Auto dealers seek more leverage in their relationship with manufacturers

Minnesota’s auto dealers, who think manufacturers aren’t reimbursing them enough for recall and warranty repairs, could benefit from a bill passed 118-4 by the House Monday.

Rep. Bob Vogel

Sponsored by Rep. Bob Vogel (R-Elko New Market), HF740 would make a number of changes to regulations governing the manufacturer-dealer relationship, including labor and parts reimbursement, and would expand the law overseeing unfair practices. The bill now goes to the Senate where Sen. Bill Ingebrigtsen (R-Alexandria) is the sponsor.

“[The bill] is not intended to break new ground, rather it’s to add more definition to what already exists in statutes so manufacturers and dealers can have more predictability in their operations and find it easier to comply with a law that has existed for more than 35 years,” Vogel said.

The bill would make it more difficult for automakers to refuse to reimburse franchisees during parts replacements because of improper paperwork and would reduce the cost to dealerships for the manufacturer-provided parts covered by warranties.  

WATCH Full video of Monday's House Floor session on YouTube

Asked by Rep. Tina Liebling (DFL-Rochester) how the bill, which addresses what she called a “kind of a fight between manufacturers and local dealers, will affect consumers, Vogel said consumers would be better off because dealers, armed with more money from reimbursements, would be more competitive.

During the committee process, Amber Backhaus, government affairs director for the Minnesota Automobile Dealers Association, said the reimbursement rate has “eroded,” costing local dealers too much money. The manufacturers contend, however, that “everything in the bill” is a concession from them to the dealers.

“We can’t give any more,” said David Bright, an attorney representing the Alliance of Auto Manufacturers.