Volkswagen Group of America
v.
Illinois Secretary of State

May 23, 2024

For those who may have missed it, Volkswagen’s recent lawsuit challenging Illinois’ warranty reimbursement statute was dismissed by a federal judge earlier this month. This decision means Volkswagen cannot refile the case. While court cases might seem distant from everyday dealership operations, this one could be a topic of discussion in summer 20 groups. Here’s a summary from Colorado’s perspective.

The Illinois Case

Illinois implemented a new warranty reimbursement approach by applying a multiplier of 1.5 times to stabilize rate growth. Volkswagen opposed this, claiming it violated several constitutional principles. However, the court found Volkswagen’s claims unconvincing, leading to a dismissal.

Colorado’s Approach

In contrast, Colorado’s 2023 legislation addressed warranty reimbursements differently by removing the “reasonableness clause” from the statute. This clause had previously allowed manufacturers to suppress market rates by comparing dealers. Colorado’s new law aimed to simplify and stabilize warranty claims without the complications seen in Illinois.

Impact on Colorado Dealers

The elimination of Chevron Deference does not require Colorado to revisit its statute. The new Colorado law has already achieved similar stabilization goals. Although the impact on dealers is still being assessed, the rule is expected to benefit workers and consumers.

Lawsuit Impact on Colorado Auto Dealers

To learn more about the VW lawsuit and how it affects dealers, watch the video below where Matthew Groves explains the impact and what dealers need to do in detail: