Pub. 1 2021 Issue 1

50 retail rate. For example, the manufacturer’s rules may require that you include battery replacements or wheel alignments in your labor submission. This type of competi- tive routine maintenance work typically has a low effective labor rate and does not represent what you charge your customers for warranty-like repairs. Certain state laws allow you to exclude this type of work, as well as other non-retail repairs such as those paid for by service con- tracts/insurance companies or repairs for fleets or govern- ment agencies. All of these exclusions are placed in the law to protect dealers from having to include non-warranty-like work in their labor rate calculation. 3. The Resulting Numbers Are Often Higher As previously mentioned, you should be evaluating both a statutory submission and a factory submission every year when contemplating a labor-rate increase. In most states, a statutory submission will have different rules than your factory protocol based on a number of specific nuances in the law. We’ve often had dealers ask why they would com- plete a statutory submission when their factory protocol required less work. Let’s say a manufacturer requires 20 consecutive qualified ROs that have closed in the last 30 days, which is far less than the 100 qualified ROs that most statutes require. You may wonder, how can a dealer get a larger increase providing five times the amount of ROs? One answer is that you can use the last six months of data in most states, rather than the limited timeframe pre- scribed by most factories. The larger data set for a statutory submission makes sure that your increase is indicative of your typical retail pricing policies, while a truncated peri - od of time may be far less representative or be subject to an unfavorable work-mix. The extra work can seem daunting to a dealer who has only ever performed factory submis- sions, but it usually pays for itself. How Do I Get Started with My Statutory Submission? The next time you are due to perform a labor rate increase submission, think twice about automatically submitting your factory RO sample or survey. A statutory submission can seem overwhelming to al- ready overworked dealership personnel trying to focus on selling and servicing cars, but that’s where a qualified and well-referenced third-party vendor comes into play. A third-party vendor that is familiar with statutory submis- sions can guide you through the unfamiliar process and perform it for you seamlessly. Before you decide to engage a vendor, you should ask your- self some key questions to make sure you are achieving the optimal result with the least disruption to your business: Exactly how much work will the vendor be complet- ing for your submission? The process between a vendor and dealer can be very different depending on who you work with. If you’re working with a best-in-class vendor to perform your submission, it should be completing all the work for you. If the vendor is asking you to complete tasks like pulling thousands of repair orders, you may be better off completing the submission yourself. Does the vendor evaluate which submission type is best for you? Many vendors simply provide one form of submission over the other, without much thought given into which submission is right for the dealer. However, other vendors have processes in place that allow them to review a dealer’s data in a way that can identify the most profitable submission type. Most often, this is a statutory submission, but it is possible that a factory submission could be better — you won’t know for sure unless your vendor evaluates both opportunities. How is the vendor ensuring you get the best result? Working with a best-in-class vendor means it will have software built specially to ensure the best labor rate sub - missions, based on both state and manufacturer guidelines. If a vendor says it can produce the best result, ask it how; get specific; there are lots of loose claims out there. Attempt- ing to use spreadsheets or DMS reports may help avoid some unfavorable repairs but will make it nearly impossi- ble to identify the optimal range to submit within the prior six months. Most of the time, you can only submit one time per year, so missing the best possible rate will cost you for at least the next 12 months. Next Steps A statutory submission doesn’t have to be as complex as it sounds; that’s why third-party vendors immerse them- selves in state laws and factory behaviors in order to give dealers the industry knowledge and tools needed to get you the best labor rate increase possible. With no commitment necessary, there’s really no reason not to take a look at working with a third-party vendor to see just how much you could be adding to your bottom line. Jordan Jankowski is the Director of Operations of Armatus Dealer Uplift, a Hunt Valley, Maryland-based firm specializing in retail warranty reimbursement submissions. Starting as an auditor, Jor- dan built his knowledge base from the ground up, and today is rec- ognized as an expert in this highly technical arena. Jordan manages a team of 45 people, which produces thousands of retail-warranty submissions each year. CONTINUED FROM PAGE 49 Does the vendor evaluate which submission type is best for you? Many vendors simply provide one form of submission over the other, without much thought given into which submission is right for the dealer.