Fixed Ops Magazine - 2021 Vol18 03 - 41

cut costs and " find " revenue. THEY SUCCEEDED. The
Manufacturers developed technology to take the repair
information being downloaded through the various
DMS systems and analyze the data to determine
cost-per-repair parameters and frequency-of-repair
issues (improper repairs, comebacks, etc.). Manufacturers
did a good job of getting " smart " and finding
revenue. They were very successful. After their technology
advancements, when the Manufacturer came
in for a Warranty audit, they knew which repairs were
overcharged, who made the repairs, and exactly how
much was over-charged before they walked in the
door. The auditors went from giving a slap on the
wrist to hammering on tens of thousands of dollars in
chargebacks. (Some higher volume dealerships experienced
chargebacks in excess of $1,000,000.)
At that time, the focus should have shifted in the dealership
as well. The shift from one of a minimum wage
clerk to a reasonably paid Warranty administrator
should have followed. It also should have signaled a
focus on comprehensive Warranty training within the
Service Department. Sadly, it did not happen on either
account. Dealership Management continued to treat
Warranty Administration as a lower priority. They paid
for it in the end, literally.
It has only been in the past 5-7 years that there has
been a shift in realizing that, while Warranty Administration
is not designed to be a major profit center
- it can be a major financial black hole. In an effort to
get dealerships to follow their policy and procedures,
some Manufacturers have even gone so far, recently, as
to term various Warranty errors as fraud. As you might
expect, once you have been marked with fraud - it creates
a mostly unjustified stain on the dealership brand
and reputation that is nearly impossible to erase.
A NEED FOR CHANGE
You might ask yourself why this trip down memory lane?
Over the last decade at NADA, how
many breakout sessions or programs
of any kind have been dedicated to
Manufacturer's Warranty, specific to
Warranty Administration and audit?
I have been attending NADA over
MAY JUNE 2021
|| FIXED OPS MAGAZINE
the last 15 years or so and the answer is ZERO. Yet,
NADA also states that Manufacturer's Warranty has
been a $30 BILLION affair within the auto industry.
This is not an indictment of NADA by any stretch. But
it is indicative of the value Warranty Administration
now has in the cost structure of the dealership.
Every dealership will be audited. Virtually every dealership
has been audited. I know of NO dealership that
had refunds sent from the Manufacturer due to underpayment
for Warranty services.
So, the question is, why is Warranty Administration still
being minimized?
Every
dealership will
be audited
In my experience, Warranty Administration is still
being minimized due to a lack of
knowledge by the Dealership Principal,
the General Manager, and even
some high-level Corporate Fixed
Operations Vice Presidents as to
the critical importance of Warranty
Training.
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