By Anthony Russo, Commerce and Industry Association of New Jersey

Every business and fleet operator in New Jersey returns to the same questions each year: how many vehicles can we replace, and what do we need to charge to cover the cost? What changes year over year is the arithmetic itself. Tariffs and overall rising costs are the more obvious factors that have made answering those questions more difficult this year, but a new state law that took effect in April only risks making the problem worse.

The new line item that fleet operators and other businesses are facing stems from how New Jersey now settles warranty repairs. When a vehicle breaks under warranty, the owner brings it to a franchised dealer, the dealer makes the repair, and the manufacturer reimburses the dealer for the costs. That system has always operated on the premise that automakers should reimburse dealers the amount of time it takes technicians to complete the repair. But S-3309, a law passed during the 2025 legislative session, changed that.

Under the new law, dealers can set their own labor times for warranty work each time they submit a claim to manufacturers, drawn from time guides often used by aftermarket repair shops that lack both the technical expertise and the specialized equipment found at dealers. The consequence is the creation of a system that rewards billing for more hours than a job takes, and because manufacturers cannot send warranty work anywhere else, they have no way to challenge the cost.

Now, manufacturers are facing roughly $348 million more in reimbursements for New Jersey’s dealers each year. Costs of that magnitude get built into the price of every new vehicle that comes off the lot. Not only does that stretch the pocketbooks of families across the state who are taking on new monthly car payments, but it’s also a serious challenge for fleet operators' daily operations. For a contractor replacing its pickup fleet, a distributor cycling out its delivery vans, or a county putting out bids for dump trucks on the taxpayers’ dime, the same premium gets paid over and over, and those costs are often passed to consumers.

A law that is spurring price hikes across the board could not come at a worse time. Fleets are already facing record-high prices and operating on some of the thinnest margins in years. The added cost of new vehicles is forcing many to keep equipment in service well past its normal retirement age. But that “solution” is only a temporary fix and will carry its own costs over time through more downtime, more post-warranty repairs, and steeper insurance premiums.

Six months into the bill taking effect, we are already seeing the unintended consequences of a policy that should have been given more thought. Thankfully, we still have time to fix it, and we do not even have to start from scratch. Other states, including California, Nebraska, North Carolina, and Oregon, have adopted guardrails that ensure dealers are paid for every minute a technician spends on a warranty repair, without allowing overcharges for hours nobody worked.

Tying reimbursement to the hours actually worked is not a rollback of the positive progress lawmakers made. It’s a correction to ensure that fleet operators and consumers aren’t being asked to shoulder unnecessary new costs, and as leaders in Trenton build their case ahead of elections next year, it’s worth their time this fall.