Nebraska Warranty Reimbursement Law

Section 60-1438. Manufacturer or distributor; warranty obligations; prohibited acts.

(1) Each new motor vehicle manufacturer or distributor shall specify in writing to each of its new motor vehicle dealers licensed in this state the dealer’s obligations for preparation, delivery, and warranty service on its products. The manufacturer or distributor shall compensate the new motor vehicle dealer for warranty service which such manufacturer or distributor requires the dealer to provide, including warranty and recall obligations related to repairing and servicing motor vehicles and all parts and components included in or manufactured for installation in the motor vehicles of the manufacturer or distributor. The manufacturer or distributor shall provide the new motor vehicle dealer with the schedule of compensation to be paid to the dealer for parts, work, and service and the time allowance for the performance of the work and service.

(2)(a) The schedule of compensation shall include compensation for diagnostic work, as well as repair service, parts, and labor. Time allowances for the diagnosis and performance of warranty work and service shall be adequate for a qualified technician to perform the work or service. A franchisor shall not unreasonably deny a written request submitted by a franchisee for modification of a franchisor’s uniform time allowance for a specific warranty repair or unreasonably deny a request submitted by a franchisee for an additional time allowance for diagnostic or repair work on a specific vehicle covered under warranty. Any such request shall include information and documentation reasonably necessary for the franchisor to assess the merits of the franchisee’s request. In the determination of what constitutes reasonable compensation under this section or fleet customers, the principal factors to be given consideration shall be the prevailing wage rates being paid by dealers in the community in which the dealer is doing business, and in no event shall the compensation of the dealer for warranty parts and labor be less than the rates charged by the dealer for like parts and service to retail. In determining prevailing wage rates, the rate of compensation for labor for that portion of repair orders for all recommended maintenance services shall not be used, including maintenance services relating to the following: Oil, filters, any fluids, brake pads, brake discs, brake drums, spark plugs, wiper blades, tire repair, or tire replacement.

(b)(i) For purposes of this section, compensation for parts may be determined by calculating the price paid by the dealer for parts, including all shipping and other charges, multiplied by the sum of one and the dealer’s average percentage markup over the price paid by the dealer for parts purchased by the dealer from the manufacturer and sold at retail. The dealer may establish average percentage markup by submitting to the manufacturer one hundred sequential customer-paid service repair orders or ninety days of customer-paid service repair orders, whichever is less, covering repairs made no more than one hundred eighty days before the submission and declaring what the average percentage markup is. Within thirty days after receipt of the repair orders, the manufacturer may audit the submitted repair orders and approve or deny approval of the average percentage markup based on the audit. The average percentage markup shall go into effect forty-five days after the approval based on that audit. If the manufacturer denies approval of the average percentage markup declared by the dealer, the dealer may file a complaint with the board. The manufacturer shall have the burden to prove that the denial was made pursuant to the Motor Vehicle Industry Regulation Act. If the board determines that the denial was not reasonable, the denial shall be deemed a violation of the Motor Vehicle Industry Regulation Act subject to the enforcement procedures of the act. When determining compensation for parts, only retail sales that do not involve warranty repairs shall be used and the rate of markup for all parts supplied on repair orders for recommended maintenance services shall not be used, including maintenance services relating to the following: Oil, filters, any fluids, brake pads, brake discs, brake drums, spark plugs, wiper blades, tire repair, or tire replacement. No manufacturer shall require a dealer to establish average percentage markup by a methodology, or by requiring information, that is unduly burdensome or time consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations. A dealer shall not request a change in the average percentage markup more than twice in one calendar year.

(ii)(A) If a franchisor furnishes, or causes to be furnished, a part to a dealer at no cost or at a reduced cost for use in performing warranty work, the franchisor shall compensate the dealer for the dealer’s cost of the part, if any, plus an amount equal to the markup on the dealer’s part. Such amount shall be multiplied by the fair wholesale value of the part.

(B) For purposes of subdivision (b)(ii) of this subsection, fair wholesale value of the part means the greatest of the following:

(I) The amount the dealer paid for the part;

(II) The cost of the part, at the time the part was furnished, in a price schedule of the franchisor; and

(III) The cost of a substantially identical part, at the time the part was furnished, in a price schedule of the franchisor.

(c)(i) A manufacturer or distributor may request up to one hundred additional repair orders different from those provided under subdivision (2)(b) of this section from a dealer of the manufacturer or distributor to determine if such dealer’s average percentage markup rate, retail labor rate, or both are materially different than the rates such dealer has declared with the manufacturer or distributor.

(ii) The manufacturer or distributor may adjust the subsequent rates paid by the manufacturer or distributor to such dealer if the manufacturer or distributor determines that such dealer’s rates charged to customers for nonwarranty work are less than the rates currently being paid by the manufacturer or distributor to such dealer for warranty work. The manufacturer or distributor shall have thirty days from receiving all requested additional repair orders to rebut the new vehicle dealer’s labor rate, average percentage markup rate, or both.

(iii) The additional repair orders specified in subdivision (2)(c) (i) of this section shall be:

(A) From a ninety-day period selected by the manufacturer or distributor within the most recent previous twelve-month period; and

(B) Repair orders selected by the dealer.

(iv) A request for repair orders under this subdivision (c) shall not be made within twelve months after any prior request under this subdivision (c).

(d) Nothing in this section prohibits a dealer and manufacturer or distributor from reaching an agreement on a mutually acceptable retail labor rate or average percentage markup rate.

(3) [Irrelevant]

(4) & (5) [Individual claims]

(6) The warranty obligations set forth in this section shall also apply to any manufacturer of a new motor vehicle transmission, engine, or rear axle that separately warrants its components to customers.

(7) This section does not apply to recreational vehicles.

Pertinent excerpts from sec. 60-1441:

(1) A manufacturer, distributor, factory branch, or distributor branch shall compensate its new motor vehicle dealers for all labor and parts required by the manufacturer, distributor, factory branch, or distributor branch to perform recall repairs on used motor vehicles. Compensation for recall repairs shall be reasonable. (5) Subject to the audit provisions of subsection (5) of section 60-1438, it shall be a violation of this section for a manufacturer, distributor, factory branch, or distributor branch to reduce the amount of compensation otherwise owed to an individual new motor vehicle dealer, whether through a chargeback, removal of the

individual new motor vehicle dealer from an incentive program, or reduction in amount owed under an incentive program solely because the new motor vehicle dealer has submitted a claim for reimbursement under this section. This subsection does not apply to an action by a manufacturer, distributor, factory branch, or distributor branch that is applied uniformly among all new motor vehicle dealers of the same line-make in the state.

(6) Any reimbursement claim made by a new motor vehicle dealer pursuant to this section for recall remedies or repairs, or for compensation where no part or repair is reasonably available and the used motor vehicle is subject to a stop-sale or do-not-drive order, shall be subject to the same limitations and requirements as a warranty reimbursement claim made under section 60-1438. In the alternative, a manufacturer, distributor, factory branch, or distributor branch may compensate its franchised new motor vehicle dealers under a national recall compensation program if the compensation under the program is equal to or greater than that provided under subsection (1) of this section; or the new motor vehicle dealer and the manufacturer, distributor, factory branch, or distributor branch otherwise agree.

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.