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New Law Protects Wisconsin Dealers From More Than Just Warranty Surcharges

2019 Wisconsin Act 67 went into effect on November 27, 2019. While it is justifiably referred to as anti-warranty surcharge legislation, it protects Wisconsin automobile and truck dealers in other ways, as well. The new law lists a number of adverse actions” that motor vehicle manufacturers or distributors are prohibited from taking against dealers either (1) for the purpose of recovering the costs of compensating dealers in accordance with the existing warranty reimbursement statute or (2) in retaliation for a dealer having exercised any other right or remedy provided by the Wisconsin Motor Vehicle Dealer Law (‘WMVDL”).

The adverse actions” defined by the new statute include, in addition to surcharges or other price increases, (1) withholding, reducing or delaying incentives or other payments, (2) limiting allocations of vehicles or parts, (3) conducting or threatening to conduct a nonroutine or nonrandom audit, and (4) failing to act in good faith generally. 

When considered along with the scope of the rights and remedies afforded dealers by the WMVDL, this list of prohibited adverse actions” expands the legal protections afforded to dealers against unfair or discriminatory treatment by manufacturers and distributors. For example, there are existing provisions in the WMVDL that prohibit manufacturers from requiring dealers to make costly facility improvements or provide exclusive facilities that are not justified by reasonable business considerations. Prior to Act 67, manufacturers have sought to get around these provisions by making sales incentive payments available only to dealers with exclusive or upgraded facilities. Under the new law, a manufacturer, who withholds incentive payments from a dealer because it has exercised its right not to make a costly and unjustified facility upgrade or has a dualed facility, may be subject to a suit for damages by the dealer. 

Another example is a provision that prohibits manufacturers from requiring dealers to order a product or service that the dealer does not want or to pay for a product or service that the dealer has not ordered. Because of Act 67, a manufacturer, who retaliates against a dealer who resists ordering or paying for an unwanted product or service by withholding incentives or some other form of adverse action” as defined in the new law, could also be sued for damages. 

If you think a manufacturer is treating you adversely because you have stood up for your rights under the WMVDL, you may now have a remedy for putting an end to such treatment. 

The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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