§ 49-1626 — PAYMENT FOR DELIVERY PREPARATION AND WARRANTY SERVICE

(1) Each manufacturer or distributor shall specify in writing to each of its dealers licensed in this state, the dealer’s obligations for predelivery preparation and warranty service on its products, compensate the dealer for service required of the dealer by the manufacturer or distributor, provide the dealer a schedule of compensation to be paid the dealer for parts, work and service in connection with its products, and the time allowance for the performance of that work and service.
(2) In no event shall a schedule of compensation fail to include reasonable compensation for diagnostic work, as well as repair service and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed.
(3) It is unlawful for a new vehicle manufacturer or distributor to fail to perform any warranty obligations or to fail to include in written notices of factory recalls to new vehicle owners and dealers, the expected date by which necessary parts and equipment will be available to dealers for the correction of those defects, or to fail to compensate any of the dealers in this state for repairs affected by recall.
(4) A vehicle dealer may submit a warranty claim to a manufacturer or distributor if a warranty defect is identified and documented prior to the expiration of a manufacturer’s or distributor’s warranty:
(a) While a franchise agreement is in effect; or
(b) After the termination of a franchise agreement if the claim is for work performed while the franchise agreement was in effect.
(5) All claims made by dealers pursuant to this section for labor and parts shall be paid within thirty (30) days following their approval. All claims shall be either approved or disapproved within thirty (30) days after their receipt, on forms and in the manner specified by the manufacturer or distributor, and any claim not specifically disapproved in writing within thirty (30) days after receipt shall be construed to be approved and payment must follow within thirty (30) days.
(6) A dealer whose claim has been denied due to failure to comply with a specific claim processing requirement, such as a clerical error or other administrative technicality that does not put into question the legitimacy of the claim, may resubmit the corrected claim as provided for in subsection (7) of this section.
(7) A dealer shall have thirty (30) days from the date of notification by a manufacturer or distributor of a denial of a claim or a charge-back to the dealer to resubmit a claim for payment or compensation if the claim was denied for any of the reasons described in subsection (6) of this section, whether the charge-back was a direct or an indirect transaction, unless a longer period of time is provided for by the manufacturer or distributor.
(8) Notwithstanding the terms of a franchise agreement or other contract with a dealer and except as provided in subsection (9) of this section, after the expiration of one (1) year after the date of payment of the warranty claim, a manufacturer or distributor shall not audit the records of a motor vehicle dealer to determine compliance with the terms of a warranty claim. Provided however, that the manufacturer or distributor may audit the dealer for fraudulent claims during any period for which an action for fraud may be commenced.
(9) A manufacturer or distributor may make charge backs to a motor vehicle dealer if, after completion of an audit of the dealer’s records, the manufacturer or distributor can show, by a preponderance of the evidence, that:
(a) With respect to a warranty claim, the repair work was improperly performed in a substandard manner or was unnecessary; or
(b) The claim is unsubstantiated in accordance with the manufacturer or distributor’s requirements.
(10) Nothing in subsection (8) or (9) of this section shall prevent a manufacturer or distributor from instituting a legal action for fraud as provided for in section 5-218, Idaho Code.
(11) The schedule of compensation for warranty parts and labor shall not be less than the rates charged by the dealer for similar service to retail customers for nonwarranty parts and labor; provided that such dealer’s retail rate is not unreasonable when compared with other motor vehicle franchises from the same or competitive lines for similar merchandise or services in the geographic area in which the dealer is engaged in business.
(a) For purposes of determining the schedule of compensation paid to a dealer by the manufacturer or distributor, the following shall not be considered in determining amounts charged by the dealer to retail customers:
(i) Menu-priced parts or services;
(ii) Repairs for manufacturer or distributor special events;
(iii) Repairs covered by any insurance or service contract;
(iv) Vehicle emission or safety inspections required by federal, state or local governments;
(v) Parts sold at wholesale or repairs performed at wholesale, which shall include any sale or service to a fleet of vehicles;
(vi) Engine assemblies and transmission assemblies;
(vii) Routine maintenance not covered under any retail customer warranty including, but not necessarily limited to, maintenance involving fluids, filters and belts not provided in the course of repairs;
(viii) Nuts, bolts, fasteners and similar items that do not have an individual part number;
(ix) Tires; or
(x) Vehicle reconditioning.
(b) The dealer shall establish their schedule of compensation under the provisions of this section by submitting to the manufacturer or distributor one hundred (100) sequential customer paid service repair orders or ninety (90) days of customer paid service repair orders, whichever is less, covering repairs made no more than one hundred eighty (180) days before the submission of such customer paid service repair orders and declaring the schedule of compensation. The new schedule of compensation shall take effect within ninety (90) days after the initial submission to the manufacturer or distributor and shall be presumed to be fair and reasonable. However, within thirty (30) days following receipt of the declared schedule of compensation from the dealer, the manufacturer or distributor may make reasonable requests for additional information supporting the declared schedule of compensation. The ninety (90) day time frame in which the manufacturer or distributor shall make the schedule of compensation effective shall commence following receipt from the dealer of any reasonably requested supporting information. No manufacturer or distributor shall require a motor vehicle dealer to establish a schedule of compensation by any other methodology or require supportive information that is unduly burdensome or time consuming to provide including, but not limited to, part by part or transaction by transaction calculations. The dealer shall not request a change in the schedule of compensation more than once every twelve (12) months.
(12) It is unlawful for a manufacturer or distributor or subsidiary to own, operate or control, either directly or indirectly, a motor vehicle warranty or service facility located in this state except on an emergency or interim basis or if no qualified applicant has applied for appointment as a dealer in a market previously served by a motor vehicle dealer of that manufacturer or distributor’s line make except as provided for in section 49-1613 (3)(g), Idaho Code.
(13) A manufacturer may not otherwise recover all or any portion of its costs for compensating its dealers licensed in this state for warranty parts and labor either by reduction in the amount due to the dealer or by separate charge, surcharge or other imposition; provided however, a manufacturer or distributor shall not be prohibited from increasing prices for vehicles or parts in the normal course of business.
(14) All procedures and protections afforded to a motor vehicle dealer under the provisions of this section shall be available to a recreational vehicle dealer. However, the schedule of compensation afforded under subsection (11) of this section shall not apply to compensation for parts, systems, fixtures, appliances, furnishings, accessories and features of a recreational vehicle that are designed, used and maintained primarily for nonvehicular residential purposes.

Legislative History

[49-1626, added 1988, ch. 265, sec. 399, p. 784; am. 1997, ch. 312, sec. 2, p. 925; am. 2011, ch. 327, sec. 4, p. 959.]