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New California law sets the reimbursement rate for dealers who do recalls

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California’s Governor Gavin Newsom signed a bill into law that will force vehicle manufacturers to pay retail rates to dealers for warranty and recall work.


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Have you ever had to have a recall performed on your car? Or maybe warranty work? Was your dealer less than enthused about getting you scheduled to come in? It could be because the reimbursement rate from a manufacturer to a dealer for that work is significantly less than what standard retail repair work brings in. But that looks to be changing, at least in California.

According to an Automotive News report published on Monday, California Governor Gavin Newsom has signed CA AB179 into law, which changes the rate at which franchised automotive dealers in the state can be reimbursed by the manufacturer for warranty or recall work — an amount which previously could have been as little as 60% of what a dealer would bill a customer for similar work.

The new law states explicitly that manufacturers will be required to reimburse at rates “equal to the franchisee’s retail labor rate and retail parts rate.” These exact rates will be calculated by a formula that takes dollar figures from previous retail repair work.

Roadshow reached out to several manufacturers for comment on the matter, but none immediately responded.


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