Section 63-17-86 - Obligations of manufacturers, distributors and motor vehicle dealers; establishment of rate for parts and labor; rebuttal and protest(1) The mark-up customarily charged by the dealer for parts or its labor rate may be established at the election of the dealer by the dealer submitting to the manufacturer, either by electronic transmission or tangible delivery, and in accordance with Section 63-17-85(j), all consecutive repair orders that include one hundred (100) sequential repair orders reflecting qualified repairs, or all repair orders closed during any period of ninety (90) consecutive days, whichever produces the fewer number of repair orders, covering repairs made no more than one hundred eighty (180) days before the submission, and declaring the parts mark-up or labor rate.(2) The dealer shall calculate its labor rate by determining the total charges for labor from the qualified repairs submitted and dividing that amount by the total number of hours that produced such charges. The dealer shall calculate its parts mark-up by determining the total charges for parts from the qualified repairs submitted, dividing that amount by its total cost of the purchase of such parts, subtracting one from that amount, and multiplying by one hundred (100) to produce a percentage.(3) A motor vehicle dealer seeking to establish or modify its warranty reimbursement labor rate, parts mark-up, or both shall no more frequently than once per twelve-month period, submit to the manufacturer:(a) A single set of repair orders for purposes of calculating both its labor rate and parts mark-up; or(b) A set of repair orders for purposes of calculating only its labor rate or for purposes of calculating only its parts mark-up.(4) In calculating the rate customarily charged by the dealer for parts and labor for purposes of this section, the following shall not be included: (a) Repairs which are the subject of manufacturer discounts, such as special events, specials, promotions, coupons, or service campaigns.(b) Parts sold at wholesale.(c) Repairs of motor vehicles owned by the dealer.(d) Routine maintenance, including, but not limited to, replacements of fluids, filters, batteries, bulbs, belts, nuts, bolts, or fasteners, unless provided in the course of, and related to, an otherwise qualified repair.(e) Installations of accessories.(f) Replacements of or work on tires, wheels, or brakes, including alignments, wheel or tire rotations, or replacements of brake drums, rotors, shoes, or pads.(g) Vehicle reconditioning.(h) Safety or emission inspections required by law.(i) Repairs for which volume discounts have been negotiated with government agencies or insurers.(j) Bodyshop repairs of conditions caused by collision, road hazard, the force of the elements, vandalism, theft, or owner, operator, or third-party negligence or deliberate act.(k) Parts that do not have individual part numbers.(l) Manufacturer approved and reimbursed goodwill repairs or reimbursements.(m) Window replacement, window etching, window tint, protective film, or other masking products.(5) The submitted parts mark-up or labor rate shall each be presumed to be reasonable, and shall go into effect forty-five (45) days after the manufacturer's receipt of its submission, unless, within such period, the manufacturer rebuts that presumption, by reasonably substantiating that such submission is materially incomplete, materially inaccurate or is materially unreasonable and providing a full explanation of any and all reasons that such submitted mark-up or rate is materially incomplete, materially inaccurate or materially unreasonable, evidence validating each such reason, a copy of all calculations used by it demonstrating any material inaccuracy, and a proposed adjusted mark-up or rate provided that the dealers submission is materially accurate, based upon the qualified repair orders submitted by the dealer. In such event, the manufacturer may not submit more than one (1) such rebuttal to the dealer, and may not thereafter add to, expand, supplement, or otherwise modify any element thereof, including, but not limited to, its grounds for contesting such parts mark-up or labor rate. If a manufacturer determines from any set of repair orders submitted under this section that the labor rate or parts mark-up calculated under this section is substantially higher or lower than the rate currently on record with the manufacturer for labor and/or parts, the manufacturer may, in accordance with this subsection, request additional repair orders for a period of either sixty (60) days prior to or sixty (60) days subsequent to the time period for which the repair orders were submitted for purposes of an alteration, and shall have forty-five (45) days from receiving the additional repair orders to rebut the presumption that the dealer's proposed mark-up and labor rates are reasonable.
(6) If the dealer and the manufacturer do not agree on the parts mark-up or labor rate, as the case may be, then the dealer may file a protest with the commission within sixty (60) days of receiving the manufacturer's written rejection of the dealer's proposed parts mark-up or labor rate. If such a protest is filed, the commission shall inform the manufacturer thereof and that a hearing will be held thereon. In any such hearing, the manufacturer shall have the burden of proving by a preponderance of the evidence that the dealer's submitted parts mark-up or labor rate or both was materially incomplete, materially inaccurate or was unreasonable as described in subsection (5). Upon a commission decision in favor of the dealer, any increase in the dealer's parts mark-up or labor rate arising from such proceeding shall be effective retroactively to the date forty-five (45) days following the manufacturer's receipt of the original submission to the manufacturer.(7) If a manufacturer furnishes a part or component to a dealer, at reduced or no cost, to use in performing warranty work, the manufacturer shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this section by compensating the dealer on the basis of the dealer's mark-up on the cost for the part or component as listed in the manufacturer's price schedule less the cost for the part or component.(8) A manufacturer may not require a dealer to establish the rate customarily charged by the dealer for parts and labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time-consuming to provide.Added by Laws, 2021, ch. 315, HB 746,§ 3, eff. 7/1/2021.