SB 23-078

Senate Bill 23-078, which has been signed into law and will take effect on August 7, 2023, changes how car and powersports vehicle manufacturers pay dealers for warranty repairs. Under the new law, manufacturers must now pay dealers based on their typical charges for parts and labor without being able to dispute these rates if they differ from other similar dealers. This means that manufacturers can no longer challenge a dealer's pricing just because it’s different from others; they can only contest if the prices are inaccurate. The bill aims to protect dealers by ensuring more consistent payment for warranty work, affecting both car and powersports vehicle manufacturers and their respective dealerships in Colorado.

Official Summary

Before passage of the act, Colorado law required a motor vehicle or a powersports vehicle manufacturer (manufacturer) to timely compensate a motor vehicle or a powersports vehicle dealer (dealer) for warranty repairs based on the dealer's typical charges for parts and labor if these charges were reasonably consistent with the law governing the setting of these charges. The act repeals the condition that the charges must be reasonably consistent with this law, requiring the manufacturer to pay the charges even if there is a dispute as to the charges. The law governing the setting of these charges is not repealed, so the charges must continue to comply with the law. Before passage of the act, Colorado law governing these charges allowed a manufacturer to challenge the setting of a labor rate or part markup if either was inaccurate or if either was substantially different than the charges of other similarly situated line-make dealers. The act repeals the manufacturer's ability to challenge these charges when the rates are substantially different than the charges of other similarly situated line-make dealers. In order to challenge the setting of a labor rate or part markup as allowed before the passage of the act, the manufacturer was required to provide the dealer a notice that explains why the calculation was subject to contest. The act changes this requirement, requiring instead that the notice must explain why the calculation is materially inaccurate. APPROVED by Governor April 3, 2023 EFFECTIVE August 7, 2023 NOTE: This act was passed without a safety clause and takes effect 90 days after sine die. (Note: This summary applies to this bill as enacted.)

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