Fixed Ops Magazine 2024 Vol 21-6 - 61

Sometimes the resulting frustration can be overwhelming
and makes it seem easier to just manage warranty
as a cost of doing business. But the significant " cost " of
such a posture leaves a gaping and what seems like an
impassable chasm in your fixed absorption and in your
profit. The truth is that there is more predictability and
control when it comes to fixed absorption and your
warranty revenue than there is customer pay business
and it is well worth your time and attention.
BOOST YOUR BOTTOM LINE TWO WAYS:
Warranty work should not be viewed as unavoidable
work but as a blessing and opportunity. It accounts
for a significant portion of your technicians' time.
Although increasing your warranty work profitability
has many factors, here we will boil it down to two
major contributors:
1. educate service advisors so they can determine
warranty coverage BEFORE the car is in front of a
technician
2. maintain knowledgeable technicians who can determine
warranty coverage while diagnosing customer
concerns
EMPOWER YOUR SERVICE ADVISORS
TO DRIVE SALES
Service is selling. You are already well aware that the
sales pipeline for your service department starts with
none other than service advisors behind the counter.
The NADA estimates that in 2023, only 16% of dealerships'
service and parts sales were accredited to warranty
work and 12% was internal work.
Knowing whether or not something is covered under
warranty before the customer drops the vehicle off is
incredibly important. If you think it is covered and later
find out that it is NOT covered, you could potentially
upset a customer by seeming to go back on your word.
From a customer service perspective, you are at risk of
damaging your reputation and what faith the customer
may have in your ability to solve their problems. From
a financial perspective, you are potentially missing out
on opportunities to sell customer pay jobs.
For example, the NHTSA states that the average new
car dealership gets about 2000 vehicles in for service
recalls alone per year. That is 2000 opportunities to
help your customers and sell needed services. With the
average customer pay repair in the US being $500, if
you close 80% of your opportunities, that's an extra
$800,000 to your services, sales, or potentially at least
$200K in additional profits! Therefore, it's clear that
warranty jobs serve as significant financial opportunities
for your entire service department.
EMPOWER YOUR TECHS TO DELIVER
EXCEPTIONAL SERVICE -
DRIVE EXCEPTIONAL REVENUE
Every time a wrench turns left or right your revenue
changes. Your technicians are the last line of defense
when it comes to money slipping through your hands.
In 2023, Dealerships' total service labor sales totaled
$10.8 BILLION in warranty revenue in the USA. Now,
as we all know, diagnostics are key when it comes to
reducing shop comeback, but they are also pivotal
to securing warranty revenue. In order to maximize
potential revenue, your techs must be well versed on
warranty coverage policies.
NOVEMBER DECEMBER 2024 || FIXED OPS MAGAZINE
61
Fixed Ops Magazine 2024 Vol 21-6

Table of Contents for the Digital Edition of Fixed Ops Magazine 2024 Vol 21-6
