In response to losing its suit against Illinois dealers in 2023, VW announced in July that it would try to recover these costs by debiting the parts accounts and adding a surcharge to the open parts accounts of Illinois-based Volkswagen and Audi dealers.
Predictably, this move sparked immediate backlash from dealers. On September 13, a group of 28 Volkswagen and nine Audi dealers filed a formal protest with Illinois’ Motor Vehicle Review Board, alleging that the surcharge violates the state’s Motor Vehicle Franchise Act.
In their protest, dealers expressed concern over the unpredictable nature of the charges, as the amounts are determined only after warranty work is completed, leaving dealerships unable to factor the surcharges into customer pricing. The dealers also argued that the new policy unfairly burdens them, making them responsible for the quality and reliability of VW products, especially those prone to warranty repairs.
The Illinois Motor Vehicle Review Board will appoint a hearing officer to mediate the dispute, which is expected to take up to a year. The IADA and the Chicago Automobile Trade Association are backing the protest financially.
Our main takeaway is that there is a reason why many states specifically have surcharge elements within their statutes – for instances like this. The only outcome of these surcharges will be that consumers will be pushed towards other comparable brands or to out-of-state VW and Audi dealers. There are too many good vehicle options and too much price competition for a consumer, no matter how brand loyal they are, to stick with you when they could get the same for less elsewhere.
The outcome of this dispute will likely influence the way states draft their comparable statutes going forward.
Read more at CBT News.
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