VW sues in Ill. over extra dealer warranty reimbursements

Volkswagen Group of America has filed a lawsuit in federal court in Illinois in hopes of reversing changes to the state’s franchise law. 1 million last year.

The lawsuit, filed last month in the U.S. District Court for the Northern District of Illinois, challenges the Multiplier Act, a change to the state’s auto franchise law signed into law in 2021. The multiplier method has removed the traditional time guide guarantee. Instead, it requires automakers to pay the same amount as retail customers for covered repairs. The lawsuit states that the change in guaranteed flat rate hourly reimbursement equates to a 50% increase per service operation.

The new warranty reimbursement clause will go into effect on January 1, 2022, and the German automaker claims it has been forced to pay nearly $10 million more to 28 VW and 12 Audi stores between that date and the end of November. I’m here. It is in a state for warranty work.

“Simply put, the Multiplier Act is what crony capitalism does at work: The Redistribution Act takes hundreds of millions of dollars from some (but not all) automakers and uses them for their own purposes, not for public purposes. Deposit the money directly into the pockets of politically favorable Illinois dealers.”

Citing several state officials and members of the Illinois Automobile Review Board as defendants, the court sought to declare the multiplier law unconstitutional for several reasons, including that it only applies to traditional automakers with franchised dealers. I’m looking for

The Multiplier Act (also known as the Guaranteed Reimbursement Act) was passed bipartisanly, supported in the legislature by a combination of franchised dealers and organized workers, ostensibly to promote technician salaries.

VW is the only automaker to challenge the constitutionality of Illinois law. Neighboring Wisconsin passed a similar provision in its state franchise law more than a decade ago.

Illinois Governor JB Pritzker said in a written statement when he signed the bill: It will be legalized in July 2021.

Illinois auto dealers do not have to hand over additional refunds to technicians. But a labor agreement with the union representing engineers in the Chicago metropolitan area now includes a clause to give workers additional reimbursement, said a dealer representative who asked not to be identified. rice field.

That person said dealers who did not pass the additional reimbursement risked losing technicians to dealers who did. Nor does it apply to technicians employed by direct-to-consumer manufacturers,” it said, pointing to a lack of clarity.

A spokesman for VW Group of America said the automaker had no comment beyond the lawsuit.

“We are delighted that the bill passed and was signed by the governor,” said Joe McMahon, executive director of the Illinois Auto Dealers Association. I think it’s a little silly, all we said during the legislative process was that we wanted dealers and technicians to be fairly compensated, and the members agreed.”

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