturer or distributor shall have the burden of proving that:

(A) the retail rate declared by the dealer was unreasonable or materially inaccurate;  and

(B) the manufacturer’s or distributor’s proposed adjustment of the retail rate is reasonable.

(4) This subsection shall not apply to manufacturers or distributors of manufactured housing. (b) Deleted by 2013, Nov. 1, P.L. 675, No. 84, § 1 , effective in 60 days [Dec. 31, 2013].

(b.1) Exceptions. When calculating the retail rate customarily charged by the dealer for parts and labor under this section, the following work shall not be included:

(1) Repairs for manufacturer or distributor special events, specials or promotional discounts for retail customer repairs.

(2) Parts sold at wholesale.

(3) Routine maintenance not covered under a retail customer warranty, such as fluids, filters and belts not provided in the course of repairs.

(4) Nuts, bolts, fasteners and similar items that do not have an individual part number.

(5) Tires.

(6) Vehicle reconditioning.

(b.2) Compensation. If a manufacturer or distributor furnishes a part or component to a dealer, at no cost, to use in performing repairs under a recall, campaign service or warranty repair, the manufacturer or distributor shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this section by compensating the dealer the average markup on the cost for the part or component as listed in the manufacturer’s or distributor’s price schedule, minus the cost for the part or component.

(b.3) Prohibitions and audit.

(1) A manufacturer or distributor may not require a dealer to establish the retail rate customarily charged by the dealer for parts and labor by:

(i) An unduly burdensome or time-consuming method.

(ii) Requiring information that is unduly burdensome or time consuming to provide, including part-by-part or transaction-by-transaction calculations.

(2) A dealer may not declare an average percentage markup or average labor rate more than once in one calendar year.

(3) A manufacturer or distributor may perform annual audits to verify that a dealer’s effective rates have not decreased. If a dealer’s effective rates have decreased, a manufacturer or distributor may reduce the warranty reimbursement rate prospectively.

(b.4) Recovery.

(1)(i) A manufacturer or distributor may not recover its costs from a dealer within this Commonwealth that does not apply to the manufacturer or distributor for retail rate reimbursement for parts and labor, including an increase in the wholesale price of a vehicle or surcharge imposed on a dealer intended to recover the cost of reimbursing a dealer for parts and labor under this section.

(ii) A manufacturer or distributor may increase the price for a vehicle or part in the normal course of business.

(2) A dealer may elect to revert to the nonretail rate reimbursement for parts and labor once in a calendar year to avoid a manufacturer or distributor surcharge. (c) Deleted by 2011, July 7, P.L. 285, No. 65, § 2 , effective in 60 days [Sept. 6, 2011].

(d) [Indemnification Provision]

(e) [Individual Claims Provisions]

(f) Applicability. This section shall also apply to each medium-duty and heavy-duty truck component and engine manufacturer or distributor that provides integral parts of vehicles, provides major components by selling directly to dealers or who enters into a contract with a medium-duty and heavy-duty truck dealer which authorizes the dealer to perform warranty or other services on the products produced or distributed.

(g) Applicability. This section shall not apply to recreational vehicle warrantors or dealers.

Sec. 818.307a

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(c) Procedure.  A reimbursement claim made by new vehicle dealers under this section for recall remedies or repairs, or for compensation where no part or repair is reasonably available and the used vehicle is subject to a stop-sale order or a do-not-drive order, shall be subject to the same limitations and requirements as a warranty reimbursement claim made under section 307. A claim shall be either approved or disapproved within 30 days after the claim is submitted to the manufacturer in the manner and on the forms the manufacturer reasonably prescribes. A claim shall be paid within 30 days of approval of the claim by the manufacturer. A claim not specifically disapproved in writing within 30 days after the manufacturer receives a submitted claim shall be deemed to be approved.

Although the statutory text provided above represented that codified and in effect in the respective state at the time of publication of the above, Armatus Dealer Uplift, LLC bears no responsibility for deviations of the above from versions thereof subsequently in effect as a result of future statutory amendments.