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HB 3859

Relating to motor vehicle franchised dealers and the reimbursement of motor vehicle franchised dealers by manufacturers and distributors for warranty, recall, over-the-air, and preparation and delivery work.

89th Legislature (2025) Introduced by Jared Patterson

HB 3859 mandates manufacturers fairly reimburse Texas franchised dealers for warranty, recall, software update, and vehicle preparation work.

Withdrawn from schedule
#business&commerce--general(i0050) #motorvehicledealers(s1214) #occupationalregulation--othertrades&professions(i0541) #vehicles&traffic--equipment(i0855) #vehicles&traffic--general(i0865)
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Bill Summary · HB 3859

Legislative bill overview

HB 3859 establishes reimbursement requirements for franchised motor vehicle dealers when manufacturers and distributors compensate them for warranty repairs, vehicle recalls, over-the-air software updates, and vehicle preparation/delivery work. The bill aims to standardize how dealerships are paid for these manufacturer-mandated services that don't generate direct customer revenue.

Why is this important

Dealership profitability depends significantly on manufacturer reimbursement rates for warranty and recall work. If reimbursement rates are too low relative to actual labor costs, dealerships absorb losses on these mandatory services. This bill addresses a persistent industry complaint that manufacturers underpay for work they require dealers to perform, potentially affecting dealership viability and service availability.

Potential points of contention

  • Manufacturer opposition: Auto manufacturers may argue that standardized reimbursement rates limit their operational flexibility and increase vehicle costs, which could be passed to consumers
  • Rate-setting mechanism: The bill's specifics on how reimbursement rates are calculated and adjusted aren't detailed in this summary, which could be contentious if rates don't reflect regional cost variations or dealer efficiency differences
  • Over-the-air update compensation: Defining fair payment for remote software updates (which require minimal physical dealer involvement) may be difficult and controversial

Compiled from official sources — confirm details with the bill’s official record.

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