HB3940 Summary

• Sales of motor vehicles by unlicensed dealers are now explicitly prohibited rather than merely discouraged in Illinois law.

• Manufacturers must pay dealers no less than retail customer rates for warranty labor and diagnostic work, with time allowances calculated using manufacturer time guides multiplied by 1.5 if no agreed-upon guide exists.

• Manufacturers must pay dealers the same effective labor rate for warranty repairs as the dealer receives for customer-pay repairs, calculated using the dealer's 100 most recent sequential repair orders excluding maintenance.

• Dealers can request warranty labor rate increases once per calendar year, and warranty claims must be approved or disapproved within 30 days with payment due 30 days after approval; unapproved claims are deemed approved if not explicitly rejected within 30 days.

• Manufacturers are prohibited from imposing cost recovery fees or surcharges against franchised dealers, reducing payments based on market norms or averages, or denying warranty claim reimbursement absent fraud or illegal actions by the dealer.