Alert – California Governor Signs AB 179 into Law

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On Saturday, Oct. 12, 2019, California Governor Gavin Newsom signed AB 179 into law, greatly impacting the new motor vehicle franchise system for California new car dealers. The bill, which goes into effect Jan. 1, 2020, provides what is considered an improvement to manufacturer accountability of California’s new motor vehicle franchise laws, stating that dealers should be reasonably compensated for warranty work.

AB 179 establishes a process for how a dealership can demonstrate the retail rates for parts and labor in order to be reimbursed correctly, which could allow dealerships to recoup costs at rates closer to what retail customers pay.

AB 179 also defines how the factory can respond to a request for retail rates, including notification guidelines and timelines. For dealers pursuing the newly established retail reimbursement on warranty work process, the bill establishes protections from adverse actions and manufacturer penalties, including assessing surcharges, limiting vehicle or parts allocations and conducting retaliatory audits. Per the bill, manufacturers within the state are required to pay dealers an amount equal to the franchisee’s retail labor and parts rates for any recall work.

Despite favorable legislation, the process for receiving warranty reimbursement can be complex, including required timelines and the process to demonstrate retail rates. Therefore, such work may require the assistance of a trusted advisor.

For more information about warranty reimbursement, please contact us at info@dhg.com.

About Dealerships

DHG Dealerships is one of the largest professional service teams providing assurance, tax and advisory services to dealers across the country. We collaborate with key industry stakeholders to enhance the insights we bring to our clients and provide them access to valuable resources. For more information, visit dhgdealerships.com.