detailed descriptions of work performed. Misclassified service work, especially within the service work sample, can distort data and negatively affect reimbursement rates on all your warranty work. Additionally, configure your service workflow system to generate reports used to update retail rates as frequently as allowed by OEMs and state laws. 4. Ensure your service manager prioritizes warranty reimbursement. Your service manager should understand the complexities of warranty reimbursement and their impact on dealership profitability. Choose a program leader who’s keen to stay informed about state statutes and OEM reimbursement programs that maximize service revenue and your service absorption rate. 5. Revisit your reimbursement rate often. Most states require that manufacturers permit dealers to request annual rate adjustments for warranty reimbursements. While the process can be time-consuming, the financial benefits make it worthwhile. Even small adjustments can significantly boost service revenue, given the volume of warranty work. Even if you don’t request a reimbursement rate adjustment, assess your pricing structure annually. Ensure that the rate you receive from the manufacturer aligns with market conditions and reflects increasing labor costs. Today’s skilled technicians earn considerably more than they did just a few years ago, and your reimbursement rate should account for these rising expenses. 6. Be wary of manufacturer consumer price index (CPI) programs. OEM-offered, CPI-based multi-year programs may seem like a convenient way to secure annual rate increases. However, these programs base increases on changes to the national CPI — not the amounts you charge customers — and typically cap increases to less than 5%. While convenient, dealers that opt for these programs may forfeit their right to request more substantial rate adjustments allowed by law. Special thanks to Jason Allen, shareholder at Bass Sox Mercer, Attorneys at Law. Bass Sox Mercer is a dealer franchise law firm representing automobile, truck, and motorcycle dealers in complex commercial transactions, business and franchise disputes, operational issues and litigation. The firm specializes in dealer rights, including warranty reimbursement matters. Contact Jason Allen at jallen@bsm-law.com or (850) 878-6404. REIMBURSED SERVICE WORK PROVIDES A RELIABLE SOURCE OF STEADY REVENUE. WITH THE RIGHT MEASURES, IT CAN BECOME EVEN MORE LUCRATIVE. vada.com 19
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