The problem with dealers and warranty repairs
Transengineer over at cumminsforum has a great rant about why dealer service departments are problematic: Transengineer Rant He is referring specifically to warrantied repairs paid for by RAM. I...
Forum Discussion
A lot of it is in the whole dealer business model.
Look at it this way, a dealer hires a tech for $15/hr, and charges $100/hr for his time, or they can hire a super tech for $30.
The $15 tech actually costs the business about $30/hr, $100-$30=$70
The $30 tech actually costs the business about $45/hr, $100-$45=$55
The super tech can complete a job right in 60% of the time it takes the other guy. So for a 1 hr job, the cheap guy makes the dealer $70, the super tech makes the dealer $33. The good mechanic needs more jobs through the shop to get the same return.
The shop overhead is more of a daily rate than hourly, so the more guys they can get in the shop taking longer to do less jobs, the more money the dealer makes.
The flat rate system that is common in auto shops helps to adjust for this, but is not used in all industries. I work for an equipment manufacturer, unfortunately we are only a short line company, so all of our dealers have some other brand as their main line. We have absolutely no control over how the dealers operate. I work with dealers over a 2 state area, there are only about 10 dealers out of 100 that I would personally consider doing business with.
Look at it this way, a dealer hires a tech for $15/hr, and charges $100/hr for his time, or they can hire a super tech for $30.
The $15 tech actually costs the business about $30/hr, $100-$30=$70
The $30 tech actually costs the business about $45/hr, $100-$45=$55
The super tech can complete a job right in 60% of the time it takes the other guy. So for a 1 hr job, the cheap guy makes the dealer $70, the super tech makes the dealer $33. The good mechanic needs more jobs through the shop to get the same return.
The shop overhead is more of a daily rate than hourly, so the more guys they can get in the shop taking longer to do less jobs, the more money the dealer makes.
The flat rate system that is common in auto shops helps to adjust for this, but is not used in all industries. I work for an equipment manufacturer, unfortunately we are only a short line company, so all of our dealers have some other brand as their main line. We have absolutely no control over how the dealers operate. I work with dealers over a 2 state area, there are only about 10 dealers out of 100 that I would personally consider doing business with.
