It’s not unusual to hear from a dealer owner or service manager that’s about to be hit by an audit that the upcoming warranty audit is random or inevitable. You hear it in his or her voice and they absolutely believe it. You almost want to agree with them since they make such a compelling case but it’s just not reality. In a way having this belief gives them the excuse that their dealership had no hand in bringing on the warranty audit so they’re not at fault.
That is far from the truth and an extremely rare occurrence. Rare enough that if you assume you’re the victim or a random or inevitable audit, you’re wrong.
Let’s look at the facts.
There are two main reasons a dealership gets a visit from a warranty auditor.
First, the warranty expense trend is out of line. This is usually the most common theme and one that a dealership should see all the warning signs well ahead of time. Most manufacturers provide dealerships with a warranty expense report and when read properly, you can see what your situation is and know whether or not you’re going off track.
Manufacturers do very well at crafting their warranty expense reports and the audit triggers so that they have an on-going stream of audit targets but it’s never a large percentage of dealerships in the dealership population. In a way, I believe many manufacturers do have room to increase the number of audits if they
wanted to and could do so if they brought on trained staff to do the work. However they do realize that could antagonize the dealer body and choose not to be so heavy handed.
The other main reason that you will be audited is a tip. Yes, you heard right, a tip. Often a disgruntled current or recently fired employee will call up the manufacturer and spill the beans on some repair that shouldn’t have been warranted or some scheme to defraud the manufacturer. It may or may not be a valid complaint but it will bring on the auditors in a hurry.
You have to consider the staffing of the warranty audit department when you throw out the idea that audits are random. There rarely is a warranty auditor sitting around twiddling his or her thumbs just looking for a dealership to hit. That is what would be necessary for a manufacturer to launch random audits.
I also want to address the inevitability of a warranty audit. I only know of one manufacturer that will audit their dealerships on a regular basis and that’s Volkswagen/Audi. They will be in for a visit every few years while everyone else can be kept out of your dealership as long as you’re not throwing up a red flag in their
system.
Usually when you hear someone say that the warranty audit that’s coming is random or inevitable, they’re asleep at the switch. Education and a wakeup call are in order for those people or another warranty audit will be inevitable but only by their own hand.
