A Fair Deal for MD Dealers and Drivers

A Fair Deal for MD Dealers and Drivers

Here are four reforms we’re asking Maryland legislators to pass this year to improve safety and make car sales and service fairer and more transparent for all MD drivers.


  1. 1. Clearly prohibit retaliation for safety and defect disclosures: In 2016, the Assembly passed a landmark law prohibiting “adverse action” by carmakers against dealers that share important safety and defect data from manufacturers with their customers. That is an important step forward. But to help MD drivers get access to the critical data that law is supposed to protect, Maryland needs to amend the law to spell out the kinds of retaliation manufacturers cannot use to punish dealers for disclosing such data. We also need to make sure law that this “adverse action” covers the broad range of powers manufacturers have over their dealers, including withholding benefits that get to consumers through dealers and appointing additional dealers within the market of existing dealers without a compelling business reason.


  1. Limit audit times for warranty and incentive work to 90 days: Maryland can help consumers get their cars fixed under warranty by limiting the time manufacturers have to conduct punitive audits of warranty and incentive work. Under current law, Maryland allows carmakers to audit dealers for nine months after warranty work and six months on incentive offers. They don’t really need that much time to check for fraud in this electronic age, but manufacturers like the power those long audit times give them. But with an average dealer spending more than $250,000/month on warranty and incentive offers, dealers end up with hundreds of thousands – even millions – of dollars at risk in a manufacturer’s audit. With so much at risk, dealers have a strong incentive to please the factory instead of their customers – by keeping their warranty and repair expenses low and taking other steps that save the factory money but hurt their customers. That makes it harder for carbuyers to get the repair work they need done and for dealers to put the needs of their customers first.


  1. Stop unfair use of clerical errors to deny payment for warranty work: Manufacturers audit dealers’ warranty work closely – and often use trivial clerical errors on repair forms as an excuse to refuse to pay dealers for repair work they’ve done for consumers. In 2009, the legislature passed a bill to make sure dealers that do warranty work get paid for their work by the manufacturer. But that language was altered as part of other reforms the legislature passed in 2014 on warranty reimbursement rates. We need to restore the protections granted by the 2009 language – so that dealers can do the work consumers need without fear of financial retribution for clerical errors.


  1. Make performance standards fairly reflect local market conditions: Manufacturers use performance standards to assess their dealers and to determine whether dealers qualify for incentives and other benefits. Dealers are often punished for failing to meet broad-brush standards that may be based on state averages or on markets in very different parts of the state. Maryland needs to amend the Transportation Code to make sure those metrics fairly and accurately reflect the demographics and geographic barriers of each dealers local market. Letting manufacturers deny such benefits to dealers without adequate basis hurts consumers as well as dealers – since benefits or incentives denied to a dealers also mean higher prices for that dealer’s customers.