would be to ensure how the claim is characterized by the manufacturer so that it doesn’t impact your warranty expense report (EPVS/CPVS), which could affect your warranty expense calculation and could ultimately lead to an audit. Reimbursement Example The following is an example of a radio that a particular manufacturer supplies at no cost. The wholesale cost of this part is $995, but the handling allowance is a measly $25. Luckily, in Montana, you are entitled to your full retail markup on ALL parts. This means a dealer with a markup of 80% would net $771 in additional gross profit on this part alone. When you consider all exchange components, a dealer could be looking at many thousands of dollars per year in additional profit that could be put to good use, such as helping to pay and retain quality technicians. THE BOTTOM LINE FOR MONTANA DEALERS The law is clear that you are entitled to retail reimbursement on exchange components. But while this particular provision in the law is designed to be self-effectuating, many manufacturers will interpret it otherwise, meaning you must “ask” for the reimbursement to receive it. For some lucky dealers, their experience is that if they ask, their manufacturers may simply comply. In other cases, dealers have had to send in a letter on their letterhead or attorney letterhead; some that took this step have found success, while others have indicated that “it’s impossible.” In such cases where you have exhausted all your practical resources, you will need to make a business decision as to whether to pursue your rights legally. While suing your manufacturer, or at least threatening to do so, is neither desirable nor preferable, there may be no alternative with respect to a manufacturer who is not complying with the law. But there’s clear evidence that some dealers are receiving retail reimbursement on many or all exchange components, with the possible exception of EV batteries, without resorting to litigation or the threat thereof. Some dealers asked for reimbursement and are collecting significantly more gross profit without pushback or retribution from their manufacturers. While the process of securing fair reimbursement for zero‑cost parts can be complex and varies widely depending on the manufacturer and state, by understanding your statutory rights and taking the necessary steps to request retail reimbursement, dealers can potentially significantly enhance their profitability and ensure they are compensated fairly for the parts they provide during warranty repairs. Jordan Jankowski is the chief operating officer at Armatus Dealer Uplift. He has played a key role in consulting on 18 warranty reimbursement laws across the country and is widely considered a subject matter expert in this highly technical arena. Jordan manages a team of over 60 people who produce thousands of retail warranty reimbursement submissions each year. A good starting point for a dealer would be to reach out to their regional representative in the process of determining how to submit for retail reimbursement on exchange parts. 42 MONTANA AUTO DEALER
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