HB1192, introduced by Rep. Dan Ruby, escaped by attention during the first half of the legislative session. It’s already sailed through the House on a 90-2 vote and is scheduled for a committee hearing in the Senate on March 21st.
But this is a troubling bill that warrants more scrutiny.
As you can see in the text of the bill, it clamps down tough new regulations on the relationship between auto dealers and auto manufacturers when it comes to doing warranty repair work. It requires that manufacturers contract only with new-car dealers to do warranty work, and sets in place requirements for a minimum level of compensation for parts and labor.
In short, this bill is price fixing and market protection to benefit new-car dealers. Not only would used-car dealers, and non-dealer mechanics, be cut out of the market for warrant repairs (auto manufacturers wouldn’t even be able to consider them) but the price requirements in the bill would greatly inflate the cost of doing warranty work in the state.
Given that doing warranty work is a big part of the repair business for any dealer, that’s a big incentive for them to raise their rates and push their compensation levels for warranty work higher.
Yet, setting all that aside, why is the government injecting itself into a transaction taking place between two private entities? Compensation levels between auto manufacturers and auto dealers should be the result of negotiations between those two sides, not some mandate set down in state law.
Regulating that relationship would be a detriment to the market place, and certainly not in keeping with free market principles.