Illinois Motor Vehicle Review Board Unanimously Rules in Favor of Illinois VW and Audi Dealers

On August 20, 2026, the Illinois Motor Vehicle Review Board (the “Board”) unanimously found that Volkswagen Group of America, Inc.’s (“VWGoA”) warranty cost recovery surcharge violated Section 6 of the Illinois Motor Vehicle Franchise Act. Thirty-three Illinois Volkswagen and Audi dealers (the “Dealers”) challenged VWGoA’s efforts to force its dealers to reimburse VWGoA for certain warranty labor costs permitted by Illinois law. The Dealers represent the large majority of Volkswagen and Audi dealerships operating in Illinois.

The dealers were represented by Burke, Warren, MacKay & Serritella, P.C. attorneys Ira Levin, Eric VanderPloeg, and Christopher Verdugo.

Background

Effective January 1, 2022, an amendment to the Illinois Motor Vehicle Franchise Act requires automotive manufacturers to reimburse dealers for labor time on warranty repairs, either pursuant to an “agreed to” labor time guide, or using the manufacturer’s own labor time guide, “multiplied by 1.5.” The 2022 amendment also prevents manufacturers from imposing “any form of cost recovery fees or surcharges against a franchised auto dealership for payments made in accordance” with its warranty reimbursement obligations (815 ILCS 710/6(b)).

In July 2024, VWGoA announced its intention to implement a surcharge program designed to recover the additional warranty expenses associated with the increased .5 time allowances under Section 6 of the Act.

The Dealers filed a protest challenging the surcharge.

The Board’s Decision

The Dealers’ protest was before a hearing officer of the Board who found earlier this year that VWGoA’s surcharge violated the Illinois Motor Vehicle Franchise Act. On August 20, 2026, the Board unanimously affirmed the hearing officer’s ruling in favor of the Dealers.

The Board’s decision reinforces the protections afforded to Illinois dealers under the Act and makes clear that manufacturers may not use surcharge programs or similar mechanisms to shift statutory warranty reimbursement costs back to their franchised dealers.

The ruling has significance beyond Volkswagen and Audi dealers in Illinois. By rejecting VWGoA’s surcharge, the Board’s decision provides important protection to Illinois dealers from other manufacturers that may have been considering similar cost-recovery programs and confirms that Illinois’ statutory warranty reimbursement requirements cannot be circumvented by simply recasting those costs to dealers.

What’s Next

Burke Warren will continue to monitor the matter, including whether VWGoA appeals the Board’s decision and any potential implications for motor vehicle dealers throughout Illinois.

For More Information

For questions regarding the Illinois Motor Vehicle Franchise Act, manufacturer warranty reimbursement obligations, or the Motor Vehicle Review Board’s decision, please contact Ira Levin, Eric VanderPloeg, or Christopher Verdugo.