(1) Each manufacturer, distributor or importer shall specify in writing to each of the manufacturer’s, distributor’s or importer’s dealers in this state:

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(a) The dealer’s obligations for predelivery preparation and warranty service on the manufacturer’s, distributor’s or importer’s motor vehicles;

(b) The schedule of compensation the manufacturer, distributor or importer will pay the dealer for parts, work and service 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 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) and (C) 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 dealer’s submission. If the manufacturer, distributor or importer does not contest the dealer’s proposal and the dealer otherwise complies with the provisions of this paragraph, the dealer’s proposal is presumed to be fair and reasonable.

(B) A manufacturer, distributor or importer may contest the dealer’s proposal with evidence that the dealer’s proposal is not accurate or on the basis that the dealer’s 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 dealer’s market area or with other relevant evidence. In contesting a dealer’s 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 manufacturer’s, distributor’s or importer’s region.

(C) A dealer may not include in the dealer’s proposal:

(i) Repairs for a manufacturer’s, distributor’s or importer’s 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) The hourly rate or the amount for parts that a dealer charges nonwarranty customers that the dealer proposes 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 dealer’s 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 dealer’s proposal, the manufacturer, distributor or importer shall propose an adjustment to the dealer’s proposal not later than 30 days after the dealer submits the dealer’s proposal.

(e) Once per year, a manufacturer, distributor or importer may verify the dealer’s hourly rate or the amount for parts the dealer charges nonwarranty customers. If the manufacturer, distributor or importer finds that the dealer’s hourly rate or the amount for parts has decreased, the manufacturer, distributor or importer may reduce the dealer’s compensation under this subsection prospectively.

(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 dealer’s 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) Treat as approved any claim that a manufacturer, distributor or importer did not approve or disapprove within 30 days after the manufacturer, distributor or importer received the claim and pay or credit the dealer for the claim within 60 days after receiving the claim; and

(d) Notify the dealer in writing of the manufacturer’s, distributor’s or importer’s grounds for disapproving a claim.

(5) 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 dealer’s 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 dealer’s claim, if the dealer resubmits the claim in compliance with the manufacturer’s, distributor’s or importer’s claim processing procedure within 45 days after the manufacturer, distributor or importer initially denies or charges back the claim. [1991 c.609 § 3; 1999 c.660 § 5; 2013 c.329 § 3; 2015 c.584 § 4]

[1980 c.3 § 5; repealed by 1991 c.609 § 4]