For over a century, Western New York has been a backbone of American auto manufacturing, providing generations of New York workers with good-paying, stable careers. New investments in the region, including Ford’s stamping plant in Hamburg and GM’s facilities in Lockport and Rochester, are meaningful steps to ensure this proud legacy is upheld.
While these commitments are a welcome signamid greater uncertainty facing our state’s business climate, pending legislation in Albany threatens to undermine the resurgence of New York’s auto manufacturing industry by drastically increasing payments that automakers make to dealers for warranty repairs.
An auto manufacturer’s warranty offers consumers peace of mind after purchasing a new car and puts the onus on automakers to pay the auto dealers for any repairs that are needed during the warranty period. How much dealers keep from this payment and the amount they decide to pay their service technicians is at the discretion of the dealers.
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Dealers are already enjoying a high profit margin from warranty repairs. However, the legislation in question would mandate massive increased payments from automakers to dealers to the tune of an extra $900 million annually for in-state auto dealers.
According to the bill sponsors, the extra cash for dealers will in turn increase compensation for auto technicians who are making the repairs. But here’s the catch: the legislation doesn’t actually require dealers to pay technicians a cent more from the additional money, leaving the extra profits in the hands of dealers.
This “oversight” suggests that the real purpose of this bill is to enhance dealership profitability. Auto dealers nationwide brought in over $600 billion in profits last year – do they really need to exploit the system even more at the expense of automakers and consumers?
Automakers are a critical anchor for a vast network of manufacturing suppliers across New York, from small family-owned businesses to larger operations, who depend heavily on the health and stability of automakers to sustain their own businesses. The proposed legislation therefore, not only impacts automakers but also jeopardizes the broader ecosystem of manufacturing suppliers vital to our state’s economy.
Across most of New York, and especially upstate, access to a car is vital to finding and keeping a job. This legislation would only cause car prices to rise, making car ownership a greater burden on those seeking employment.
Rejecting this legislation is an important step to ensure New York’s auto industry remains competitive, sustainable and fair. Our business climate already presents manufacturers with a host of challenges.
Now more than ever, we must advocate for policies that bolster, rather than hinder, our state’s auto manufacturing sector, ensuring it continues to provide New Yorkers with opportunities for generations to come.
Heather Mulligan is president and CEO of the Business Council of New York State.