(1) Each manufacturer, distributor or importer shall specify in writing to each of the manufacturers, distributors or importers dealers in this state: (a) The dealers obligations for predelivery preparation and warranty service on the manufacturers, distributors or importers motor vehicles; (b) The schedule of compensation the manufacturer, distributor or importer will pay the dealer for diagnostic work, repair service, parts and labor in connection with predelivery preparation and warranty service; and (c) The time allowances for performing predelivery preparation and warranty service. (2)(a) A schedule of compensation must include reasonable compensation for diagnostic work, repair service, parts and labor and must reasonably, adequately and fairly compensate the dealer for the work, service, parts and labor. Time allowances for diagnosing and performing predelivery and warranty service must be reasonable and adequate for the work to be performed. A manufacturer, distributor or importer may not pay an hourly rate to a dealer that is less than the rate the dealer charges nonwarranty customers for nonwarranty service and repairs. Reimbursement for parts, other than parts used to repair the living facilities of motor homes, that the dealer purchases for use in performing predelivery and warranty service must be the amount the dealer charges nonwarranty customers, as long as the amount is not unreasonable. (b)(A) For purposes of this subsection and subject to subparagraphs (B) to (D) of this paragraph, to determine compensation under this subsection, a dealer shall propose an hourly rate and an amount for parts that the dealer charges nonwarranty customers by submitting to the manufacturer, distributor or importer copies of 100 sequential nonwarranty service repair invoices that customers paid or 90 consecutive days worth of nonwarranty service invoices that customers paid, whichever is less, for repairs the dealer made not more than 180 days before the dealers submission. If the manufacturer, distributor or importer does not contest the dealers proposal and the dealer otherwise complies with the provisions of this paragraph, the dealers proposal is presumed to be fair and reasonable. (B) A manufacturer, distributor or importer may contest the dealers proposal with evidence that the dealers proposal is not accurate or on the basis that the dealers proposal does not reasonably conform with the hourly rate or the amount for parts that other dealers charge nonwarranty customers in the same line-make in market areas that are contiguous to the dealers market area or with other relevant evidence. In contesting a dealers proposal based on evidence from other dealers in the contiguous market area, a manufacturer, distributor or importer shall rely on evidence from at least three other dealers in the contiguous market area or three dealers in an economically similar market within the manufacturers, distributors or importers region. (C) A manufacturer, distributor or importer shall use time allowances that are reasonable and adequate for a qualified technician to make a diagnosis and perform work or service. The manufacturer, distributor or importer may not unreasonably deny a written request from a dealer for a modification of the manufacturers, distributors or importers time allowance for a specific warranty repair, or for an additional time allowance for diagnostic work or repair work on a specific vehicle that is covered by a warranty, if the dealer includes with the request information and documentation that the manufacturer, distributor or importer reasonably requires to assess the merits of the request. (D) A dealer may not include in a proposal described in subparagraph (A) of this paragraph: (i) Repairs for a manufacturers, distributors or importers specials, special events or promotional discounts for retail customer repairs; (ii) Parts sold at wholesale; (iii) Routine maintenance that a retail customer warranty does not cover, such as fluids, filters and belts that a dealer uses in performing work other than repairs; (iv) Nuts, bolts, fasteners and similar items that do not have an individual part number; and (v) Vehicle reconditioning. (c) A dealers proposal under paragraph (b)(A) of this subsection becomes effective 30 days after the manufacturer, distributor or importer approves the hourly rate or the amount for parts. For purposes of this paragraph, a manufacturer, distributor or importer approves the dealers proposal if the manufacturer, distributor or importer does not contest the proposed hourly rate or amount for parts within 30 days after the dealer submits the proposal. (d) If a manufacturer, distributor or importer contests a dealers proposal, the manufacturer, distributor or importer shall propose an adjustment to the dealers proposal not later than 30 days after the dealer submits the dealers proposal. (e) Not more than once per year, a manufacturer, distributor or importer may verify the dealers hourly rate or the amount for parts the dealer charges nonwarranty customers and a dealer may propose an increase in the manner provided in paragraph (b)(A) of this subsection in the hourly rate or the amount the dealer charges for parts. If the manufacturer, distributor or importer finds that the dealers hourly rate or the amount for parts has decreased, the manufacturer, distributor or importer may reduce the dealers compensation under this subsection prospectively. If the manufacturer, distributor or importer does not contest the dealers proposed increase in the manner provided in paragraph (b)(B) of this subsection, the increase becomes effective as provided in paragraph (c) of this subsection. (3) A manufacturer, distributor or importer shall include, in written notices of vehicle recalls to motor vehicle owners and dealers, the expected date by which necessary parts and equipment will be available to the dealers to correct the defect or defects. A manufacturer, distributor or importer shall adequately compensate a dealer for repair service the dealer performs under the recall. (4) A manufacturer, distributor or importer shall: (a) Pay or credit a dealer for labor or parts the dealer claims under this section within 30 days after approving the dealers claim; (b) Approve or disapprove, in the manner the manufacturer, distributor or importer specifies, all claims that a dealer makes for labor or parts within 30 days after receiving the claim; (c) Allow a dealer to correct and resubmit a claim for labor or parts within 30 days after receiving the manufacturers, distributors or importers disapproval; (d) Treat as approved any claim, or resubmission of a corrected claim, that a manufacturer, distributor or importer did not approve or disapprove within 30 days after the manufacturer, distributor or importer received the claim or resubmission and pay or credit the dealer for the claim within 60 days after receiving the claim or resubmission; and (e) Notify the dealer in writing of the manufacturers, distributors or importers grounds for disapproving a claim. (5) A manufacturer, distributor or importer may: (a) Require reasonable documentation as substantiation for a dealers claim under this section; (b) Audit a dealers claim under this section within one year after the date on which the manufacturer, distributor or importer paid the claim; and (c) Charge back a dealers claim under this section that is unsubstantiated, false or fraudulent. (6) A manufacturer, distributor or importer may not: (a) Recover all or a portion of cost of compensating a dealer for warranty parts or service by reducing the amount due a dealer or by imposing a separate charge, surcharge, administrative fee or other fee. (b) Deny or charge back a dealers claim solely because a dealer failed to comply with a specific claim processing procedure because of a clerical or administrative error that does not affect the legitimacy of the dealers claim, if the dealer resubmits the claim in compliance with the manufacturers, distributors or importers claim processing procedure within 45 days after the manufacturer, distributor or importer initially denies or charges back the claim. (c) Deny a dealers claim solely because an owner who brought a motor vehicle to the dealer for a repair under warranty drove the motor vehicle for additional miles while awaiting service or a repair that the dealer could not complete because parts for the service or repair were not available. (d) Reduce a payment for a dealers claim solely on the basis of a national market norm or market average. (e) Limit or restrict the number of repairs a motor vehicle owner may obtain from a dealer on the basis of a national index or average of failure rates for the motor vehicle. (7)(a) Except as provided in paragraph (b) of this subsection, if a manufacturer, distributor or importer supplies a part to a dealer for the purpose of replacing the part or making a repair under warranty to a motor vehicle in the manufacturers, distributors or importers line-make, but the manufacturer, distributor or importer does not sell the part to the dealer, the manufacturer, distributor or importer shall compensate the dealer at the equivalent of the dealers average percentage markup on the part as if the manufacturer, distributor or importer had sold the part to the dealer at the price listed for the part in the manufacturers, distributors or importers current parts catalog. (b) The requirement set forth in paragraph (a) of this subsection does not apply to entire engine assemblies, propulsion engine assemblies, entire transmission assemblies or electric batteries. If the manufacturer, distributor or importer supplies the dealer with an assembly or battery described in this paragraph but does not sell the assembly or battery to the dealer, the manufacturer, distributor or importer shall compensate the dealer in an amount that is equivalent to 30 percent of what the dealer would have paid for the assembly or battery had the manufacturer, distributor or importer sold the assembly or battery to the dealer at the price listed in the manufacturers, distributors or importers current parts catalog.
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