We can add another state to the ever growing list of states that have been updating their warranty reimbursement laws in the past few years.
To give you a quick rundown, here’s a list of the improvements that are part of the two pieces of legislation that passed this year.
- Clarification was brought to warranty reimbursement – the passages now referred to parts and labor instead of vaguely referred to warranty claims as work, service or repairs.
- There is also clarification that warranty labor and parts are to be reimbursed at a rate equal to that charged to retail customers for like work.
- No surcharges of any kind can be imposed in an attempt by the manufacturer to recover the additional costs for warranty repairs.
- When a paid claim is charged back to the dealership as the result of an audit, the manufacturer must meet (in person, by phone or video conference) with an officer or designated employee of the dealership to discuss the proposed chargebacks, provided a detailed explanation with supporting documentation.
- Proposed audit chargebacks cannot be charged back for at least 45 days from the date of the chargeback meeting to allow a dealership to respond. Charge back time frame should be dependent on the size of the chargeback.
- Chargeback basis cannot be changed after the chargeback meeting. If it does, the manufacturer must conduct a subsequent chargeback meeting and give the dealership at least 45 days to respond before applying the chargeback.
Overall the changes are a great benefit to dealerships in Florida. There is a chance much will be made about the changes to the warranty reimbursement law. Although it sounds good at first glance, the changes are not much different than the basic warranty reimbursement law that most states already have in place. The
wording changes were minor and really didn’t materially impact the chances dealerships will have an easy time getting paid at retail rates from the manufacturers.
The one twist that may help dealerships is that dealership groups like AutoNation, Penske Automotive Group (was United Auto Group) and Sonic have a foothold in the Florida market and are more likely to take on the manufacturers over warranty reimbursement rates because they’ve got the clout and the money to make it an issue.
You may want to consider contacting your dealer association or attorney to see what, if anything, you can do to seek higher warranty reimbursement rates from the manufacturer.
GM has made it know that it’s not happy about the new law. At least the Southeast Region isn’t too happy with that. Ricardo LaCosta, Regional Service Manager for the Southeast Region sent out a letter with a list of consequences that dealerships will have to endure if they do ask for rates allowed under the new law.
First up is a warranty audit. Yes, you heard right. Before anything else, it looks like you’ll get audited as the first step towards that long overdue warranty money you should have received many years ago.
Depending on the outcome, you may go to step two which is a sampling of 100 consecutive customer repair orders. This review will be used to determine the rates at which the dealership will be reimbursed.
A semi-annual review will be performed to re-verify the reimbursement rates and a warranty audit will be performed. It looks like the seriousness of these semi-annual reviews and warranty audit will be based on the rates the dealership is being reimbursed at and the circumstances surrounding their warranty expense.
But wait, there’s more!
Once your new reimbursement rates are determined, you self-authorization empowerment will be crippled. The only authorization codes you’ll be able to use are A and G. Everything else, and this includes authorization codes B, E and P will be taken away. Any claim type B claims will be subject to inspection and approval by a rep.
This is going a bit overboard in the region wielding its power. It’s so obviously intended to steer dealerships away from asking for the increase by imposing onerous requirements on them. There is no doubt that it’s another way of patting those on the head that don’t rock the boat and taking the whip to those that do.
Nissan surprisingly has come out and embraced the new law. They’ve already sent out a bulletin to dealerships saying they will pay the Nissan listed MSRP on parts. This decision didn’t come out until late August so Nissan went a step further and is retroactively paying MSRP on parts back to July 1st, the date the law went into effect.
Nissan’s motives may not be all that generous. Somewhere between 20% and 25% of Nissan dealerships in Florida are owned by AutoNation, the largest dealership group in the country. No doubt AutoNation has the capability to battle with manufacturers to get what they are due under the new law if it’s needed. Certainly
Nissan didn’t want to take on one company that is responsible for so many of their sales in one state.
It’ll be interesting to see how other manufacturers handle the new warranty reimbursement law in Florida. If it can be judged by the way GM’s Southeast Region is handling it, it could get ugly. If you go by Nissan, the fight may not be so hard.
