31-16-117. Payment for delivery preparation, warranty, sales incentives and service incentives.

(a) Each new vehicle manufacturer shall specify in writing to each of its new vehicle dealers licensed in this state the dealer's obligations for predelivery preparation and warranty service on its products, compensate the new vehicle dealer for service required of the dealer by the manufacturer and provide the dealer a schedule of compensation to be paid the dealer for parts, work and service in connection therewith, and the time allowance for the performance of that work and service.

(b) No schedule of compensation shall fail to include reasonable compensation for diagnostic work, repair service and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. The hourly labor rate charged by the dealer for warranty service shall not exceed the hourly labor rate charged to nonwarranty customers for nonwarranty service and repairs, provided that rate is reasonable. Reimbursement for parts purchased by the dealer for use in performing work pursuant to a manufacturer's express warranty shall be dealer cost plus thirty percent (30%).

(c) No new vehicle manufacturer shall fail to perform any warranty obligations, fail to include in written notices of factory recalls to new vehicle owners and dealers, the expected date by which necessary parts and equipment will be available to dealers for the correction of those defects or fail to compensate any of the new vehicle dealers in this state for repairs affected by recall.

(d) All claims made by new vehicle dealers for predelivery preparation, warranty, sales incentives or service incentives shall be paid or credited within thirty (30) days following their approval. The manufacturer may audit claims and charge the dealer for unsubstantiated or incorrect claims for a period of one (1) year following payment except where the manufacturer reasonably suspects fraud. A manufacturer that reasonably suspects fraud may audit claims for a period of four (4) years and charge the dealer for fraudulent claims as otherwise provided by law. All claims shall be either approved or disapproved within thirty (30) days after their receipt, on forms or by computerized communication and in the manner specified by the manufacturer including a computerized communications system. Any claim not specifically disapproved in writing or through electronic communication within thirty (30) days after receipt is construed to be approved and payment shall be made within thirty (30) days.

(e) This section shall apply to each manufacturer or distributor of motor vehicles, medium duty or heavy duty truck components or engines who provides integral parts of vehicles or major components by selling directly to dealers or enters into a contract with a motor vehicle, medium duty or heavy duty truck dealer which authorizes the dealer to perform warranty or other services on products produced or distributed.