Committee advances broad motor-vehicle recall and dealer compensation bill after lengthy debate

The Assembly Consumer Affairs Committee on March released a substitute to Assembly Bill 43-80, the Motor Vehicle Open Recall Notice and Fair Compensation Act, after extended testimony from labor unions, dealer associations, accounting firms and automakers.

The substitute supplements the New Jersey Motor Vehicle Franchise Practices Act to (1) grant standing to trade associations meeting specified criteria to bring administrative proceedings on behalf of franchisees in certain circumstances; (2) require enhanced recall-notification duties for automakers and the New Jersey Motor Vehicle Commission; (3) entitle dealers to compensation when parts required for recall repairs are unavailable or when a manufacturer issues a do-not-drive or stop-sale notice; and (4) extend the existing 100 sequential customer-paid repair order methodology so it can be used to calculate retail hourly labor rates and labor time allowances for warranty and recall work. The substitute also contains provisions addressing chargebacks and a monthly reimbursement for dealers holding used vehicles with open recalls.

Supporters — including union representatives, technicians and dealer trade groups — said the bill will ensure dealers and technicians are paid fairly for recall and warranty work and improve the recall completion rate by incentivizing manufacturers to prioritize parts and repair protocols. Technicians described examples where warranty labor times paid by manufacturers were substantially lower than the time actually required to complete a repair; speakers said the discrepancy depresses technician pay, discourages new entrants and can lead to unpaid off-the-clock work. United Service Workers, the International Association of Machinists and local technicians provided multiple examples, and technicians cited specific repair tasks where flat-rate warranty times did not match time-in-practice.

Dealer representatives and their accountants argued the bill protects small and mid-sized local dealerships from unilateral manufacturer practices on parts pricing, labor rates and audit chargebacks. NJCAR (New Jersey Coalition of Automotive Retailers) said the substitute clarifies associational standing for trade associations to bring suit and would apply the 100 sequential repair-order methodology to labor time and labor rate, a method NJCAR said is objective and already used in other states.

Automakers, represented by the Alliance for Automotive Innovation, opposed several parts of the substitute on cost and fairness grounds. Witnesses from the Alliance argued the substitute's changes to time-guide usage and the removal of a reasonability standard could substantially increase warranty and recall costs and therefore be passed to consumers; they also disputed claims that manufacturers resist completing recalls, noting federal NHTSA oversight and fines incentivize recalls and reporting. Alliance testimony described concerns that allowing dealers to pick among third-party time guides (which generally add extra time to account for older vehicles and independent-shop conditions) would let dealers charge warranty work as if they lacked dealer-only tools and equipment, creating higher costs for automakers and, ultimately, consumers.

Consumer advocates and public-interest groups said they were wary of provisions that could allow dealers to sell used vehicles with open recalls, and emphasized that recall-notification measures and limits on resale should protect consumers. Several national and local consumer organizations provided written comments and testified that they welcomed some amendments circulated in the substitute but reserved judgment until final language addressing resale and notice definitions was settled.

After prolonged discussion, the committee voted to release the bill as substituted. The roll call recorded affirmative votes from Assemblywoman Munoz, Assemblyman Egan, Assemblywoman McCoy and Chairman Samson.