Do main dealiers profit from warranty claims?

[blindswelledrat]

Im always curious about this. I might be wrong but I've always had the distinct impression that warranty claims were a pain in the arse for main dealers.
How are they paid for these? Do the manufacturer pay them their hourly rate for the work or not?

[hondafanatic]

When I worked at a dealership, the were a set number of hours for a particular job. So in effect, a fixed price. Come under the hours, dealer makes money...go over and dealer is out of pocket.

[rehab71]

hondafanatic said:

When I worked at a dealership, the were a set number of hours for a particular job. So in effect, a fixed price. Come under the hours, dealer makes money...go over and dealer is out of pocket.

Exactly this, on the whole warranty claims are not big money spinners.

[Johnson SE]

Manufacturers pay a reduced labour rate for warranty work. Approximately 25% of the retail rate.

They do not pay for diagnosis time. As with any job in a main dealer the operstion (IE fit a specific part) it is carried out at book time - their book of course

Its usually the reason that parts tend to get thrown at a problem rather than diagnosing it correctly in the first place. 25 years plus in retail motor trade experience to back that statement up

[MOB1]

Different brands vary but generally no its very hard to make money. Some brands pay a flat rate per claim so doesn't matter if the claim is £50 or £5000 but some brands do pay well

[hondafanatic]

Johnson SE said:

Manufacturers pay a reduced labour rate for warranty work. Approximately 25% of the retail rate.

They do not pay for diagnosis time. As with any job in a main dealer the operstion (IE fit a specific part) it is carried out at book time - their book of course

Its usually the reason that parts tend to get thrown at a problem rather than diagnosing it correctly in the first place. 25 years plus in retail motor trade experience to back that statement up

Good summing up that ^^

[blindswelledrat]

Johnson SE said:

Manufacturers pay a reduced labour rate for warranty work. Approximately 25% of the retail rate.

They do not pay for diagnosis time. As with any job in a main dealer the operstion (IE fit a specific part) it is carried out at book time - their book of course

Its usually the reason that parts tend to get thrown at a problem rather than diagnosing it correctly in the first place. 25 years plus in retail motor trade experience to back that statement up

Makes complete sense and explains general malaise with warranty claims.
Would you say that for the dealer, this makes warranty claims nothing but a pain in the arse? i.e. there's no money in it and loads of hassle?

[hondafanatic]

blindswelledrat said:

Makes complete sense and explains general malaise with warranty claims.
Would you say that for the dealer, this makes warranty claims nothing but a pain in the arse? i.e. there's no money in it and loads of hassle?

The dealer can be caught between a rock and a hard place just trying to get the warranty approved.

Paint claims were the worst... where I worked, the manufacture sent a warranty approver who would authorise the work. More often than not, they would refuse paint issues so the dealer was left trying to explain to an irate customer that the work won't be done under warranty.

The customer, understandably, doesn't separate dealer/manufacture so would take it out on the chap at the service desk while the manufacture's warranty approver was sat in an office finishing his coffee.

So yes... certainly has the potential to be a pain in the arse.

[750turbo]

hondafanatic said:

Johnson SE said:

Manufacturers pay a reduced labour rate for warranty work. Approximately 25% of the retail rate.

They do not pay for diagnosis time. As with any job in a main dealer the operstion (IE fit a specific part) it is carried out at book time - their book of course

Its usually the reason that parts tend to get thrown at a problem rather than diagnosing it correctly in the first place. 25 years plus in retail motor trade experience to back that statement up

Good summing up that ^^

Really? 25%? Then you are being royally raped by the OEM. There is a factor used to work out the Warrranty rates for most OEM's probablyy looking at approaching 50% of retail as a good starting point, depending on circumstances, it can be higher though.

They do not pay for Diagnostic Time? Rubbish, you are coding the claims incorrectly then.

Parts thrown at a problem, fair enough, swamp diagnosis, there are ways around it.

33 years in the Motor Trade (Albeit with a DMS latterly, but highly involved with OEM Integration a fair bit)

Oh and just to address the original question. At the start of a financial year there are budgets drawn up and guesstimates are made of the 5age of Warranty work that they expect to do over the year, so yes, there will be profit, but retail work is always more preferable. (Do not ask me how I know this!!!! )

Edited by 750turbo on Friday 17th January 08:50

[Johnson SE]

Take 25% off the retail rate and then you get the warranty figure. Sorry if I wasnt clear enough for the PH pedants

So because you worked for an OEM you know all their protocols for diagnosis for every manufacturer. Hmm OK. I can tell you that the only diagnosis that we get paid for is by contacting the OEM and getting their agreement to pay for half an hours labour for certain faults.

Fortunately for me as I work for the OEM running their workshop getting the extra 30 minutes for diagnosis isnt too much trouble. For the dealer they have to sit in a telephone queue to wait to speak to the tech advisor to then explain what they have done so far before getting the agreement for the extra time. All very good if you have an irate customer sitting in the reception area!

[TA14]

Johnson SE said:

Manufacturers pay a reduced labour rate for warranty work. Approximately 25% of the retail rate.

Johnson SE said:

Take 25% off the retail rate and then you get the warranty figure. Sorry if I wasnt clear enough for the PH pedants

A good illustration that it is important to know the difference between of and off.

[750turbo]

TA14 said:

Johnson SE said:

Manufacturers pay a reduced labour rate for warranty work. Approximately 25% of the retail rate.

Johnson SE said:

Take 25% off the retail rate and then you get the warranty figure. Sorry if I wasnt clear enough for the PH pedants

A good illustration that it is important to know the difference between of and off.

In my experience, Warranty Labour Rates are calculated on many varying conditions. There is no, "One size fits all" calculation.

[750turbo]

Johnson SE said:

Take 25% off the retail rate and then you get the warranty figure. Sorry if I wasnt clear enough for the PH pedants

So because you worked for an OEM you know all their protocols for diagnosis for every manufacturer. Hmm OK. I can tell you that the only diagnosis that we get paid for is by contacting the OEM and getting their agreement to pay for half an hours labour for certain faults.

Fortunately for me as I work for the OEM running their workshop getting the extra 30 minutes for diagnosis isnt too much trouble. For the dealer they have to sit in a telephone queue to wait to speak to the tech advisor to then explain what they have done so far before getting the agreement for the extra time. All very good if you have an irate customer sitting in the reception area!

I did not say that I worked for an OEM, apologies if it came across that way.

A good few years ago when I was employed actively in the MT, I was responsible for half a dozen or so different OEM claim submissions, absolute ballache.

Now, I am on the DMS side, our systems having a high level of integration with a lot (not all) with the OEM Warranty Systems - Actually, still a ballache! (Just not my ultimate responsibility now, if the end user does not tick and underline the fekkin job card )

I am sure you will now know where I am coming from.