Listen to this articleThe basics:
- Gov. Murphy signs Motor Vehicle Open Recall Notice and Fair Compensation Act
- Law takes effect April 1, 2026, strengthening recall and warranty protections
- Requires fair dealer compensation, bars retaliation by automakers
- Aims to improve safety, consumer protection & technician workforce retention
Gov. Phil Murphy signed a new law Sept. 11 that aims to increase fairness, safety and accountability in how manufacturers handle recalls and warrant work on private vehicles.
The bipartisan “Motor Vehicle Open Recall Notice and Fair Compensation Act” takes effect April 1, 2026. The measure ensures strong consumer protections when it comes to recalls. Meanwhile, it also shields dealership technicians across the state, who will now be guaranteed fair compensation for recall and warranty work.
Sponsors included the leaders of both parties in each legislative chamber.
“New Jersey consumers and dealers shouldn’t be stuck paying the price for a manufacturer’s mistake,” said Senate Republican Leader Anthony Bucco, R-25th District, a prime sponsor. “This law will now ensure that the financial burden and responsibility of vehicle recalls falls on the automakers who are responsible for the defects. It’s a fair, commonsense solution that will now protect New Jersey automobile customers and provide support for local dealerships.”
The New Jersey Coalition of Automotive Retailers applauded the action. NJ CAR described the “landmark legislation” as a “major victory for New Jersey consumers dealers, and their employees.”
“This legislation represents a critical step forward in protecting consumers, leveling the playing field for locally owned dealerships, and ensuring that automakers fairly compensate those who fix their mistakes,” said NJ CAR President Laura Perrotta.
Key things to know about the law:
- Prior to issuing a registration or renewal, the Motor Vehicle Commission must verify whether the vehicle has an open recall
- For a vehicle subject to an open recall, the MVC must notify the owner and inform them that the vehicle’s manufacturer will repair the vehicle at no cost by an approved dealer
- Manufacturers must reimburse dealers at no less than the retail rate for warranty and recall work
- Automakers must compensate dealers 1.5% per month of the book value of any vehicle subject to a “stop sale” or “do not drive” order
- Strengthens outreach and notification to vehicle owners with unresolved recalls, encouraging them to seek free safety repairs at authorized dealerships
- Automakers must now cover all costs associated with warranty and recall compliance. That includes holding inventory, parts and labor, which prevents a shifting of expenses from manufacturers onto dealers and consumers
- Dealers are protected from financial retaliation by automakers when asserting warranty or recall claims; and more
Recruitment & retention booster
“Bringing New Jersey’s laws in-line with our neighboring states will ensure that family-owned and operated businesses like ours, as well as all dealerships across the state, will be fairly compensated while keeping drivers safe on the road,” said NJ CAR Chairman Ronald Baus Jr.
He also thanked the governor, legislative leaders and key stakeholders for their efforts on this legislation.
“This legislation was approved with broad bipartisan support, requiring auto dealership technicians to be paid the same rate for warranty repairs as non-warranty work,” the IAM Union (International Association of Machinists and Aerospace Workers) State Council of New Jersey said in a statement. “Our union represents hundreds of skilled automotive technicians throughout New Jersey. Gov. Murphy’s action will help improve the quality of life for workers and their families.
“This law will help recruit and retain a strong auto technician workforce to keep New Jersey moving forward. This law is about fairness for the men and women who keep New Jersey’s vehicles and roads safe.”
