AN ACT relating to motor vehicle dealers.
SB94 revises Kentucky’s motor vehicle dealer warranty reimbursement laws. The bill expands and clarifies the obligations of manufacturers and distributors to compensate franchised dealers for warranty, recall, certified pre-owned, and other factory-authorized repair work. It defines key terms such as parts, qualifying repairs, repair orders, warranty work, and qualifying repair orders, and it sets detailed rules for how dealers may submit labor-rate and parts-markup requests based on repair orders.
The bill requires manufacturers and distributors to indemnify dealers for losses tied to warranty defects, recalls, factory-directed repairs, and design or assembly defects beyond the dealer’s control. It also establishes minimum reimbursement standards for labor, diagnostic time, parts, and administrative costs, including rules for labor-rate increases, parts markup calculations, payment deadlines, claim approval timelines, and audit limits. The bill further addresses compensation for recall-related stop-sale inventory, manufacturer-sponsored promotions, and parts supplied at no cost for warranty repairs.
In practical terms, SB94 would strengthen dealer protections and likely increase the amount and speed of reimbursement dealers receive from manufacturers and distributors. It also limits the ability of manufacturers to impose different procedures, reduce payments based on market averages, or recover costs through surcharges. The bill applies not only to motor vehicle dealers but also to franchised dealers of all-terrain vehicles, and it amends KRS 190.046 while interacting with related dealer dispute and licensing provisions.
The overall sentiment reflected in the available voting history appears strongly favorable in the Senate, where the bill passed third reading unanimously 35-0. No committee transcript is available, but the structure of the bill suggests support from dealer interests and those seeking stronger statutory reimbursement rights. The bill’s later recommittal to House Appropriations & Revenue indicates further fiscal or policy review, but the recorded vote suggests little overt opposition at the Senate stage.
The main points of contention are likely to center on the financial burden and administrative constraints placed on manufacturers and distributors. The bill gives dealers a presumption of accuracy for submitted rates, shifts the burden of rebuttal to manufacturers, limits audit windows, and requires compensation for diagnostic and administrative work, all of which may be viewed as dealer-friendly and potentially costly by manufacturers. Another possible area of dispute is the bill’s detailed treatment of labor rates, parts markups, and recall compensation, especially where it restricts manufacturer discretion and prohibits payment reductions based on market norms or national failure averages.
SB94 would amend KRS 190.046 and related dealer reimbursement rules to require manufacturers and distributors to pay franchised motor vehicle dealers, including ATV dealers, for warranty, recall, and factory-authorized repair work at specified rates and within specified timeframes. It would expand statutory definitions, set formulas and presumptions for labor-rate and parts-markup calculations, require payment for diagnostic and administrative time, limit audit periods and documentation demands, and prohibit certain cost-recovery practices and payment reductions. The bill would materially increase dealer reimbursement protections and constrain manufacturer billing, audit, and compensation practices in Kentucky.
The available voting record shows strong support, with the Kentucky Senate passing the bill 35-0 on third reading. No committee transcript is available, but the bill’s provisions are consistent with a dealer-protection measure and likely reflect support from franchised dealers and related industry advocates. The recommittal to House Appropriations & Revenue suggests additional review, but there is no recorded floor opposition in the provided history.
The likely controversy is between franchised dealers and manufacturers/distributors. Dealers would benefit from higher reimbursement standards, faster claim payment, broader compensable work categories, and stronger presumptions in rate-setting disputes, while manufacturers may object to the bill’s cost implications, reduced flexibility, and tighter audit limits. Specific flashpoints include the 150% default time allowance when no guide applies, the requirement to pay diagnostic and communication time, the 30% parts gross-profit floor, the prohibition on market-average reductions, and the limits on audits and charge-backs.