Fixed Ops Magazine - 2021 Vol18 03 - 40

FEATURE
WARRANTY
ADMIN &
AUDIT PREP
Are You Ready for the Next Warranty Audit?
T
his article is meant specifically for Dealership
Owners and Dealership General Managers to
provide information regarding costly Warranty
Administration issues and how to manage them effectively.
In my last 35 years of experience, specifically
with Warranty Administration, I have found that it has
been terribly neglected in the auto industry. In the beginning
it was simply an administrative nuisance. Then,
if auditors found enough issues to hit the dealership
with a chargeback, it became an occasional financial
obligation. Now, it is a critical aspect of protecting
your bottom-line since audits are highly technical, forensic,
and WILL HAPPEN at least once every 3 years.
If not managed effectively, your next Warranty Audit
could be the worst event in your career due to chargebacks
that could take years to regain.
A BRIEF HISTORY OF
WARRANTY ADMINISTRATION
In the early years, Warranty revenue allowed dealership
management to easily take advantage of Manu40
facturers
(even if that was not the dealership's intention).
The business did not cost much to manage, and
audits were a joke. From an income perspective, Warranty
Management was mostly an afterthought, being
several light-years behind Sales and Service income.
Warranty Administration efforts were often managed
in a secluded room in the back of the Service Department,
staffed by someone who had not been given
much direction or inspiration to know why their job
was a critical aspect of the dealership. Manufacturer's
auditors would come in periodically and go through
some repair orders. They might slap the dealership on
the wrist and tell them to watch certain areas or certain
repairs. There was no technology to alert a Manufacturer
of chronic problems. At that time, Sales offered
so much revenue to the dealership that no one really
cared. When the auditor came in, he or she would look
for mistakes but had no credible reporting to provide
the dealership any direction or hold them accountable.
Fast forward to 2008 and the great auto industry
melt-down. Manufacturers were suddenly forced to

Fixed Ops Magazine - 2021 Vol18 03

Table of Contents for the Digital Edition of Fixed Ops Magazine - 2021 Vol18 03

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