ADMIN DEPARTMENT BY BRENNAN REITER WARRANTY WORK AND FIXED ABSORPTION How much does Warranty Business affect Fixed Absorption? I t is no secret that fixed absorption is the key to profitability in the car business. There is a ton of advice out there detailing the many ways you can pave your way to a successful operation. The way that will be singled out here is your warranty business and the fact that it deserves serious consideration as far as fixed absorption goes. NADA, OEMS, AND SUCCESSFUL DEALERSHIPS The NADA states that the most successful dealerships in the U.S. set their gross parts sales targets to be above 41% for internal business and above 28% for warranty business generated. The NADA also preaches that internal and warranty labor sales should account for 40% together. The reality is that these numbers are typically grouped together since the OEM is not always going to reimburse all that comes through your service department. There is much to know about each OEM's parameters for reimbursement as well as each State's laws governing Warranty Administration. 60