Over the years I’ve spoken to and dealt with dealerships that have high warranty expense issues.
It comes to reason that there always will be dealerships that have high expense issues. Someone has to be low man on the totem pole and someone has to be up at the top. That’s how the law of averages works.
More dealerships should be wondering why they are on the high side of the equation. Too many think they know the answer and it’s usually incorrect. I’m used to hearing a one or two sentence analysis of the problem that took all of five minutes to develop.
There are several excuses that are common but let’s take a look at one of them.
During the start of my visit, one of the first things I’ll do is ask the service manager what he/she thinks the problem is. The conversation often goes like this.
Me: “So what do you think is causing your high expense?”
Service Manager: “We have a pretty highly regarded service department in this area. Sometimes the rep sends vehicles our way that no one else can fix. Everyone else’s problem cars seem to come here and we fix them.”
The way it sounds, their warranty expense problem is based on a noble effort to fix every problem GM, Ford, Chrysler, Subaru, Mitsubishi (insert any other manufacturer here) in a 50-mile radius.
It’s a quick and easy answer to give to everyone that asks but it’s the wrong answer.
That’s a pretty harsh to pill to swallow, especially to some of you who may have used the excuse before but it’s a reality.
Why is it the wrong answer?
Warranty expense issues are more complex than most think. Explaining it away with what you think may be the problem instead of diving in and finding out where the real problem is, is doing you a disservice and going to burn you in the end. Rarely if ever can you have one problem be the sole reason you have a high warranty expense. Certainly some problems will impact warranty expense more than others but it takes at least a few problems going on at the same time to create a high warranty expense problem.
If as a service manager you have given the same answer to your warranty expense problem, you need to reevaluate your situation and take a more in-depth approach to it. If you’re a dealership owner or a factory rep and have heard it from your service department or one that is in your zone/area, don’t accept the answer. It’s incorrect to think it’s the sole answer to high warranty expense. There’s a possibility it may be part of the right answer but only part of it.
It really does take a hands-on approach with an unbiased eye to find what is causing high warranty expense. Throw away all the preconceived notions you have and look at repair orders as though you don’t know the customer and don’t know the particulars of a repair. Look at everything from an outsider’s point of view and question anything that doesn’t look right.
Many times when I’ve talked to a dealership on the phone with seeing nothing more than their warranty expense report, I’ve pointed them in the direction of the areas that I see are a problem. I’ll make my best guesses at what the problems are but as I tell everyone, they’re my best guesses, not a thorough analysis.
Usually with a little discussion we can narrow down the possibilities but it takes someone putting in the time to fully investigate the issues and then developing the solutions that need to be implemented.
If you’re running into a problem with high warranty expense, you’re always welcomed to give me a call for some input. I may not be able to pin down a specific cause for you over the phone but we can likely point you in the right direction. Sometimes it just takes a little direction to find out where your problem lies.
Please don’t make the mistake many make by coming up with a convenient excuse and not doing anything about the situation. That formula is a recipe for disaster.
