Zero Cost, Zero Reimbursement — Not So Fast BY JORDAN JANKOWSKI, ARMATUS DEALER UPLIFT Manufacturers supplying warranty parts at zero cost or on an “exchange” basis is a practice that has been around for a long time. However, this continues to be a misunderstood topic in terms of how the manufacturers actually compensate for these parts, versus how they are required to compensate the dealer under various state laws. This practice, where manufacturers supply high-ticket parts to dealers at no cost, has become more common. While this approach might appear beneficial to some on the surface, it often results in financial challenges for dealers, who receive minimal handling allowances instead of a retail markup. The following article explores the complexities surrounding zero-cost parts, focusing on the legal landscape nationwide, where specific provisions exist to ensure dealers are compensated fairly. We delve into the process, the challenges dealers face, and the potential strategies you can employ to secure the retail mark-up dealers are entitled to by law. Zero-Cost Part Provision Concept Manufacturers sometimes supply warranty parts to dealers at zero cost or on an exchange basis. This can vary from manufacturer to manufacturer, but typically includes high-ticket parts such as radios, navigation units, transmissions, engines and EV batteries. When it comes to these “exchange components,” manufacturers have historically only paid a handling allowance, 14 UTAH AUTO DEALER
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