Auto industry warns new warranty bill could raise repair costs for consumers

The Assembly Consumer Affairs Committee of the New Jersey Legislature convened on March 6, 2025, to discuss significant changes proposed in the automotive warranty repair legislation. The meeting focused on the implications of these changes for consumers, dealers, and automakers.

One of the primary concerns raised was the potential increase in costs for consumers due to the proposed legislation. It was noted that the new bill could make extended warranties approximately 50% more expensive. The removal of a reasonability standard from the previous version of the bill was highlighted, which previously allowed consumers to seek legal recourse for excessive charges. This change has raised alarms about the fairness of warranty repairs and the financial burden it may place on vehicle owners.

The discussion also addressed the financial dynamics between automakers and dealers. It was estimated that the bill could generate an additional $45 million annually for automakers, which would ultimately be passed on to consumers. The committee heard arguments that automakers have a vested interest in completing recall repairs efficiently, as they are graded by the National Highway Traffic Safety Administration (NHTSA) and face federal fines for poor performance in this area.

A significant point of contention was the payment structure for technicians. Critics argued that the bill does not guarantee that technicians will receive higher wages, despite the expectation that dealers would pass on savings to their employees. The current profit margins for dealers on warranty repairs were cited as being around 78%, raising questions about the justification for higher consumer costs.

The meeting also delved into the use of time guides for warranty repairs. Automakers typically provide time estimates based on extensive testing, while third-party guides often suggest longer repair times. The proposed legislation would allow dealers to use these third-party guides, which could lead to inflated repair costs for consumers. The committee expressed concerns that this could result in consumers paying for time that technicians did not actually work, as dealers could charge based on estimates that do not reflect the efficiency of their operations.

In conclusion, the Assembly Consumer Affairs Committee's meeting underscored the complexities of the proposed automotive warranty repair legislation. The discussions highlighted the potential financial implications for consumers, the relationship between dealers and automakers, and the ongoing debate over fair compensation for technicians. As the committee continues to evaluate the bill, stakeholders are urged to consider the broader impact on vehicle owners and the automotive repair industry.