STATE LEGISLATIVE RECAP

SB 23-078 was CADA's effort to amend the 2018 Warranty Reimbursement bill. 

The 2018 bill required that OEM's reimburse dealers for warranty work at a rate similar to what they received for customer pay work.  It then provided a multi-step formula to prove what your customer pay rate was.  As a result of protracted negotiations with the Alliance of Automotive Innovation (Manufacturers) , there was one catchall provision that complicated the intent of bringing parity to warranty rates.  What CADA refers to as the 'reasonableness' provision, was text that would allow manufacturers to amend a dealer's submission down when it was not reasonably in parity with other line make dealers in the state.  Therefore, even if you could prove your customer pay rate, you may get less per hour for warranty work based on what your competition was being paid.

CADA first proposed not only striking the reasonableness provision from the statute, but also establishing reference to independent time guides for the number of hours for which a dealer is compensated for a specified job.  The independent time guides has always been a 3rd rail for manufacturers, who are the sole determinants of the appropriate time for repairs of a well maintained car in a sterile environment.  

Through urging of legislators to come to an agreement, and negotiations with our manufacturers' representatives, CADA ultimately agreed to drop the independent time guides provision in exchange for striking the reasonableness provisions.  Under this new heirarchy, the only reason for which an OEM may decline a dealer warranty submission is 'material inaccuracy' in the calculation of the rate.  We will continue to watch the next series of time guides to ensure that the time for each job is not modified down to account for the higher rate.

We are grateful to our long-time friends, Senators Fields and Van Winkle, and Representatives Lynch and Jodeh for ushering this legislation through the legislative process.

HB23-1181 was the culmination of a several year conversation with the Colorado Attorney General over how dealers may charge consumers for GAP waivers.

Since the mid-1990s, Rule 8(k) of the Colorado Consumer Credit Code has dictated that the maximum allowable charge for GAP waivers is $300 or 2% of the amount financed, whichever is greater.  As decades have passed and inflation taken its toll, some dealers are finding that the cost to generate a waiver is exceeding the allowable charge to consumers.  As a result, GAP was beginning to disappear from the marketplace.

This bill, sponsored by Representative Trish Mauro (Pueblo), changed many of the mechanisms guiding the provision of GAP.  Most important to dealers, the maximum allowable charge was moved from regulation into statute.  It was enacted at $600 or 4% of the amount financed.  This will allow dealers to sell GAP waivers for years into the future.  In addition, the loan-to-value ratio was changed from 125% to 150%.  This recognizes the fluctuating value of vehicles during times of inventory shortages and does not preclude those consumers with negative equity from purchasing GAP on a vehicle purchase.

We are working with the Attorney General's office to develop an education session on the changes to the GAP policies.  We hope to go live this summer with a webinar where you may be able to ask questions directly to the market regulators.