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Alabama has approved legislation proposed by the Automotive Dealers Association of Alabama (ADAA) amending the Alabama Motor Vehicle Franchise Act to clarify warranty reimbursement requirements by manufacturers. This law will take effect on June 1, 2022.

The History: The franchise act in 1991 established a mechanism for auto manufacturers to reimburse dealerships for performing warranty and recall repairs on motor vehicles at no cost to the consumer. The section provides that reimbursement for labor and parts should be equal to the amount the dealership charges a retail customer for similar repairs that are not already covered under a manufacturer's warranty.

The Changes: The new legislation more clearly articulates the process a dealer may use to calculate the reimbursement rate by taking the average parts markup and labor rates on 100 sequential repair orders for non-warranty repairs.

Read more about the legislation here.

How DHG Can Help: Our goal is to provide our dealer clients with exceptional service and analysis that helps them receive the additional revenue on warranty parts and labor reimbursement for which they are entitled from their manufacturers.

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