O Service Warranty Audits Putting Your Best Foot Forward By Justin Carr, Vice President of Sales and Marketing, Warranty Processing Company Over the past few years, warranty audits have become mandatory. They are no longer driven by your dashboard or the health of your dealership in the eyes of the manufacturer. They are happening more randomly as manufacturers work to claw back warranty dollars however and wherever they can. Planning for an audit includes having strong processes in place before a manufacturer pays you a visit. Preparing the claims for presentation once the audit comes can be difficult if your team isn’t organized. Challenging the findings will be daunting if your team doesn’t have a strong grasp of the manufacturer’s policies and procedures and the state laws that can help protect your money. Falling short in an audit scenario can be incredibly damaging for your business. Reputation, monetary loss and key players time being consumed in a market that needs their expertise are just a few reasons why it makes sense — on many levels — to be proactive. The good news is there are tools out there to help. After dealing with the pandemic, supply chain shortages and a changing economy, the auto industry is trying to find its center. Dealers are looking to fixed operations to fill the short fall of smaller profit margins experienced on the front side of the house. This high level of disruption to dealerships has changed many long-standing policies. This fact alone increases the likelihood of things slipping through the cracks. When this is paired with new staff that may not be fully trained, the stage is set for mistakes, as well as the probability of poor decisions. Since warranty audit visits are back, you are creating a high-risk, high-liability scenario if you are not prepared with a document management process that has vigorous checks and balances. Knowing this begs the question: Does your team have efficient and consistent processes in place? In a typical warranty audit, most manufacturers review 50-100 VINs. We all know how much detail, as well as supporting documentation, is involved in warranty claims. This equates to many labor hours pulling documents, checking for completeness and accuracy and re-filing the requested documents. Additionally, compiling all this information can lead to misfiling down the road or result in lost documentation. Dealers who do not have a solid electronic system for organizing their documents are putting themselves at great risk. EMPLOYEE TRAINING Given the complexity of the warranty process, regular reviews and consistent reminders are a necessity. This may require training service and parts employees to follow all the necessary steps through the life cycle of a repair order to make sure nothing is missed. It begins with the client booking an appointment for service and doesn’t end until the claim is 100% properly paid and filed for review, should there ever be a need to look back. This requires creating, writing down and making those procedures and policies available to employees. Don’t forget it’s extremely important to keep employees accountable for the process. Would you take a long road trip without a map? This would likely end poorly, having wasted lots of time in the process. Traveling with no road map is like holding your team to a process that isn’t written down and clearly documented — only this time, you’re not just getting lost, you’re losing lots of money. It only takes one employee not following the process to cost your dealership thousands of dollars. Thousands of dollars that could have been avoided. In order to steer clear of this, employees should know their role in the process and make sure they complete their responsibilities before moving the claim forward. Below are just a few examples of some of the key players touching a warranty claim. • Service advisors should make sure the VIN Inquiry is run and attached, prior approvals are handled, signatures are present and repeat repairs follow manufacturer guidelines. • Technicians are responsible for documenting the 3 Cs (Complaint, Cause, Correction) with diagnostic test results. Failure to include all and complete 3 Cs on any line may lead to a chargeback during the audit. They will ensure the Technical Service Bulletins are followed in their repair and noted in their story. They are responsible for their time punching and making sure all onetime-use parts are replaced and charged out on the repair order. • Managers need to make sure they are authorizing add-on repairs, multiple component replacements, straight time and more. 14 Virginia Auto Dealer
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