Written by John Bozella
Updated: 1 hour ago, Published: 2 hours ago
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Alaska's state legislature just approved a plan to raise costs for automakers. The decision will ultimately raise fees for Alaska drivers and direct millions more to the state's franchised auto dealers.
Did your car ever need repairs within the warranty period?
I know what's going on in your heart. “How soon can I make a reservation?” followed by “I'm glad you're covered.”
Drivers are not responsible for vehicle warranty repairs. Or remember.
Here's how it works: Car manufacturers direct all warranty repair work to car dealers.
Automakers pay repair costs directly to auto dealers using an established reimbursement formula based on extended labor time guides that outline how long it takes to complete a specific warranty repair.
Under Alaska law, automakers pay the hourly labor rate that the same dealers would normally charge. This is the same fee that the dealer charges you as a retail customer. It's a system that generally works.
House Bill 233, now on Gov. Mike Dunleavy's desk, would disrupt the auto warranty repair system and shift millions of dollars in additional costs to Alaska drivers.
What's the problem? HB 233 would require Alaska auto dealers to be paid for vehicle warranty work under a new system that uses a different work hour guide originally created for independent auto repair shops. It is mandatory.
so what?
The Hours Guide for Independent Repairers is written for all types of auto repair work, not warranty repairs. This is important because independent working time guides, also known as third-party time guides, are based on certain assumptions.
For example, we assume that independent repairers may be less familiar with vehicle systems than franchised dealers who repair the same make and model on a daily basis, so it will take more time and effort to complete repairs. .
The independent repair labor time guide also takes into account other variables, such as older model vehicles and the lack of special time-saving tools and equipment.
Again, so what?
Auto dealers in Alaska earned an average gross profit of 74% on guaranteed labor payments from automakers in 2023. Enacting HB 233 and withdrawing from the continuing program would force automakers to repay Alaska auto dealers an additional $8 million annually.
If all states enacted this type of law, it would add more than $5 billion annually to the repair system, which equates to $323 per car.
That's a huge sum for dealers, which are already making record profits and have a monopoly on auto warranty repair.
By the way, there's nothing in HB 233 that requires additional compensation for technicians, so that $8 million goes to auto dealers, not auto technicians. I don't have a penny.
Why would Congress intervene in the business relationship between automakers and auto dealers? Twelve states have already considered and rejected similar proposals.
Alaska Auto Dealer's current warranty labor time guide is accurate. And it's fair. and it's working fine. There are no issues that need fixing.
Governor Dunleavy should veto HB 233.
John Bozzella is President and CEO of the Alliance for Automotive Innovation.
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