Colorado Warranty Reimbursement State Law


Cliff Notes:

Timeframes for Approval and Reimbursement of Warranty Claims:

The manufacturer shall pay any difference between the amount the manufacturer compensated the dealer and the amount agreed to by the motor vehicle dealer and manufacturer as of thirty days after the manufacturer received the submission.

The uncontested retail labor rate or retail parts markup percentage becomes effective forty-five days after the manufacturer has received the submission from the motor vehicle dealer

The manufacturer may request additional repair orders for the ninety days before or after the submitted repair orders for purposes of alteration.

Reimbursement Rate for Parts:

This section, to calculate the retail parts markup percentage, the motor vehicle dealer must divide the motor vehicle dealer’s total parts sales generated from non-warranty repairs submitted under subsection (3) of this section by the amount of the motor vehicle dealer’s total cost for those parts, subtracting one from this amount, and then multiplying the amount by one hundred.

• 100 sequential repair orders containing non-warranty repairs, which may include a non-warranty repair that is included in a repair order with a warranty obligation repair, that have been paid by a
consumer and closed by the time of submission; or
(II) All repair orders for non-warranty repairs, which may include a non-warranty repair that is included in a repair order with warranty obligation repair, that have been paid by a consumer and closed by the time of submission for a period of ninety consecutive days.

Reimbursement Rate for Labor:

The calculation of the retail labor rate in subsection (4)(a) of this section and of the retail parts markup percentage in subsection (4)(b) of this section do not include parts used or labor performed:

• 100 sequential repair orders containing non-warranty repairs, which may include a non-warranty repair that is included in a repair order with a warranty obligation repair, that have been paid by a consumer and closed by the time of submission; or
(II) All repair orders for non-warranty repairs, which may include a non-warranty repair that is included in a repair order with warranty obligation repair, that have been paid by a consumer and closed by the time of submission for a period of ninety consecutive days.

• To determine the retail labor rate must contain only repair orders from the last ninety days before the date the submission is sent to the manufacturer.

2018 Colorado Revised Statutes
Title 44 – Revenue – Regulation of Activities Automobiles
Article 20 – Sale of Self-Propelled Vehicles
Part 1 – Motor Vehicle Dealers

§ 44-20-141.5. Fulfillment and compensation for warranty and recall obligations – definitions

Universal Citation: CO Rev Stat § 44-20-141.5 (2018)

(1) As used in this section:

(a) “Manufacturer” includes a manufacturer, a distributor, and a manufacturer representative.

(b) “Non-warranty repair” means a diagnosis, repair, labor, or part for which payment was made by a person other than a manufacturer and that was not a warranty obligation. “Non-warranty repair” also means customer-pay repairs, labor, or parts.

(c) “Part” means an accessory, a part, or a component used to repair a motor vehicle. “Part” includes engine and transmission parts and all motor vehicle assemblies.

(d) “Repair” means diagnosing, work, and labor performed by a motor vehicle dealer for which the motor vehicle dealer is making a claim for compensation.

(e) “Retail labor rate” means the rate for labor calculated by the motor vehicle dealer in accordance with subsection (4) of this section that a manufacturer is required to pay a motor vehicle dealer in accordance with subsection (2) of this section.

(f) “Retail parts markup percentage” means the percentage markup on parts calculated by the motor vehicle dealer in accordance with subsection (4) of this section that a manufacturer is required to pay a motor vehicle dealer in accordance with subsection (2) of this section.

(g) “Warranty obligation” means diagnosing and repairing a motor vehicle in accordance with any warranty, recall, or certified preowned warranty, under which a manufacturer makes a repair commitment to a consumer or motor vehicle dealer.

(2) At a motor vehicle dealer’s request, a manufacturer shall timely compensate the motor vehicle dealer at the retail labor rate and the retail parts markup percentage in accordance with subsection (3) of this section for all labor performed and parts used by the motor vehicle dealer for covered repairs performed in accordance with the warranty obligation, if the retail labor rate and retail parts markup percentage are reasonably consistent with the requirements of this section that concern the retail labor rate and parts markup percentage.

(3) (a) A motor vehicle dealer may establish the retail labor rate and the retail parts markup percentage by submitting to the manufacturer either of the following as decided by the motor vehicle dealer:

(I) One hundred sequential repair orders containing non-warranty repairs, which may include a non-warranty repair that is included in a repair order with a warranty obligation repair, that have been paid by a consumer and closed by the time of submission; or

(II) All repair orders for non-warranty repairs, which may include a non-warranty repair that is included in a repair order with warranty obligation repair, that have been paid by a consumer and closed by the time of submission for a period of ninety consecutive days.

(b) A manufacturer shall not disqualify a repair order under this subsection (3) because the repair order contains both warranty and non-warranty repairs, but only non-warranty repairs are used in the calculation of the retail labor rate and the retail parts markup percentage.

(c) A motor vehicle dealer may submit one set of repair orders for the purpose of calculating both its retail labor rate and the retail parts markup percentage or may submit separate sets of repair orders for purposes of calculating only its retail labor rate or for purposes of calculating only its retail parts markup percentage. If the rates from the calculation are ten percent higher or lower than the current rates,the manufacturer may request additional repair orders for the ninety days before or after the submitted repair orders for purposes of alteration.

(d) Except with regard to a request for additional repair orders as provided in subsection (3)(c) of this section, the repair orders submitted under this subsection (3) to determine the retail labor rate must contain only repair orders from the last ninety days before the date the submission is sent to the manufacturer.

(e) Except with regard to a request for additional repair orders as provided in subsection (3)(c) of this section, the repair orders submitted under this subsection (3) to determine the retail parts markup percentage must contain only repair orders from the last ninety days before the date the submission is sent to the manufacturer.

(4) (a) Except as provided in subsection (4)(c) of this section, to calculate the retail labor rate, the motor vehicle dealer must divide the motor vehicle dealer’s total non-warranty labor sales generated from the non-warranty repairs submitted under subsection (3) of this section by the total number of labor hours that generated those total labor sales.

(b) Except as provided in subsection (4)(c) of this section, to calculate the retail parts markup percentage, the motor vehicle dealer must divide the motor vehicle dealer’s total parts sales generated from non-warranty repairs submitted under subsection (3) of this section by the amount of the motor vehicle dealer’s total cost for those parts, subtracting one from this amount, and then multiplying the amount by one hundred.

(c) The calculation of the retail labor rate in subsection (4)(a) of this section and of the retail parts markup percentage in subsection (4)(b) of this section do not include parts used or labor performed:

(I) For manufacturer or motor vehicle dealer special events, one-time specials, express service, and quoted-price promotional discounts, but this exclusion from the calculation does not include broadly applicable discounts offered by the dealer, such as percentage-off coupons, that apply to repairs and parts;

(II) For parts sold at wholesale;

(III) For routine maintenance, including replacement fluids, filters, batteries, bulbs, nuts, bolts, fasteners, tires, and belts;

(IV) That do not have individual part numbers;

(V) For the repairs of a motor vehicle owned by the motor vehicle dealer, an affiliate of the motor vehicle dealer, or an employee of either the motor vehicle dealer or the affiliate;

(VI) For motor vehicle dealer reconditioning;

(VII) For window tint, protective film, masking products, or window replacement labor;

(VIII) For manufacturer-approved and reimbursed goodwill repairs or replacements;

(IX) For emission inspections required by law;

(X) For safety inspections required by law;

(XI) For which a volume discount was negotiated with a third-party payer, including government agencies, insurance carriers, and fleet operators, but not including third-party warranty companies or service contract companies.

(5) (a) Notwithstanding any manufacturer requirement, policy, procedure, guideline, or standard, a motor vehicle dealer may submit to the manufacturer the retail labor rate or retail parts markup percentage as each is calculated in accordance with subsection (4) of this section.

(b) A motor vehicle dealer may request in writing, not more often than once annually, an increase in compensation for labor at the retail labor rate for warranty obligations.

(c) A motor vehicle dealer may request in writing, not more often than once annually, an increase in compensation for parts at the retail parts markup percentage for warranty obligations.

(d)

(I) A manufacturer may conduct a periodic review of a motor vehicle dealer’s service records to verify the continuing accuracy of the retail labor rate or retail parts markup percentage proposed by or in effect for the dealer.

(II) A manufacturer shall not conduct a periodic review more than once per calendar year. This periodic review is not an audit in accordance with section 44-20-135.

(6) (a) (I) If the submitted calculation of the retail labor rate or retail parts markup percentage is materially inaccurate or is substantially different than the rate of or percentage of other similarly situated same line-make dealers within the state, a manufacturer may contest the motor vehicle dealer’s submitted calculations of the retail labor rate or retail parts markup percentage by delivering a notice to the motor vehicle dealer within forty-five days after receiving the submission in accordance with subsection (3) of this section from the motor vehicle dealer. To comply with this subsection (6), the notice must:

(A) Include an explanation of the reasons that the manufacturer believes the calculation is subject to contest;

(B) Provide evidence substantiating the manufacturer’s position; and

(C) Propose an adjustment of the contested retail labor rate or retail parts markup percentage.

(II) Upon the discovery of new relevant information by the manufacturer, the manufacturer may modify the grounds for contesting the retail labor rate or retail parts markup percentage after delivering the notice to the motor vehicle dealer under this subsection (6), but the modification does not change the timing requirements in this section.

(b) If the manufacturer does not timely contest the motor vehicle dealer’s calculation of the retail labor rate or retail parts markup percentage in accordance with this subsection (6), the uncontested retail labor rate or retail parts markup percentage becomes effective forty-five days after the manufacturer has received the submission from the motor vehicle dealer, and thereafter, the manufacturer shall use the motor vehicle dealer’s increased retail labor rate and retail parts markup percentage in calculating compensation for warranty obligations until a subsequent calculation of the motor vehicle dealer’s retail labor rate or retail parts markup percentage is established in accordance with this section.

(c)

(I) If the manufacturer timely contests the motor vehicle dealer’s calculation of the retail labor rate or retail parts markup percentage and the manufacturer and motor vehicle dealer are unable to resolve the disagreement, the motor vehicle dealer may seek a determination by filing a complaint with a court of competent jurisdiction or the executive director no later than sixty days after the new motor vehicle dealer receives the manufacturer’s challenge to the determined retail labor rate or retail parts markup percentage.

(II) In a court proceeding, the court shall determine, in accordance with this section, the proper retail labor rate or retail parts markup percentage.

(III) Any retail labor rate or retail parts markup percentage established through the proceeding applies retroactively to calculate reimbursement for any labor and part beginning thirty days after the manufacturer received the submission required by subsection (3) of this section.

(IV) If the manufacturer contests the motor vehicle dealer’s calculation of the retail labor rate or retail parts markup percentage, the manufacturer shall continue to reimburse the motor vehicle dealer for warranty obligation repairs at the retail labor rate and retail parts markup percentage as both existed before the motor vehicle dealer submitted a request for an increase under subsection (5) of this section. When the manufacturer and motor vehicle dealer agree on the retail labor rate or retail parts markup percentage, the manufacturer shall pay any difference between the amount the manufacturer compensated the dealer and the amount agreed to by the motor vehicle dealer and manufacturer as of thirty days after the manufacturer received the submission required by subsection (3) of this section.

(d) In the court proceeding, the court shall award the prevailing party reasonable attorney fees and costs. If the motor vehicle dealer prevails, the court shall award as damages the full amount of reimbursement that should have been paid to the motor vehicle dealer.

(7) When calculating the retail labor rate and the retail parts markup percentage, the manufacturer:

(a) Shall not establish an unreasonable flat-rate time, nor establish unreasonable flat-rate labor times for new line-makes that are inconsistent with the existing rates;

(b) Shall, if the manufacturer furnishes a part to a motor vehicle dealer at no cost for use in performing a repair under a warranty obligation, compensate the motor vehicle dealer for the authorized repair part by paying the dealer an amount equal to the retail parts markup percentage multiplied by the cost the dealer would have paid for the authorized part as listed in the manufacturer’s price schedule;

(c) Shall not establish a different part number for repairs made in accordance with a warranty obligation than the part number established for non-warranty repairs solely to provide a lower compensation to a motor vehicle dealer;

(d) Shall not recover or attempt to recover, directly or indirectly, in whole or in part, any of its costs from the motor vehicle dealer for compensating the motor vehicle dealer under this section;

(e) Shall not, directly or indirectly, in whole or in part, assess penalties or surcharges to the motor vehicle dealer, limit allocation of motor vehicles or parts to the motor vehicle dealer, or take any adverse action based on the motor vehicle dealer’s exercise of the dealer’s rights under this section;

(f) Shall not require from a motor vehicle dealer any information that is unduly burdensome or time-consuming to obtain, including any part-by-part or transaction-by-transaction calculations.

(8) Nothing in this section prohibits a manufacturer from increasing the price of a motor vehicle or motor vehicle part in the normal course of business.

(9) This section does not apply to any of the following that are involved in the manufacturing of or selling of recreational vehicles:

(a) A motor vehicle dealer;

(b) A manufacturer or component manufacturer;

(c) A distributor; or

(d) A manufacturer representative.