Overpriced Car Repairs at Texas Dealerships to Become Illegal

$160 for an oil change at the dealership?  While this price for an oil change seems exorbitant, it is real and what many luxury car dealerships charges for one at their service centers. In the state of Texas however, they have done something to curtail this practice.

The Texas legislature today passed a law to put a cap on how much a car dealership may charge for many repair and maintenance services they offer to the public. The new law, which takes effect immediately, imposes limits on both the labor charge and profits made on the parts they sell to any customer, regardless of whether the car was bought from the dealership or not, or if the car is the same make/brand sold by the dealership, or whether the type of car is a ‘luxury brand’ or an economy car.

Assemblyman Henry R. Hill of Arlen, TX, said in a prepared statement this morning that “it is the duty of the state to protect its citizens from this kind of practice, which has largely gone unnoticed and accepted for many years.”

“It is un-American, and we will no longer tolerate it,” Hill adds.

However, Dale Gribble, president of the United Dealership Association of Texas (UDAT) said that the law is unfounded and goes against the basics of free enterprise, which has its roots in America since its inception.

“I cannot believe that this law passed without any opposition. This clearly is a blow to many business owners. It maybe just car dealerships right now, but this is just the beginning,” Gribble said.

The new law puts a limit on the profit margin by car dealerships and repair centers to all parts that are either installed or purchased separately to a 2% limit over cost, and labor charge down to the same rate as the minimum wage of $7.25/hour for the state of Texas.

Violation under the new law will mean a $10,000 fine for the first offense, $50,000 fine for the second, and revocation of business license for the third time on top of a stiff $100,000 fine and possible jail time for the business owner.

Consumer groups are however rejoicing upon learning of this latest news.

William Dauterive, a spokesperson for the Texas office of the Consumer Federation of United States, a non-profit organization founded to advance consumer interests, said that this is a “win for all consumers not just in Texas, but for the entire United States.”

Dauterive adds that consumers have been “over charged for car repair services for many years and it was about time the government did something about it.”

Meanwhile, a legislator in California is monitoring consumer response to this new Texas law and may introduce a similar one in California. Linda Royce-Lieberton, assemblywoman for California’s 54th district, said that the law in Texas could apply in California.

“I’d like to see what happens in the next few months, and maybe we can adopt this in California as well,” Royce-Lieberton said.