Read the full stored bill text
H8213A
2026 -- H 8213 SUBSTITUTE A
========
LC005026/SUB A
========
STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
____________
A N A C T
RELATING TO MOTOR AND OTHER VEHICLES -- REGULATION OF BUSINESS
PRACTICES AMONG MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND
DEALERS
Introduced By:
Representatives Serpa, Fellela, and Read
Date Introduced:
February 27, 2026
Referred To:
House Corporations
It is enacted by the General Assembly as follows:
1
SECTION 1. Sections 31-5.1-4.1, 31-5.1-4.2, 31-5.1-5, 31-5.1-6, 31-5.1-6.1, 31-5.1-8, 31-
2
5.1-11, 31-5.1-18, 31-5.1-19 and 31-5.1-21 of the General Laws in Chapter 31-5.1 entitled
3
"Regulation of Business Practices Among Motor Vehicle Manufacturers, Distributors, and
4
Dealers" are hereby amended to read as follows:
5
31-5.1-4.1. Dealership — Survivorship.
6
(a)(1) Right of designated family member to succeed in dealership ownership. Any owner
7
of a new motor vehicle dealership may appoint by will or any other written instrument a designated
8
family member to succeed in the ownership interest of that owner in the new motor vehicle
9
dealership.
10
(2) Unless there exists good cause for refusal to honor that succession on the part of the
11
manufacturer
,
or
distributor
, or factory branch
, any designated family member of a deceased or
12
incapacitated owner of a new motor vehicle dealer may succeed to the ownership of the new motor
13
vehicle dealer under the existing franchise provided that:
14
(i) The designated family member gives the manufacturer
,
or
distributor
, or factory branch
15
written notice of his or her intention to succeed to the ownership of the new motor vehicle dealer
16
within one hundred twenty (120) days of the owner’s death or incapacity;
17
(ii) The designated family member agrees to be bound by all the terms and conditions of
18
the franchise; and
1
(iii) The designated family member shall not operate the dealership unless he or she meets
2
the then-current criteria generally applied by the manufacturer
,
or
distributor
, or factory branch
in
3
qualifying dealer-operators.
4
(3) The manufacturer
,
or
distributor
, or factory branch
may request, and the designated
5
family member shall provide, promptly upon the request, personal and financial data that is
6
reasonably necessary to determine whether the succession should be honored.
7
(b) Refusal to honor succession to ownership — Notice required.
8
(1) If a manufacturer
,
or
distributor
, or factory branch
believes that good cause exists for
9
refusing to honor the succession to the ownership of a new motor vehicle dealer by a family member
10
of a deceased or incapacitated owner of a new motor vehicle dealer under the existing franchise
11
agreement, the manufacturer
,
or
distributor
, or factory branch
may, not more than sixty (60) days
12
following receipt of:
13
(i) Notice of the designated family member’s intent to succeed to the ownership of the new
14
motor vehicle dealer; or
15
(ii) Any personal or financial data which it has requested, serve upon the designated family
16
member and the department of revenue notice of its refusal to honor the succession and of its intent
17
to discontinue the existing franchise with the dealer no sooner than ninety (90) days from the date
18
the notice is served.
19
(2) The notice must state the specific grounds for the refusal to honor the succession and
20
of the manufacturer’s
,
or
distributor's
, or factory branch's
intent to discontinue the existing
21
franchise with the new motor vehicle dealer no sooner than ninety (90) days from the date the notice
22
is served.
23
(3) If notice of refusal and discontinuance is not timely served upon the family member,
24
the franchise shall continue in effect subject to termination only as otherwise permitted by this
25
chapter.
26
(c) Written designation of succession unaffected. This chapter does not preclude the owner
27
of a new motor vehicle dealership from designating any person as the owner’s successor by written
28
instrument filed with the manufacturer
,
or
distributor
, or factory branch
and, in the event there is a
29
conflict between that written instrument and the provisions of this section, the written instrument
30
shall govern.
31
31-5.1-4.2. Establishing new dealerships and relocating existing dealerships.
32
(a) In the event that a manufacturer
, distributor or factory branch
seeks to enter into a
33
franchise establishing an additional new motor vehicle dealership, adding an additional location for
34
an existing new motor vehicle dealership, or relocating an existing new motor vehicle dealership
LC005026/SUB A - Page 2 of 14
1
within or into a relevant market area where the same line or make is then represented, except when
2
the corporation operating the new motor vehicle dealership contains one or more officers who were
3
also officers of a dealership operating at the same location as the new motor vehicle dealership
4
immediately prior to the establishment of the new motor vehicle dealership, the manufacturer
,
5
distributor or factory branch
shall in writing by certified mail first notify the department and each
6
new motor vehicle dealer in the same line or make in the relevant market area of the intention to
7
establish an additional dealership to add an additional location for an existing new motor vehicle
8
dealership, or to relocate an existing dealership within or into that market area. Within thirty (30)
9
days of receiving notice or within thirty (30) days after the end of any appeal procedure provided
10
by the manufacturer
, distributor or factory branch
, any affected new motor vehicle dealership may
11
file with the department a protest to the establishing or relocating of the new motor vehicle
12
dealership or adding an additional location for an existing new motor vehicle dealership. When a
13
protest is filed, the department shall inform the manufacturer
, distributor or factory branch
that a
14
timely protest has been filed, and that the manufacturer
, distributor or factory branch
shall not
15
establish or relocate the proposed new motor vehicle dealership or add the proposed additional
16
location for an existing new motor vehicle dealership until the department has held a hearing, nor
17
until the department has determined that there is good cause for not permitting the new motor
18
vehicle dealership. For the purposes of this section, the reopening in a relevant market area of a
19
new motor vehicle dealership shall be deemed the establishment of an additional new motor vehicle
20
dealership.
21
(b) In determining whether good cause has been established for entering into or relocating
22
an additional franchise for the same line or make, or adding an additional location for an existing
23
new motor vehicle dealership, the department shall take into consideration the existing
24
circumstances, including, but not limited to:
25
(1) Permanence of the investment of the existing new motor vehicle dealer(s) in the
26
community;
27
(2) Whether the new motor vehicle dealers of the same line or make in that relevant market
28
area are providing adequate consumer care for the motor vehicles of the line or make in the market
29
area which shall include the adequacy of motor vehicle sales and service facilities, equipment,
30
supply of motor vehicle parts, and qualified service personnel;
31
(3) Whether there is reasonable evidence that after the granting of the new motor vehicle
32
dealership, that the market would support all of the dealerships of that line or make in the relevant
33
market area;
34
(4) Whether it is injurious to the public welfare for an additional new motor vehicle
LC005026/SUB A - Page 3 of 14
1
dealership to be established;
2
(5) The growth or decline in population and new motor vehicle registrations during the past
3
five (5) years in the relevant market area;
4
(6) Whether the manufacturer
, distributor or factory branch
is motivated principally by
5
good faith to establish an additional or new motor vehicle dealer and not by non-economic
6
considerations;
7
(7) Whether the manufacturer
, distributor or factory branch
has denied its existing new
8
motor vehicle dealers of the same line or make the opportunity for reasonable growth, market
9
expansion, or relocation;
10
(8) The reasonably expected or anticipated vehicle market for the relevant market area,
11
including demographic factors such as age of population, income, size class preference, product
12
popularity, retail lease transactions, or other factors affecting sales to consumers in the relevant
13
market area;
14
(9) Growth or decline in population, density of population, and new car registrations in the
15
relevant market area;
16
(10) Distance, travel time, traffic patterns, and accessibility between the existing new
17
dealership of the same new line make and the location of the proposed new or relocated dealership;
18
(11) The amount of business transacted by existing new motor vehicle dealers of the line
19
or make when compared with the amount of business available to them;
20
(12) Whether the existing new motor vehicle dealers of the line or make are receiving
21
vehicles and parts in quantities promised by the manufacturer, factory branch or distributor and on
22
which promised quantities existing new motor vehicle dealers based their investment and scope of
23
operations.
24
(c) Any parties to a hearing by the department concerning the establishing or relocating of
25
a new motor vehicle dealership or adding an additional location for an existing new motor vehicle
26
dealership shall have a right to a review of the decision in a court of competent jurisdiction.
27
(d) At any hearing conducted by the department under this section, the manufacturer or
28
dealer seeking to establish an additional new motor vehicle dealership, relocate an existing new
29
motor vehicle dealership, or add an additional location for an existing new motor vehicle dealership
30
shall bear the burden of proof in establishing that good cause exists for it.
31
(e) Every person, firm or corporation who prior to the retail sale of a motor vehicle,
32
converts or otherwise assembles, installs or affixes a body, cab or special equipment to a chassis or
33
who adds to, subtracts from or modifies a previously assembled or manufactured motor vehicle
34
shall be required to comply with the requirements of this section.
LC005026/SUB A - Page 4 of 14
1
31-5.1-5. Delivery obligations.
2
Every manufacturer
, distributor or factory branch
shall specify to the dealer the delivery
3
and preparation obligations of its motor vehicle dealers prior to delivery of new motor vehicles to
4
retail buyers. A copy of the delivery and preparation obligations of its motor vehicle dealers, and a
5
schedule of the compensation to be paid to its motor vehicle dealers for the work and services they
6
shall be required to perform in connection with the delivery and preparation obligations, shall be
7
filed with the department by every motor vehicle manufacturer
, distributor or factory branch
, and
8
shall constitute the dealer’s only responsibility for product liability as between the dealer and the
9
manufacturer. The compensation as set forth on the schedule shall be in accordance with §§ 6A-2-
10
329 and 31-5.1-6.
11
31-5.1-6. Warranty agreement.
12
(a) Every manufacturer
, distributor or factory branch
shall properly fulfill any warranty
13
agreement and adequately and fairly compensate each of its motor vehicle dealers for labor and
14
parts. In no event shall that compensation fail to include reasonable compensation for diagnostic
15
work, as well as repair service and labor. All claims made by motor vehicle dealers for labor and
16
parts shall be paid in accord with the provisions of this section.
Every manufacturer, distributor or
17
factory branch shall allow not less than ninety (90) days for its new motor vehicle dealers to submit
18
claims for reimbursement for such service required of the dealers by the manufacturer, distributor
19
or factory branch.
Any delay in payment after approval or disapproval that is caused by conditions
20
beyond the reasonable control of the manufacturer
, distributor or factory branch
shall not constitute
21
a violation of this section. Reimbursement for warranty repairs
or
diagnostic
, certified pre-owned
22
warranty or recall that is issued by the manufacturer, distributor, factory branch, common entity,
23
or agent of the manufacturer, distributor, or factory branch
work shall be at the dealer retail rate in
24
effect at the time the warranty repair or diagnostic work is performed. Compensation for parts used
25
in warranty service shall be fair and reasonable, as determined by methods described in subsection
26
(b). Compensation for labor used in warranty service shall be fair and reasonable, as determined by
27
methods described in subsection (c).
28
(b) The retail rate customarily charged by the dealer for parts shall be established by the
29
dealer submitting to the manufacturer
,
or
distributor
, or factory branch
one hundred (100)
30
sequential non-warranty customer-paid service repair orders that contain warranty-like parts, or
31
sixty (60) consecutive days of non-warranty customer-paid service repair orders that contain
32
warranty-like parts, whichever is less, covering repairs made no more than one hundred eighty
33
(180) days before the submission and declaring the average percentage markup. The average of the
34
markup rates shall be presumed to be fair and reasonable, however, a manufacturer
,
or
distributor
,
LC005026/SUB A - Page 5 of 14
1
or factory branch
may, not later than thirty (30) days after submission, rebut that presumption by
2
reasonably substantiating that the rate is unfair and unreasonable in light of the
practices of
3
advertised retail rates charged to retail customers for warranty-like repairs by
all other franchised
4
motor vehicle dealers in the
vicinity
relevant market area
offering the same line-make vehicles. The
5
retail rate shall go into effect thirty (30) days following the declaration, subject to audit of the
6
submitted repair orders by the franchisor and a rebuttal of the declared rate as described above. If
7
the declared rate is rebutted, the manufacturer
,
or
distributor
, or factory branch
shall propose an
8
adjustment of the average percentage markup based on that rebuttal not later than thirty (30) days
9
after submission. If the dealer does not agree with the proposed average percentage markup, the
10
dealer may file a protest with the department not later than thirty (30) days after receipt of that
11
proposal by the manufacturer
,
or
distributor
, or factory branch
. If the protest is filed, the department
12
shall inform the manufacturer
,
or
distributor
, or factory branch
that a timely protest has been filed
13
and that a hearing will be held on the protest. In any hearing held pursuant to this subsection, the
14
manufacturer
,
or
distributor
, or factory branch
shall have the burden of proving that the rate
15
declared by the dealer was unfair and unreasonable as described in this subsection and that the
16
proposed adjustment of the average percentage markup is fair and reasonable pursuant to the
17
provisions of this subsection.
18
(c) The retail rate customarily charged by the dealer for
non-warranty
labor may be
19
established by submitting to the manufacturer
,
or
distributor
, or factory branch
all non-warranty
20
customer-paid service repair orders covering repairs made during the month prior to the submission
21
and dividing the amount of the dealer’s total labor sales by the number of total labor hours that
22
generated those sales.
Compensation for warranty labor shall equal the dealer’s non-warranty labor
23
rate multiplied by the actual time worked by the dealer's technician performing necessary repairs
24
in accordance with the manufacturer, distributor or factory branch's procedures, evidenced by the
25
dealer's submission of the technician's time punch, inclusive of any diagnostic and manufacturer
26
technical assistance time, and any relevant electronic data or records for the warranty repair.
27
Compensation for warranty labor shall be supported by an attestation from the dealer that
28
submission is accurate to the best of the dealer's knowledge.
The average labor rate shall be
29
presumed to be fair and reasonable, provided a manufacturer
,
or
distributor
, or factory branch
may,
30
not later than thirty (30) days after submission, rebut the presumption by reasonably substantiating
31
that the rate is unfair and unreasonable in light of the practices of all other franchised motor vehicle
32
dealers in the vicinity offering the same line-make vehicles. The average labor rate shall go into
33
effect thirty (30) days following the declaration, subject to audit of the submitted repair orders by
34
the franchisor and a rebuttal of the declared rate. If the declared rate is rebutted, the manufacturer
,
LC005026/SUB A - Page 6 of 14
1
or
distributor
, or factory branch
shall propose an adjustment of the average labor rate based on the
2
rebuttal not later than thirty (30) days after submission. If the dealer does not agree with the
3
proposed average labor rate, the dealer may file a protest with the department not later than thirty
4
(30) days after receipt of that proposal by the manufacturer
,
or
distributor
, or factory branch
. If a
5
protest is filed, the department shall inform the manufacturer
,
or
distributor
, or factory branch
that
6
a timely protest has been filed and that a hearing will be held on the protest. In any hearing held
7
pursuant to this subsection, the manufacturer
,
or
distributor
, or factory branch
shall have the burden
8
of proving that the rate declared by the dealer was unfair and unreasonable as described in this
9
subsection and that the proposed adjustment of the average labor rate is fair and reasonable pursuant
10
to the provisions of this subsection.
11
(d) In calculating the retail rate customarily charged by the dealer for parts and labor, the
12
following work shall not be included in the calculation:
13
(1) Repairs for manufacturer
,
or
distributor
, or factory branch
special events, specials, or
14
promotional discounts for retail customer repairs;
15
(2) Parts sold at wholesale;
16
(3) Engine assemblies and transmission assemblies;
17
(4) Routine maintenance not covered under any retail customer warranty, such as fluids,
18
filters, and belts not provided in the course of repairs;
19
(5) Nuts, bolts, fasteners, and similar items that do not have an individual part number;
20
(6) Tires; and
21
(7) Vehicle reconditioning.
22
(e) If a manufacturer
,
or
distributor
, or factory branch
furnishes a part or component to a
23
dealer at no cost, to use in performing repairs under a recall, campaign service action, or warranty
24
repair, the manufacturer
,
or
distributor
, or factory branch
shall compensate the dealer for the part
25
or component in the same manner as warranty parts compensation under this section by
26
compensating the dealer the average markup on the cost for the part or component as listed in the
27
manufacturer’s
,
or
distributor's
, or factory branch's
price schedule less the cost for the part or
28
component.
29
(f) A manufacturer
,
or
distributor
, or factory branch
may not require a dealer to establish
30
the retail rate customarily charged by the dealer for parts and labor by an unduly burdensome or
31
time-consuming method or by requiring information that is unduly burdensome or time consuming
32
to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations. A
33
dealer may not declare an average percentage markup or average labor rate more than twice in one
34
calendar year.
LC005026/SUB A - Page 7 of 14
1
(g) A manufacturer
,
or
distributor
, or factory branch
may not otherwise recover its costs
2
from dealers within this state, including an increase in the wholesale price of a vehicle or surcharge
3
imposed on a dealer solely intended to recover the cost of reimbursing a dealer for parts and labor
4
pursuant to this section, provided a manufacturer
,
or
distributor
, or factory branch
shall not be
5
prohibited from increasing prices for vehicles or parts in the normal course of business.
6
(h)
Each manufacturer or distributor shall perform all warranty obligations, include in
7
written notices of factory recalls to owners and dealers the expected date by which necessary parts
8
and equipment will be available to dealers for the correction of the defects, and compensate dealers
9
for repairs necessitated by such recall.
A manufacturer, distributor, or factory branch shall not
10
unreasonably subject a dealer to a warranty audit or chargeback. A dealer shall only assign warranty
11
claims to technicians that meet the manufacturing distributor, factory branch or department's
12
reasonable qualifications. Either party may appeal provisions of this subsection to the department.
13
(i) A claim filed under this section
or § 31-5.1-6.1
by a dealer with a manufacturer
,
or
14
distributor
, or factory branch
shall be:
15
(1) In the manner and form prescribed by the manufacturer
,
or
distributor
, or factory
16
branch
; and
17
(2)(i) Approved or disapproved within (30) days of receipt.
18
(ii) A claim not approved or disapproved within thirty (30) days of receipt shall be deemed
19
approved.
20
(iii) Payment of, or credit issued on, a claim filed under this section shall be made within
21
thirty (30) days of approval.
22
(3)(i) If a claim filed under this section is shown by the manufacturer
,
or
distributor
, or
23
factory branch
to be false or unsubstantiated, the manufacturer
,
or
distributor
, or factory branch
24
may charge back the claim within twelve (12) months from the date the claim was paid or credit
25
issued.
26
(ii) A manufacturer
,
or
distributor
, or factory branch
shall not charge back a claim based
27
solely on a motor vehicle dealer’s incidental failure to comply with a specific claim processing
28
requirement, such as a clerical error or other administrative technicality that does not put into
29
question the legitimacy of the claim after the motor vehicle dealer properly resubmits the claim in
30
accordance with the manufacturer’s
,
or
distributor's
, or factory branch's
submission guidelines.
31
(iii) A dealer shall have no less than sixty (60) days from the date of
written
notification
32
by a manufacturer
,
or
distributor
, or factory branch
or distributor of a
proposed
charge back
to the
33
identifying the specific claim documentation procedure or procedures violated by the
dealer to
34
resubmit a claim for payment or compensation if the claim was denied for a dealer’s incidental
LC005026/SUB A - Page 8 of 14
1
failure as set forth in subsection (i)(3)(ii)
, whether the chargeback was a direct or an indirect
2
transaction
.
3
(iv) This subdivision does not limit the right of a manufacturer
,
or
distributor
, or factory
4
branch
to charge back for any claim that is proven to be fraudulent.
5
(4) Any claim disapproved by manufacturer, distributor, or factory branch shall be
6
provided via written notice to the dealer within forty-five (45) days which shall include a detailed
7
explanation of the reason(s) for disapproval. A dealer shall have forty-five (45) days from the
8
receipt of disapproval to resubmit a corrected claim. For any disapproval based on actual time
9
worked by a technician, the burden shall be on the manufacturer, distributor, or factory branch to
10
provide evidence that the technician did not spend the submitted time working on the repair or that
11
the dealer's submission did not comply with this section. A manufacturer, distributor, or factory
12
branch may protest a corrected claim within thirty (30) days after receipt of the correct claim by
13
filing a protest with the department and providing a copy to the dealer. The department shall provide
14
reasonable notice to all parties of any hearing to be held on a protest. The burden in a protest shall
15
be on the manufacturer, distributor, or factory branch to prove that a claim made by the dealer under
16
this section was unfair and unreasonable pursuant to the terms of this section.
17
31-5.1-6.1. Obligations during recalls.
18
(a) A manufacturer
, distributor, or factory branch
shall compensate its new motor vehicle
19
dealers for all labor and parts required by the manufacturer
, distributor, or factory branch
to perform
20
recall repairs. Compensation for recall repairs shall be at the dealer retail rate in effect at the time
21
the recall repair work is performed. The dealer retail rate for parts and labor shall be at the same
22
rates as those provided for under § 31-5.1-6. If parts or a remedy are not reasonably available to
23
perform a recall service or repair on a used vehicle held for sale by the dealer authorized to sell
24
new vehicles of the same line-make within thirty (30) days of the manufacturer
, distributor, or
25
factory branch
issuing the initial notice of recall and the manufacturer
, distributor, or factory branch
26
has issued a “Stop-Sale,” or “Do-Not-Drive,” order on the vehicle, the manufacturer
, distributor,
27
or factory branch
shall compensate the dealer at a rate of at least one and one-half percent (1.5%)
28
of the value of the vehicle per month, or portion of a month, while the recall or remedy parts are
29
unavailable and the “Stop-Sale,” or “Do-Not-Drive,” order remains in effect. A “Stop-Sale” shall
30
be defined as a notification issued by a vehicle manufacturer
, distributor, or factory branch
to its
31
franchised dealerships stating that certain used vehicles in inventory shall not be sold or leased, at
32
retail and/or wholesale, due to a federal safety recall for a defect or a noncompliance, or a federal
33
or California emissions recall.
34
(b) The value of a used vehicle shall be the average trade-in value for used vehicles as
LC005026/SUB A - Page 9 of 14
1
indicated in an independent, third-party guide for the year, make, model, and mileage of the recalled
2
vehicle on the later of:
3
(1) The date the “Stop-Sale” or “Do-Not-Drive” order was issued; or
4
(2) The date the vehicle is taken in the used motor vehicle inventory.
5
(c) This section shall apply only to used vehicles subject to safety or emissions recalls
6
pursuant to and recalled in accordance with federal law and regulations adopted thereunder and
7
where a “Stop-Sale,” or “Do-Not-Drive,” order has been issued; provided, further, that this section
8
shall apply only to new motor vehicle dealers holding used vehicles for sale that are a line-make
9
that the dealer is franchised to sell or on which the dealer is authorized to perform recall repairs.
10
This section further shall apply only to new motor vehicle dealers holding an affected used motor
11
vehicle for sale that was:
12
(1) In inventory at the time the “Stop-Sale” or “Do-Not-Drive” order was issued;
13
(2) Taken in the used motor vehicle inventory of the new motor vehicle dealer as a
14
consumer trade-in incident to the purchase of a new motor vehicle before or after the “Stop-Sale”
15
or “Do-Not-Drive” order was issued; or
16
(3) Properly taken in the used motor vehicle inventory of the new motor vehicle dealer as
17
a lease return vehicle returned to the new motor vehicle dealer before or after the “Stop-Sale” or
18
“Do-Not-Drive” order was issued in accordance with the terms of the applicable contract.
19
(d) It shall be a violation of this section for a manufacturer
, distributor, or factory branch
20
to reduce the amount of compensation otherwise owed to a new motor vehicle dealer, whether
21
through a chargeback; removal from an incentive program; reduction in amount owed under an
22
incentive program; or any other means, because the new motor vehicle dealer has submitted a claim
23
for reimbursement under this section, or was otherwise compensated for a vehicle subject to a recall
24
where a “Stop-Sale,” or “Do-Not-Drive,” order has been issued.
25
(e) All reimbursement claims made by new motor vehicle dealers pursuant to this section
26
for recall remedies or repairs, or for compensation where no part or repair is reasonably available
27
and the vehicle is subject to a “Stop-Sale” or “Do-Not-Drive” order, shall be subject to the same
28
limitations and requirements as a warranty reimbursement claim made under § 31-5.1-6.
Claims
29
shall be either approved or disapproved within thirty (30) days after they are submitted to the
30
manufacturer in the manner and on the forms the manufacturer reasonably prescribes. All claims
31
shall be paid within thirty (30) days of approval of the claim by the manufacturer. Any claim not
32
specifically disapproved in writing within thirty (30) days after the manufacturer receives a
33
properly submitted claim shall be deemed to be approved. In the alternative, a
A
manufacturer may
34
compensate its franchised dealers under a national recall compensation program provided the
LC005026/SUB A - Page 10 of 14
1
compensation under the program is equal to or greater than that provided under subsection (a) of
2
this section or the manufacturer and dealer otherwise agree.
3
(f) Nothing in this section shall require a manufacturer
, distributor, or factory branch
to
4
provide total compensation to a new motor vehicle dealer that would exceed the total average trade-
5
in value of the affected used motor vehicle as determined under subsection (b) of this section.
6
(g) Any remedy provided to a dealer under this section is exclusive and may not be
7
combined with any other state recall compensation remedy.
8
31-5.1-8. Agreements.
9
The provisions of this chapter shall apply to all written or oral agreements between a
10
manufacturer
, distributor, or factory branch
and a motor vehicle dealer including, but not limited
11
to, the franchise offering; the franchise agreement; sales of goods, services, or advertising; leases
12
of mortgages of real or personal property; promises to pay; security interests; pledges; insurance
13
contracts; advertising contracts; construction or installation contracts; servicing contracts; and all
14
other agreements in which the manufacturer, wholesaler,
or
distributor
, or factory branch
has any
15
direct or indirect interest.
16
31-5.1-11. Sales to the state.
17
In connection with a sale of a motor vehicle or vehicles to the state or to any political
18
subdivision, no manufacturer, distributor
, factory branch
or wholesaler shall offer any discounts,
19
refunds, or any other similar type of inducement to any dealer without making the same offer or
20
offers to all other of its dealers within the relevant market area, and if any inducements are made,
21
the manufacturer, distributor
, factory branch
, or wholesaler shall give simultaneous notice to all of
22
its dealers within the relevant market area.
23
31-5.1-18. Transportation damages.
24
(a) Notwithstanding the terms, provisions, or conditions of any agreement or franchise, the
25
new motor vehicle dealer is solely liable for damages to new motor vehicles after acceptance from
26
the carrier and before delivery to the ultimate purchaser.
27
(b) Notwithstanding the terms, provisions, or conditions of any agreement or franchise, the
28
manufacturer
, distributor, or factory branch
is liable for all damages to motor vehicles before
29
delivery to a carrier or transporter.
30
(c) The new motor vehicle dealer is liable for damages to new motor vehicles after delivery
31
to the carrier only if the dealer selects the method of transportation, mode of transportation, and the
32
carrier. In all other instances, the manufacturer
, distributor, or factory branch
is liable for carrier-
33
related new motor vehicle damage.
34
(d) On any new motor vehicle, any uncorrected damage or any corrected damage exceeding
LC005026/SUB A - Page 11 of 14
1
six percent (6%) of the manufacturer’s
, distributor's, or factory branch's
suggested retail price, as
2
defined in 26 U.S.C. § 4216 and measured by retail repair costs, must be disclosed in writing prior
3
to delivery. Damage to glass, tires, and bumpers is excluded from the six percent (6%) rule when
4
replaced by identical manufacturer’s
, distributor's, or factory branch's
original equipment.
5
(e) Repaired damage to a customer ordered new motor vehicle, not exceeding the six
6
percent (6%) rule, shall not constitute grounds for revocation of the customer order. The customer’s
7
right of revocation ceases upon his or her acceptance of delivery of the vehicle.
8
(f) If damage to a vehicle exceeds the six percent (6%) rule at either the time the new motor
9
vehicle is accepted by the new motor vehicle dealer, or whenever the risk of loss is shifted to the
10
dealer (as defined in subsection (c)), whichever occurs first, then the dealer may reject the vehicle
11
within a reasonable time. Should the dealer elect to repair any damage exceeding the six percent
12
(6%) rule, full disclosure shall be made by the dealer in writing to the customer and an
13
acknowledgment by the customer is required. If there is less than six percent (6%) damage as
14
described in subsection (d) of this section, no disclosure is required. Pre-delivery mechanical work
15
shall not require a disclosure.
16
31-5.1-19. Risk of loss.
17
(a) If a new motor vehicle dealer determines the method of transportation, as defined in §
18
31-5.1-18(c), then the risk of loss passes to the dealer upon delivery of the vehicle to the carrier.
19
(b) In every other instance, the risk of loss remains with the manufacturer
, distributor, or
20
factory branch
until such time as the new motor vehicle dealer accepts the vehicle from the carrier.
21
31-5.1-21. Promotional activities.
22
(a) Upon filing of a claim, a manufacturer
,
or
distributor
, or factory branch
shall
23
compensate a dealer for any incentive or reimbursement program sponsored by the manufacturer
,
24
or
distributor
, or factory branch
, under the terms of which the dealer is eligible for compensation.
25
(b)(1) A claim filed under this section shall be:
26
(i) In the manner and form prescribed by the manufacturer
,
or
distributor
, or factory branch
;
27
and
28
(ii) Approved or disapproved within thirty (30) days of receipt.
29
(2) A claim not approved or disapproved within thirty (30) days of receipt shall be deemed
30
approved.
31
(3) Payment of a claim filed under this section shall be made within thirty (30) days of
32
approval.
33
(c)(1) If a claim filed under this section is shown by the manufacturer
,
or
distributor
, or
34
factory branch
to be false or unsubstantiated, the manufacturer
,
or
distributor
, or factory branch
LC005026/SUB A - Page 12 of 14
1
may charge back the claim within one year from the date the claim was paid or credit issued or one
2
year from the end of a manufacturer
, distributor or factory branch
program that does not exceed
3
one year in length, whichever is later.
4
(i) A manufacturer
,
or
distributor
, or factory branch
shall not charge back a claim based
5
solely on a motor vehicle dealer’s incidental failure to comply with a specific claim processing
6
requirement, such as a clerical error or other administrative technicality that does not put into
7
question the legitimacy of the claim after the motor vehicle dealer properly resubmits the claim in
8
accordance with the manufacturer’s
,
or
distributor's
, or factory branch's
submission guidelines.
9
(ii) A dealer shall have no less than sixty (60) days from the date of notification by a
10
manufacturer
,
or
distributor
, or factory branch
of a charge back to the dealer to resubmit a claim
11
for payment or compensation if the claim was denied for a dealer’s incidental failure as set forth in
12
subsection (c)(1)(ii) whether the chargeback was a direct or an indirect transaction.
13
(2) This paragraph does not limit the right of a manufacturer
,
or
distributor
, or factory
14
branch
to charge back for any claim that is proven fraudulent.
15
SECTION 2. This act shall take effect on October 1, 2026.
========
LC005026/SUB A
========
LC005026/SUB A - Page 13 of 14
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO MOTOR AND OTHER VEHICLES -- REGULATION OF BUSINESS
PRACTICES AMONG MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND
DEALERS
***
1
This act would extend certain protocols applicable to motor vehicle manufacturers to their
2
distributors and factory branches, as well as update warranty reimbursement and recall obligation
3
policies.
4
This act would take effect on October 1, 2026.
========
LC005026/SUB A
========
LC005026/SUB A - Page 14 of 14