Illinois Compiled Statutes
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815 ILCS 710/6
(815 ILCS 710/6)
(from Ch. 121 1/2, par. 756)
Warranty agreements; claims; approval; payment; written
(a) Every manufacturer, distributor, wholesaler, distributor branch
or division, factory branch or division, or wholesale branch or division
shall properly fulfill any warranty agreement and adequately and fairly
compensate each of its motor vehicle dealers for labor and parts.
(b) Adequate and fair compensation requires the manufacturer to pay each dealer no less than the amount the retail customer pays for the same services with regard to rate and time.
Any time guide previously agreed to by the manufacturer and the dealer for extended warranty repairs may be used in lieu of actual time expended. In the event that a time guide has not been agreed to for warranty repairs, or said time guide does not define time for an applicable warranty repair, the manufacturer's time guide shall be used, multiplied by 1.5.
In no event shall such compensation fail to include full
compensation for diagnostic work, as well as repair service, labor, and
parts. Time allowances for the diagnosis and performance of warranty
work and service shall be no less than charged to retail customers
for the same work to be performed.
No warranty or factory compensated repairs shall be excluded from this requirement, including recalls or other voluntary stop-sell repairs required by the manufacturer. If a manufacturer is required to issue a recall, the dealer will be compensated for labor time as above stated.
Furthermore, manufacturers shall pay the dealer the same effective labor rate (using the 100 sequential repair orders chosen and submitted by the dealer less simple maintenance repair orders) that the dealer receives for customer-pay repairs. This requirement includes vehicle diagnostic times for all warranty repairs. Additionally, if a technician is required to communicate with a Technical Assistance Center/Engineering/or some external manufacturer source in order to provide a warranty repair, the manufacturer shall pay for the time from start of communications (including hold time) until the communication is complete.
The dealer may submit a request to the manufacturer for warranty labor rate increases a maximum of once per calendar year.
A claim made by a franchised motor vehicle dealer for compensation under this Section shall be either approved or disapproved within 30 days after the claim is submitted to the manufacturer in the manner and on the forms the manufacturer reasonably prescribes. An approved claim shall be paid within 30 days after its approval. If a claim is not specifically disapproved in writing or by electronic transmission within 30 days after the date on which the manufacturer receives it, the claim shall be considered to be approved and payment shall follow within 30 days.
In no event shall compensation to a motor
vehicle dealer for labor times and labor rates be less than the rates charged by such
dealer for like service to retail customers for nonwarranty service and
repairs. Additionally, the manufacturer shall reimburse the dealer for any parts provided in satisfaction of a warranty at the prevailing retail price charged by that dealer for the same parts when not provided in satisfaction of a warranty; provided that such dealer's prevailing retail price is not unreasonable when compared with that of the holders of motor vehicle franchises from the same manufacturer for identical parts in the geographic area in which the dealer is engaged in business.
There shall be no reduction in payments due to preestablished market norms or market averages.
Manufacturers are prohibited from establishing restrictions or limitations of customer repair frequency due to failure rate indexes or national failure averages.
No debit reduction or charge back of any item on a warranty repair order may be made absent a finding of fraud or illegal actions by the dealer.
A warranty claim timely made shall not be deemed invalid solely because unavailable parts cause additional use and mileage on the vehicle.
If a manufacturer imposes a recall or stop sale on any new vehicle in a dealer's inventory that prevents the sale of the vehicle, the manufacturer shall compensate the dealer for any interest and storage until the vehicle is repaired and made ready for sale.
Manufacturers are not permitted to impose any form of cost recovery fees or surcharges against a franchised auto dealership for payments made in accordance with this Section.
All claims, either original or resubmitted, made by motor vehicle
dealers hereunder and under Section 5 for such labor and parts shall be either
approved or disapproved within 30 days following their submission. All
approved claims shall be paid within 30 days following their approval. The
motor vehicle dealer who submits a claim which is disapproved shall be notified
in writing of the disapproval within the same period, and each such notice
shall state the specific grounds upon which the disapproval is based. The
motor vehicle dealer shall be permitted to correct and resubmit such
disapproved claims within 30 days of receipt of disapproval. Any claims not
specifically disapproved in writing within 30 days from their submission shall
be deemed approved and payment shall follow within 30 days. The manufacturer
or franchiser shall have the right to require reasonable documentation for
claims and to audit such claims within a one year period from the date the
claim was paid or credit issued by the manufacturer or franchiser, and to
charge back any false or unsubstantiated claims. The audit and charge back
provisions of this Section also apply to all other incentive and reimbursement
programs for a period of one year after the date the claim was paid or credit issued by the manufacturer or franchiser. However, the manufacturer retains the
right to charge back any fraudulent claim if the manufacturer establishes in
a court of competent jurisdiction in this State that the claim is fraudulent.
(c) The motor vehicle franchiser shall not, by agreement, by restrictions
upon reimbursement, or otherwise, restrict the nature and extent of services to
be rendered or parts to be provided so that such restriction prevents the motor
vehicle franchisee from satisfying the warranty by rendering services in a good
and workmanlike manner and providing parts which are required in accordance
with generally accepted standards. Any such restriction shall constitute a
(d) For the purposes of this Section, the "prevailing retail price
charged by that dealer for the same parts" means the price paid by
the motor vehicle franchisee for parts, including all shipping and other
charges, multiplied by the sum of 1.0 and the franchisee's average percentage
markup over the price paid by the motor vehicle franchisee for parts purchased
by the motor vehicle franchisee from the motor vehicle franchiser and sold at
retail. The motor vehicle franchisee may establish average percentage markup
under this Section by submitting to the motor vehicle franchiser 100 sequential
customer paid service repair orders or 90 days of customer paid service repair
orders, whichever is less, covering repairs made no more than 180 days before
the submission, and declaring what the average percentage markup is. The
average percentage markup so declared shall go into effect 30 days following
the declaration, subject to audit of the submitted repair orders by the motor
vehicle franchiser and adjustment of the average percentage markup based on
that audit. Any audit must be conducted within 30 days following the
declaration. Only retail sales not involving warranty repairs, parts covered
by subsection (e) of this Section, or parts supplied for routine vehicle
maintenance, shall be considered in calculating average percentage markup. No
motor vehicle franchiser shall require a motor vehicle franchisee to establish
average percentage markup by a methodology, or by requiring information, that
is unduly burdensome or time consuming to provide, including, but not limited
to, part by part or transaction by transaction calculations. A motor vehicle
franchisee shall not request a change in the average percentage markup more
than twice in one calendar year.
(e) If a motor vehicle franchiser supplies a part or parts for use in a
repair rendered under a warranty other than by sale of that part or parts to
the motor vehicle franchisee, the motor vehicle franchisee shall be entitled to
compensation equivalent to the motor vehicle franchisee's average percentage
markup on the part or parts, as if the part or parts had been sold to the motor
vehicle franchisee by the motor vehicle franchiser. The requirements of this
subsection (e) shall not apply to entire engine assemblies, propulsion engine assemblies, including electric vehicle batteries, and entire transmission assemblies. In the case of those assemblies, the motor vehicle franchiser shall reimburse the motor vehicle franchisee up to and including 30% of what the motor vehicle franchisee would have paid the motor vehicle franchiser for the assembly if the assembly had not been supplied by the franchiser other than by the sale of that assembly to the motor vehicle franchisee.
(f) The obligations imposed on motor vehicle franchisers by this Section
shall apply to any parent, subsidiary, affiliate, or agent of the motor vehicle
franchiser, any person under common ownership or control, any employee of the
motor vehicle franchiser, and any person holding 1% or more of the shares of
any class of securities or other ownership interest in the motor vehicle
franchiser, if a warranty or service or repair plan is issued by that person
instead of or in addition to one issued by the motor vehicle franchiser.
(Source: P.A. 102-232, eff. 1-1-22; 102-669, eff. 11-16-21