What the Right Partner Should Do A warranty partner can get receivables flowing and protect your dealership from audit problems, but they don’t just lift warranty claims. A good one boosts the service department by making it unnecessary for the service manager to spend time in the weeds. They also help the team work together more efficiently. Tech enablement is important on the fixed operations side of a dealership, but deep tribal knowledge and an equally deep understanding of data are also important. The warranty company helps the service manager focus on growth by fixing processes and providing insights and information. Owners and General Managers often don’t have a front-row seat to the intricate details that get and protect the money on a warranty repair. Although state laws are being implemented to combat dated factory policies, dealerships should not solely focus on getting a labor rate and parts markup increase. These types of increases will certainly help the bottom line, but are they being as impactful as they could be? Some dealers don’t maximize the warranty to include items like rentals, test drives, or any additional work that needs to be done so the repair is handled correctly the first time. They may skip signing and approving add-ons, which could ultimately result in you losing that money down the road. Sometimes employees leave items off claims because they don’t know how to get an advanced repair order paid. Teach them. Checks and balances in the warranty process are important to maximize repair orders. Adjustments that appear on the warranty schedule are not necessarily a bad thing. Imbalances are an opportunity to gain knowledge, fight for additional dollars and make corrections to processes or systems that improve efficiency. Too many dealers are submitting repair orders to the manufacturer before they are closed to the DMS system. Once they are paid, they are closed to the DMS for that amount. How can you ensure that you have collected every dollar in that process? What is your tool to monitor progress? In the previously mentioned scenario, there is nothing on the schedule that would show you that a rental was left off or a part was marked up incorrectly. It also creates risk and potential audit liability. Was a recurring problem not identified? Are you giving the manufacturer just reason to recapture your legitimate dollars stating that a repair didn’t follow policy and procedure? Be conscious that you are getting all the dollars the manufacturer will pay, and avoid closing repair orders after the manufacturer has released the credit statement. Audit each claim to ensure it complies with the policy and procedure, and nothing is missing. Ensure all codes are applied, identify and understand all variances before reconciling the differences, and update everything daily. It is easy to keep a schedule clean and running clean when you touch it every day. When warranties fall behind, they become a mess. When that happens, the work it takes to clean them up is extremely time-consuming and can involve many staff. By controlling the things you can, you make it easier to achieve your goals and objectives. You also minimize the risks associated with uncertain or uncontrollable factors. The right warranty company can help you create a clean, complete process. A Justin Carr is a VP at Warranty Processing Company, which recently relocated to Texas. Justin works with dealers nationwide to increase efficiency within service departments and educates dealer staff on why efficiencies matter. To learn more, please visit warrantyprocessing.com. By controlling the things you can, you make it easier to achieve your goals and objectives. inefficient. Increasing the profit margin is smarter than spending money unnecessarily; also, maximizing your margin when it is harder to make a profit will serve as preparation to grow profits more efficiently later. To improve how your dealership works, evaluate and improve the quality of your business decisions. Running a dealership is complicated. Getting knowledgeable and objective advice from outside the dealership can help you examine and improve your business’s processes. Your goal should be to capture every warranty dollar, but you must be granular to do that, and a General Manager’s job is typically not granular in that department. Instead, hire a warranty company to act as your partner. 36 California New Car Dealer Quarterly
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