Legal Victory for Auto Dealers Reaffirms the Value of Illinois Warranty Reimbursement Law

Sarah J. Reusche • May 23, 2024
A close up of an orange car in a dark room.

The current Warranty Law in Illinois became effective on January 1, 2022, by Public Act 102-232, and is now codified as 815 ILCS 710/6. The purpose of the Warranty Law is to ensure that dealers are compensated equitably, aligning warranty reimbursement, recall, and stop-sale repairs directly with the rates charged to retail customers. The Warranty Law also prohibits manufacturers from imposing cost recovery surcharges on dealers who choose to be reimbursed at their retail rate. 


Volkswagen Grp. of Am., Inc. v. Giannoulias 


On May 6, 2024, the Northern District of Illinois dismissed a lawsuit filed by Volkswagen: Volkswagen Grp. of Am., Inc. v. Giannoulias, No. 22-cv-7045. (N.D. Ill. May 6, 2024). The suit challenged the constitutionality of the 2022 changes to the Warranty Law, asserting violations of the U.S. Constitution, including Due Process, Equal Protection, First Amendment, and the Commerce Clause.


The court rejected Volkswagen’s Due Process claim based in part on a finding that the Illinois legislature has a legitimate state interest related to ensuring that dealers are fairly compensated for warranty repairs.


The court disagreed with Volkswagen’s argument that the Warranty Law discriminates against traditional manufacturers by not imposing similar requirements on manufacturers that do not use independent dealers. The court held that if direct sale manufacturers chose to adopt dealer networks, the Warranty Law would apply to them in the same way it applies to traditional manufacturers such as Volkswagen.


Additionally, the court disagreed with Volkswagen’s argument that the Warranty Law infringes on its free speech rights and concluded that the Warranty Law did not prevent Volkswagen from raising prices or communicating the reasons for such increases.


Lastly, the court disposed of Volkswagen’s Commerce Clause arguments by clarifying that the Warranty Law does not prohibit Volkswagen from recovering increased warranty costs through price adjustments. 


Dealer Rights Under The Warranty Law


The decisive ruling of Volkswagen Grp. of Am., Inc. v. Giannoulias not only affirms the strength of the Warranty Law but also underscores its value to Illinois dealers. 


The Warranty Law empowers dealers to claim reimbursements that accurately reflect the value of their services. Under the Warranty Law, a manufacturer’s time allowance must be at least equal to the time allowance for retail customers for the same repair work. If no extended warranty time guide is agreed upon, the time allowance must equal the manufacturer’s time guide multiplied by 1.5. The Warranty Law also requires manufacturers to compensate dealers for diagnostic time, including time spent on calls and on-hold with technical assistance centers.


Additionally, the Warranty Law allows dealers to charge retail rates for parts used in warranty, recall, and stop-sale repairs. Reimbursement for parts is calculated by multiplying the dealer’s purchase price by the sum of 1 plus the dealer’s average percentage markup for customer pay repairs. Dealers are further entitled to receive a 30% markup on parts for entire engine and transmission assemblies.

 

Dealers may submit a request to a manufacturer for an increase in warranty reimbursement once each year. A manufacturer must approve or disapprove warranty reimbursement claims within 30 days. Unchallenged claims within this period are automatically considered approved.


Lavelle Law can assist dealers in submitting warranty reimbursement claims and enforcing their right to greater compensation for labor and parts used in warranty repairs. For further inquiries or questions, please contact attorney Sarah Reusche at sreusche@lavellelaw.com or (847) 705-7555. 


More News & Resources

Lavelle Law News and Events

Disregarding clear obligations in a court-approved parenting agreement led to costly consequences.
By Domestic Relations / Family Law May 26, 2026
As a result of our efforts, the court reduced our client’s child support arrearage by half because of the mother’s intentional and prolonged refusal to provide her share of transportation costs. The court also ordered the mother to pay a substantial portion of the father’s attorney’s fees.
A Guide to Preparing and Completing the Dreaded Financial Affidavit  in Illinois Divorce Cases
By Annette K. Corrigan May 22, 2026
Anyone going through a divorce in Illinois is required to complete a financial affidavit as part of the legal process. Each spouse completes their own financial affidavit, utilizing all financial records and information available to them. Follow this step-by-step guide to streamline the process and avoid costly errors.
How to Run as a Write-In Candidate in Illinois
By Annette K. Corrigan May 21, 2026
Write-in candidates are a unique feature of Illinois elections. They allow qualified individuals to run for office without appearing on the printed ballot. While this option provides flexibility, it comes with strict procedural requirements under the Illinois Election Code.
Important Update for Auto Dealers: FTC Cracks Down on Advertising Practices.
By Sarah J. Reusché May 15, 2026
On March 13, 2026, the Federal Trade Commission sent warning letters to 97 dealerships nationwide concerning their advertising practices. This article addresses the practical implications of the FTC’s stance on dealer advertising and what dealers need to know to remain in compliance.
IRS Announces New Option for Taxpayers to Request More Time After ERC Claim Disallowance
By Timothy M. Hughes May 10, 2026
The Internal Revenue Service recently announced a new, streamlined way for taxpayers to extend the period of time for the IRS and the IRS Independent Office of Appeals to review a taxpayer’s response to a disallowance of an Employee Retention Credit (“ERC”) claim to avoid refund litigation.
High-level insight into sophisticated tax-deferral strategies tailored for business owners
By Kerry M. Lavelle May 4, 2026
Kerry Lavelle explains how business owners can access tax-deferred money, highlighting two selective strategies for key employees or management: Deferred Compensation Plans and Cash Balance Plans. Both allow business owners and key team members to earn money while deferring taxes.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
By James P. Berg April 27, 2026
Losing a job or experiencing a change in employment status can be stressful, particularly when it impacts health insurance coverage. The Consolidated Omnibus Budget Reconciliation Act (“COBRA”) provides a critical safety net by allowing employees and their families to continue employer-sponsored health coverage.
Success Story - Strategic Defense in Probate Property Dispute
By Probate Litigation April 27, 2026
In a contentious probate matter involving a disputed deed to residential property, our client, the administrator of the estate, seeks to recover assets after the deed was recorded by the decedent’s neighbor.
Major life events, shifts in financial status, and changes in the law can affect your estate plan.
By Heather A. McCollum and Gabriel P. Kokoszka April 14, 2026
Major life events, shifts in financial status, and changes in the applicable law can all affect your estate plan, and those changes may require you to make some edits to your documents. So, this spring, dust off your estate plan and consider the following 8 circumstances that signal an update is needed.
IRS Announces Filing Season is Progressing Smoothly
By Timothy M. Hughes April 10, 2026
The Internal Revenue Service recently announced that it is seeing the 2026 filing season have a rise in tax refunds. With the April 15th deadline approaching, the IRS stated that there is a smooth pace at which taxpayers are getting their refunds, with the high use of electronic filing.
More Posts