GENERAL ASSEMBLY OF NORTH CAROLINA
1993 SESSION
CHAPTER 116
AN ACT TO CLARIFY THE WARRANTY REIMBURSEMENT RIGHTS OF MOTOR VEHICLE DEALERS.
The General Assembly of North Carolina enacts:
Section 1. G.S. 20-305.1(a) reads as rewritten:
"(a) Each motor vehicle
manufacturer, factory branch, distributor or distributor branch, shall specify
in writing to each of its motor vehicle dealers licensed in this State the
dealer's obligations for preparation, delivery and warranty service on its
products, the schedule of compensation to be paid such dealers for parts, work,
and service in connection with warranty service, and the time allowances for
the performance of such work and service. In no event shall such schedule
of compensation fail to include reasonable compensation for diagnostic work and
associated administrative requirements as well as repair service and
labor. Time allowances for the performance of warranty work and service shall
be reasonable and adequate for the work to be performed. In the
determination of what constitutes reasonable compensation under this section,
the factors to be given consideration shall include, among others, the
compensation being paid by other manufacturers to their dealers, the retail
price the dealers charge their retail customers for parts used to perform
similar work, and paid to dealers for parts, other than parts used to repair
the living facilities of recreational vehicles, and the prevailing wage rates
being paid by dealers, and the prevailing labor rate being charged by dealers
to their retail customers, in the community in which the dealer is doing
business, provided such rates and prices are not unreasonable. The
compensation which must be paid under this section must be reasonable,
provided, however, that under no circumstances may the reasonable compensation
under this section be in an amount less than the dealer's current retail labor
rate and the amount charged to retail customers for the manufacturer's or
distributor's original parts for nonwarranty work of like kind, provided such
amount is competitive with other franchised dealers within the dealer's market."
Sec. 2. G.S. 20-305.1(b) reads as rewritten:
"(b) Notwithstanding the terms of any franchise agreement, it is unlawful for any motor vehicle manufacturer, factory branch, distributor, or distributor branch to fail to perform any of its warranty obligations with respect to a motor vehicle, to fail to compensate its motor vehicle dealers licensed in this State for warranty parts other than parts used to repair the living facilities of recreational vehicles, at the prevailing retail rate according to the factors in subsection (a) of this section, or, in service in accordance with the schedule of compensation provided the dealer pursuant to subsection (a) above, and to fail to indemnify and hold harmless its franchised dealers licensed in this State against any judgment for damages or settlements agreed to by the manufacturer, including, but not limited to, court costs and reasonable attorneys' fees of the motor vehicle dealer, arising out of complaints, claims or lawsuits including, but not limited to, strict liability, negligence, misrepresentation, express or implied warranty, or recision or revocation of acceptance of the sale of a motor vehicle as defined in G.S. 25-2-608, to the extent that the judgment or settlement relates to the alleged defective negligent manufacture, assembly or design of new motor vehicles, parts or accessories or other functions by the manufacturer, factory branch, distributor or distributor branch, beyond the control of the dealer. Any audit for warranty parts or service compensation, service incentives, rebates, or other forms of sales incentive compensation shall only be for the 24-month period immediately following the date of the claim. Provided, however, these limitations shall not be effective in the case of fraudulent claims."
Sec. 3. This act shall not apply to manufacturers of, or dealers in, mobile or manufactured housing or recreational trailers.
Sec. 4. This act becomes effective July 1, 1993.
In the General Assembly read three times and ratified this the 3rd day of June, 1993.
───────────────────
Dennis A. Wicker
President of the Senate
───────────────────
Daniel Blue, Jr.
Speaker of the House of Representatives