(a) The manufacturer must replace the motor vehicle with a comparable motor vehicle or accept return of the vehicle from the consumer and refund to the consumer the full purchase price if:

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Terms Used In Tennessee Code 55-24-103

  • Code: includes the Tennessee Code and all amendments and revisions to the code and all additions and supplements to the code. See Tennessee Code 1-3-105
  • Consumer: means the purchaser, other than for purposes of resale, or the lessee of a motor vehicle, any person to whom the motor vehicle is transferred during the duration of an express warranty applicable to the motor vehicle, and any other person entitled by the terms of the warranty to enforce the obligations of the warranty. See Tennessee Code 55-24-101
  • Dealer: means every person engaged in the business of buying, selling or exchanging vehicles of a type required to be registered and who has an established place of business for that purpose in this state. See Tennessee Code 55-8-101
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Manufacturer: means any person who manufactures or assembles new or unused motor vehicles or, in the case of motor vehicles not manufactured in the United States, the importer of the motor vehicle. See Tennessee Code 55-24-101
  • Motor vehicle: includes a motorcycle, as defined in §. See Tennessee Code 55-24-101
  • Substantially impair: means to render a motor vehicle unreliable or unsafe for normal operation or to reduce its resale market value below the average resale value for comparable motor vehicles. See Tennessee Code 55-24-101
  • Vehicle: means every device in, upon or by which any person or property is or may be transported or drawn upon a highway, excepting devices used exclusively upon stationary rails or tracks. See Tennessee Code 55-8-101
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(1) The nonconformity, defect or condition substantially impairs the motor vehicle; and
(2) The manufacturer, its agent or authorized dealer is unable to conform the motor vehicle to any applicable express warranty after a reasonable number of attempts.
(b) For purposes of this section:

(1) “Collateral charges” means manufacturer-installed or agent-installed items or service charges, credit life and disability insurance charges, sales taxes, title charges, license fees, registration fees, any similar governmental charges and other reasonable expenses incurred for the purchase of the motor vehicle;
(2) “Comparable motor vehicle” means a new motor vehicle of comparable worth to the same make and model with all options and accessories, with appropriate adjustments being allowed for any model year differences;
(3) “Full purchase price” means the actual cost paid by the consumer, including all collateral charges, less a reasonable allowance for use; and
(4)

(A) “Reasonable allowance for use” means that amount directly attributable to use by a consumer prior to the consumer’s first report of the nonconformity to the manufacturer, agent or dealer and during any subsequent period when the vehicle is not out of service by reason of repair, plus a reasonable amount for any damage not attributable to normal wear;
(B) A reasonable allowance for use shall not exceed one-half (1/2) of the amount allowed per mile by the internal revenue service, as provided by regulation, revenue procedure or revenue ruling promulgated pursuant to § 162 of the Internal Revenue Code (26 U.S.C. § 162), for use of a personal vehicle for business purposes, plus an amount to account for any loss to the fair market value of the vehicle resulting from damage beyond normal wear and tear, unless the damage resulted from nonconformity to an express warranty.
(c) Refunds shall be made to the consumer, and lienholder, if any, as their interests appear. This section shall not affect the interests of a lienholder; unless the lienholder consents to the replacement of the lien with a corresponding lien on the vehicle accepted by the consumer in exchange for the vehicle having a nonconformity, the lienholder shall be paid in full the amount due on the lien, including interest and other charges, before an exchange of automobiles or a refund to the consumer is made.
(d) In instances where a vehicle that was financed by the manufacturer or its subsidiary or agent is replaced under this section, the manufacturer, subsidiary or agent shall not require the consumer to enter into any refinancing agreement that would create any financial obligations upon the consumer beyond those imposed by the original financing agreement.
(e) It shall be an affirmative defense to any claim under this chapter that:

(1) An alleged nonconformity does not substantially impair a motor vehicle; or
(2) A nonconformity is the result of abuse, neglect or unauthorized modifications or alterations of a motor vehicle by a consumer.
(f) Funds held by a manufacturer or manufacturer’s distributor that are necessary to perform the manufacturer’s or manufacturer’s distributor’s obligations to consumers under this section are trust funds held in trust by the manufacturer or manufacturer’s distributor for the benefit of any consumer who is entitled to the protections and rights afforded under this section.
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