KADA will continue to advocate in Frankfort for unambiguous legislation that ensures dealers will not suffer financial losses by performing the warranty and recall repairs that keep millions of Americans safely on the road. Accordingly, we cannot afford to have a system wherein dealers are disincentivized from performing warranty and recall repairs. When dealers are not paid retail rates for warranty and recall work, they lose money on those repairs. Auto technician time is extraordinarily valuable in a service department, and good technicians are increasingly hard to come by. For a service department to be profitable, the limited hours of available tech time should be dedicated to the repairs that bring maximum value. Economic realities, including tariffs and inflation, have put tremendous financial pressure on OEMs. OEMs are, in turn, putting pressure on dealers through attempts to reduce their costs, including those related to warranty reimbursement. OEMs have attempted to reduce their warranty reimbursement obligations by providing parts to dealers at no charge. While seemingly innocuous, this practice often results in financial challenges for dealers, who receive minimal handling allowances instead of retail markup. Other OEMs have begun strict and discerning audits of dealer warranty repair claims, charging back dealer accounts on questionable bases. Forty-nine states — including Kentucky — have franchise protections for dealers that protect against OEM mandates and ensure fair reimbursement rates for dealers. The Alliance’s letter to the DOJ highlights the tension between OEMs’ desire to minimize reimbursement rates and dealers’ interest in obtaining fair compensation for parts and repairs. The letter also makes clear OEMs’ apparent intent to fight against legislation that is favorable to dealers. KADA will continue to advocate in Frankfort for unambiguous legislation that ensures dealers will not suffer financial losses by performing the warranty and recall repairs that keep millions of Americans safely on the road. But we will need the support of our members like you to make these efforts a success. WWW.KYADA.COM 15
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