Louisiana Motor Vehicle Commission sets new rules for dealer protests on parts mark-up

House Bill 623, introduced in Louisiana on April 4, 2025, aims to reshape the relationship between motor vehicle dealers and manufacturers by addressing compensation disputes over parts and labor rates. The bill empowers dealers to contest unfavorable pricing decisions made by manufacturers, distributors, and wholesalers, marking a significant shift in the balance of power within the automotive industry.

At the heart of the legislation is a provision allowing dealers to file a protest with the Louisiana Motor Vehicle Commission if they disagree with a manufacturer's proposed parts mark-up or labor rate. This process includes a hearing where the burden of proof lies with the manufacturer to demonstrate that the dealer's submission is materially inaccurate. If the commission rules in favor of the dealer, any approved increase in compensation will be retroactively effective, providing a financial safety net for dealers who feel shortchanged.

The bill also stipulates that if manufacturers provide parts at no cost or a reduced rate for warranty work, they must compensate dealers based on the dealer's established mark-up, ensuring that dealers are not left at a loss when fulfilling warranty obligations. Additionally, it prohibits manufacturers from imposing overly burdensome requirements on dealers regarding how they establish their pricing.

Supporters of House Bill 623 argue that it levels the playing field for motor vehicle dealers, who often find themselves at the mercy of larger manufacturers. Critics, however, express concerns that the bill could lead to increased costs for consumers if manufacturers pass on the expenses associated with higher dealer compensation.

As the bill progresses through the legislative process, its implications could ripple through the automotive market, potentially altering pricing structures and dealer-manufacturer dynamics. Stakeholders are closely monitoring the situation, anticipating that the outcome could redefine warranty compensation practices in Louisiana's automotive industry.