A Delaware law change means warranty work can now generate real revenue for your dealership instead of eating into margins.
Most trucking and transportation dealers in Delaware don't realize that a provision buried in state law has fundamentally changed how they should be compensated for warranty work. Under Delaware's SB286, manufacturers and suppliers are now required to reimburse dealers at rates that reflect actual business value—not the discounted, below-cost rates that have historically squeezed dealership profitability.
Section 8707(c) of Delaware Code Title 21 requires warrantors (manufacturers and parts suppliers) to reimburse dealers for warranty parts and labor at the dealer's own retail nonwarranty rate. If there's a dispute about what that rate is, the law sets a floor: wholesale cost plus 40% for handling, plus return freight.
In plain terms: you can no longer be forced to perform warranty work at a loss. The manufacturer must pay you what the work is actually worth to your business.
This applies to any manufacturer-dealer agreement entered into on or after July 1, 2014. If you signed a dealer agreement with a truck manufacturer, engine supplier, or parts vendor after that date, this provision likely covers you. Older agreements may not, depending on their terms.
The rule covers both parts reimbursement and labor reimbursement, meaning warranty service work becomes a genuine revenue line item rather than a cost center subsidized by your other sales.
Warranty work has traditionally been a thin-margin or break-even operation for dealers. Manufacturers set reimbursement rates that don't reflect the true cost of keeping technicians on staff, maintaining service bays, or carrying inventory. This law shifts that burden back where it belongs: to the party that designed and sold the product.
For small and mid-sized dealerships, this can meaningfully improve cash flow and profitability. If you're performing 20 hours of warranty labor per week at your retail service rate, that's now billable revenue instead of absorbed cost.
Review your current manufacturer and supplier agreements to confirm they were executed after July 1, 2014. If they were, the law applies automatically—you don't need to renegotiate. However, if you're in disputes over reimbursement rates, or if you're negotiating new agreements, this provision gives you clear legal ground to demand retail-rate compensation.
Document your actual retail rates for parts and labor. If a manufacturer challenges your reimbursement claim, you'll need to show what you charge non-warranty customers. The 40% handling markup plus return freight floor is there to protect you if that documentation is ever questioned.
If you have older agreements (pre-July 2014), they may not include this protection. That's a separate conversation with your legal counsel, but it's worth knowing the difference.
This summary reflects Delaware Code Title 21, § 8707(c), as part of SB286 (An Act To Amend Title 21 Of The Delaware Code Relating To Commerce And Trade). For specific questions about your agreements or reimbursement claims, consult a Delaware business attorney.