Franchise laws are set to be reformed in several states, including California, revising factory reimbursements for warranty work. Brian Maas is the President of the California New Car Dealers Association (CNCDA), where he keeps careful track of the massive region’s catalytic car market. On this episode of Inside Automotive, Maas joins host Jim Fitzpatrick to discuss these laws and what they could mean for retail automotive at large.
Maas explains what his association has been working towards in California, in conjunction with several other states. Presently, when OEMs pay for maintenance costs resulting from poor manufacturing or recalls, as required by law, the payment to the dealer or technician is calculated based on labor and time spent. However, the data suggests that automakers, without technically breaking any franchise laws, have continually under-estimated the length of time mechanics spend making repairs, thereby failing to pay for the full value of the service. Up till now, he argues, they have managed to escape legal repercussions since they are allowed to set time guidelines for work orders as they see fit.
The CNCDA is seeking to restructure California’s franchise laws based on a system used in Montana, which would allow dealers to set the timeframe for repairs based on the duration of customer orders, taking away the car maker’s right to enforce their own guidelines. Although the OEMs have argued that such a system would be inaccurate and raise the price of consumer repairs, Maas notes that these arguments make little sense when compared against data. For one, he notes that automakers often adjust their time estimates down directly before a recall is initiated, placing doubt on the legitimacy of OEM guidelines. Furthermore, Since the price matches what consumers would normally pay, the repair value has an objective metric to base calculations on, with costs fluctuating with the market rather than at the manufacturer’s discretion.
Although franchise laws are meant to protect the interests of both OEMs and their business partners, the two groups have often been placed at odds. Transparency between both parties is essential for the system to work, and both dealers and automakers should push for fair and balanced regulations which encourage openness and honesty in retail automotive.
