§ 650.158 — Predelivery preparation and warranty service; notice to dealers; schedule of compensation; determination; claims by dealers; audits of dealers’ claims

Oregon § 650.158

• Jurisdiction: Oregon
• Vol.: 16
• Title 50: Trade Regulations and Practices
• Ch. 650: Franchise Transactions

Text

(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:
(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 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 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 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 manufacturer’s, distributor’s or importer’s 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 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) A dealer’s 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 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) Not more than 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 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 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. If the manufacturer, distributor or importer does not contest the dealer’s 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 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) Allow a dealer to correct and resubmit a claim for labor or parts within 30 days after receiving the manufacturer’s, distributor’s or importer’s 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 manufacturer’s, distributor’s or importer’s grounds for disapproving a claim.
(5) A manufacturer, distributor or importer may:
(a) Require reasonable documentation as substantiation for a dealer’s claim under this section;
(b) Audit a dealer’s 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 dealer’s 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 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.
(c) Deny a dealer’s 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 dealer’s 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 manufacturer’s, distributor’s or importer’s 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 dealer’s 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 manufacturer’s, distributor’s or importer’s 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 manufacturer’s, distributor’s or importer’s current parts catalog.

Legislative History

1991 c.609 §3; 1999 c.660 §5; 2013 c.329 §3; 2015 c.584 §4; 2025 c.50 §5