I was recently retained to "clean up" an automotive group's warranty departments at a few of their locations - they were dealing with aging claims, manufacturer reduction of claim submission deadlines, bottom right hand drawer syndrome - the normal stuff.

As the days went on, I continued to find an amazing amount of infractions to the established warranty policy and procedure guidelines for claims compliance.  I presented my finding to the head honchos and the respective general…

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Recently I started consulting for an automotive group.  A few of their stores were in serious trouble with warranty claims that were aging and an outstanding accounts receivable that just seemed to keep growing.  They had a wonderful person performing the claims input.  She was a very nice person.  Always on time.  Never took a longer lunch break than was allowed.  They told me that she never once called in sick the entire time of her employment.  Matter of fact, she didn't even join in…

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Recently, a new client of mine was surprised that the first thing I did when I came into his dealership was to familiarize myself with the manufacturers Policy and Procedure manual - and by familiarize, I mean that I read it cover to cover.  This has been a process of mine since I first entered into the automotive field almost 20 years ago.  If there has ever been a publication that is released by a manufacturer, which outlines pretty much every expectation they have for each of the…

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Are you familiar with this term:  "bottom right hand drawer syndrome"?  If you are not, it will likely create a major headache for you and cost you a good deal of money...

What is this syndrome?  In years past, before manufacturers started reducing the amount of time they would allow a claim to age, many warranty administrators would shuffle difficult claims to a "special" place so that they could "re-visit" it at a later date...often that hiding place was the lower right hand drawer…

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I have worked in most positions in a dealership.  In each department, there are established procedures that are used to complete tasks to meet forcasted goals.  Sales use stringent procedures to ensure that cars are pushed across the curb.  Service departments use multiple procedures to generate upsales and high customer satisfaction indexes.  General office departments use precise procedures to keep all of the legal and accounting aspects of the dealership in order.

What about your…

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I have found that training, or lack thereof, makes a huge impact on the success of a fixed operations department.  Manufacturers spend a great deal of money developing curriculum to enhance dealership personel performance.  They entice the dealership to utilize this training in the way of money allocation for car sales and parts ordering.  I am amazed at the number of employees who simply cannot stand to be forced to increase their knowledge.

From the very beginning of my career, I…

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One of the most overlooked and biggest issues revolving around warranty infraction is lack of communication between the Warranty Administrator and the Service Manager.  Many times, the Warranty Administrator gets so self-involved with repair order review/correction that they forget that it is the Service Manager that is ultimately responsible for the fiscal well being of the service department.  Don't get me wrong, when I wore the hat of Fixed Operations Manager the last thing I really…

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If you find yourself caught up in a consultative review or a full blown corporate audit, you will be amazed at one area where you will lose a great deal of money:

 

YOUR PDI REPAIR ORDERS!

 

That's right!  If your PDI checklist forms are not filled out properly - WITH the appropriate management signatures, or there are mileage inconsistencies, or untrained techs performing the service, the auditors will simply debit the PDI.  That will equal around $100 per repair…

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Office Management is compiling all of the numbers to generate Service Management commissions over the next couple of days.  There are factors that you control as an ongoing basis...there are others that you do not address until after the fact.  Did your Warranty Administrator submit for the maximum allowable dollars (100%) vs. their peer indexes this month?  How much is being applied to your policy adjustment account because of claim non-payment or claim debit? 

In Fixed Operations,…

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Here is a question for Service Managers and/or Fixed Operations Directors:  How much time do you spend reviewing your warranty department on a daily basis?  If you are performing the tasks and duties that are the responsibility of your warranty administrator, then you need to re-evaluate who you have in that position.  Are you simply assisting with those duties?  Have you placed too many other tasks upon your warranty administrator?  (i.e. cashiering, phone operator, service drive assistant,…

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Manufacturers can debit a warranty claim if it is determined that the technician recorded excessive efficiency during the repair (typically +125%) - excessive efficiency is an indicator of cutting corners or fraudulent repair practices.  When a manufacturer reviews/audits repair orders, one of the things that they look for on the accounting copy of the invoice is the actual time worked vs the time flagged/submitted for payment.  When they see a repair order with…

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I am often confused by dealerships that place a want ad for a warranty administrator/clerk every 6 months, yet when called on by a reputable warranty submission company, many will state "we do not like to use an outside source..." - well, I wonder exactly what they are expecting when they place a want ad?  Is that not an "outside source" they are seeking?  They are willing to jeopardize hundreds of thousands, if not millions of dollars by placing trust in someone that they bring in off the…

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Most dealerships reduce their overall expense in ways that make complete sense.  They utilize vendors for pin striping, dent repair, small paint repair, even detailing departments.  Why would you pay the expensive overhead to employ full time people that provide "part time" results?  Yet everyday, dealerships keep paying a ridiculous amount per year for warranty administrators...

Fixed Operations account for about 12% of the total dealership sales; however, it produces 60% of the overall net profit.  Warranty claims equate to 30% of the total volume in the service department...with that understanding, one will deduce that the warranty department in your dealership accounts for 20% of the total net profit of the dealership!  When you have…

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I have never found a dealership that does not have some amount as an "automatic policy adjustment."  - Most that I have seen have what seems to be a minimal, "$5.00" - but I have also seen as much as "$50.00"...what?!?  Did you know that if you write 1000 warranty repair orders per month, and you allow for a $5.00 automatic adjustment, for whatever reason, you have the potential of simply losing $60,000 per year!!!  Now that $5.00 is starting to look like a little bigger number isn't it?  Let's… Continue

Your effective labor rate for customer pay service work is variable and certainly differs from your posted "door" rate.  Your warranty labor rate is fixed for at least one year and normally increases after a labor rate review.  Your single biggest customer pays a fixed dollar amount for every single labor hour you charge them, yet you continue to attempt to manage a variable rate for every other customer, while you overlook… Continue