NOTIFICATION OF NON-OEM PRODUCTS If you use non-OEM accessories or parts, you may be required by the dealer agreement to notify customers, and possibly get specific consent, that the parts are non-OEM and not covered by the manufacturer’s warranty. In order to avoid confusion and to minimize potential customer dissatisfaction, in any instance where DEALER sells, installs or uses other than Genuine [Manufacturer] Parts or Accessories, DEALER shall disclose such fact to the customer and shall advise the customer that these items are not included in warranties furnished by DISTRIBUTOR. Such disclosure shall be written, conspicuous and stated on the customer’s copy of the service or repair order or sale document. In addition, DEALER will clearly explain to the customer the extent of any warranty covering the parts or accessories involved and will deliver a copy of the warranty to the customer. Dealer shall not represent as new, genuine [Manufacturer] Parts or as parts approved or authorized by the Company or the Manufacturer, any parts which are not in fact new, genuine [Manufacturer] Parts or parts expressly approved or authorized by the Company or the Manufacturer. Dealer will not, without the specific consent of the owner, install on any [Manufacturer] Vehicle any non-approved parts or accessories which may (a) affect the owner’s rights under any warranty applicable to the Vehicle or (b) create any unreasonable risk to motor vehicle safety. Even if the dealer agreement does not require you to notify the customer, it may be good practice to notify consumers that non-OEM accessories and parts have been used on the new vehicle to avoid consumer claims of fraud or breach of contract. If the non-OEM accessories or parts are used and have a warranty, you may want to provide the consumer with that warranty information, since the parts will not be covered by the manufacturer’s warranty. MANUFACTURER INDEMNIFICATION In the event that the non-OEM accessories or parts are alleged to result in a product claim or an injury claim, the manufacturer may have no obligation to indemnify you against these claims. [Manufacturer] will assume the defense of Dealer and indemnify Dealer against any judgment for monetary damages or rescission of contract, less any offset recovered by Dealer, in any lawsuit naming Dealer as a defendant relating to any Product that has not been altered… (emphasis added) Since using non-OEM accessories or parts could alter the vehicle, the manufacturer may have grounds to decline a request for indemnification in a product or injury claim. There is also a concern that, should there be an injury claim involving modified vehicles in which the consumer sues the dealer and the manufacturer, the manufacturer could seek indemnification from the dealer. INSURANCE COVERAGE If there is a product claim or personal injury claim that is the result of the non-OEM accessories or parts modification, your insurance company may have the right to deny coverage. If your dealership is in the practice of modifying new vehicles, you may want to put the insurance company on notice since that increases the carrier’s risk. CONCLUSION Although using non-OEM accessories and parts to modify new motor vehicles may not void the manufacturer’s warranty, vehicle modification could cause other issues. To minimize your dealership’s risk: • Make sure you have checked your dealer agreement to determine whether you are in compliance with its language when modifying new vehicles. • Make sure you are notifying consumers that the vehicle has been modified using non-OEM accessories and that those parts and accessories will not be covered by the manufacturer’s new vehicle warranty. • Make sure you don’t need specific consent to install non-OEM parts. • Make sure that the modifications do not result in any safety issues or adversely affect the mechanical operation of the vehicle in a way that could lead to product or personal injury claims, which could put your dealership at risk that the manufacturer will not indemnify or insurance may deny coverage. 22 Virginia Auto Dealer
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