The problem with dealers and warranty repairs

[brulaz]

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.
In summary:

transengineer wrote:
Yes, this is one reason why new vehicles are so expensive. And why dealerships are such profitable businesses. The more they screw up, the more money they make.

Are other manufacturers this bad? Maybe the Tesla model of manufacturer provided warranty repairs is better.

[brulaz]

JALLEN4 wrote:

...
The manufacturer, because of the tremendous volume and expense, converts all the variables in claims by every dealer to a common denominator. They can tell you to the penny which dealer spends more money per claim. They can tell you which dealer has too high an incidence of a particular claim and which area they exceed the group average in whether it be body, engine, electrical. etc. If a dealer does not read the bulletins and is spending more money than others on transmission repairs, for example, they will then start reviewing every claim coming from that dealer.

If the manufacturer determines that a particular dealer is spending too much on warranty repairs, they then will forward this information to their field people who will review it with the Service Manager of the facility and the Dealer or General Manager. If that does not cure the problem and reverse the trend, they will then send in an Audit Team. This team shows up with a list of hundreds of repair orders they want to see. They will review each repair order checking for any abnormalities. When the team leaves, they will sit down with the Dealer and 99% of the time issue a chargeback to the dealership of tens of thousands of dollars. I have seen the chargebacks exceed a half million dollars and personally was hit with one for $200,000.

What I describe is but a small microcosm of the warranty system of major manufacturers. Anyone with even a base understanding of the actual warranty reality would laugh at your guy's claims and assertions and be greatly offended. Sure there are dealers that cheat and or do a very poor job just like every other profession. In reality, pulling the wool over the manufacturers eyes does not last very long. You either do it their way or you do not long exist!

OK, I was wondering how manufacturers could best deal with the issues raised by transengineer.

Thanks for this good explanation.

[FishOnOne]

JALLEN4 wrote:

brulaz wrote:

Lessmore wrote:

brulaz wrote:
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.
In summary:

transengineer wrote:
Yes, this is one reason why new vehicles are so expensive. And why dealerships are such profitable businesses. The more they screw up, the more money they make.

Are other manufacturers this bad? Maybe the Tesla model of manufacturer provided warranty repairs is better.

That's quite a jump implying Tesla would somehow be better.
...

I made no such implication. "Maybe" is the term I used. The "somehow" is that with Tesla, the manufacturer, is directly responsible for warranty repairs of their cars. Thus they have more control over how they are done.

With the franchise or dealership model, RAM apparently has little control, and "the more they screw up, the more money they make."

It has nothing to do with Tesla per se :R , but is all about how best to handle warranty repairs.

Whether the other manufacturers have such loose control over their dealers is another question. And maybe RAM could step up and improve how their dealers handle this.

What bugs me is that such sloppy repair work under warranty will prolly translate to sloppy repair work out of warranty. And if your local RAM dealer is all that's available to you, you are screwed.

I am afraid your assumption about Ram not having any control over the dealership's repair process is very wrong. Any and all warranty repairs must be approved for payment by the manufacturer after being submitted to them. Every major manufacturer has an incredibly sophisticated system controlling their warranty process and approval process. Their warranty algorithm will immediately flag a suspicious repair that falls outside the parameters of repair set by their engineers and the engineers of the suppliers. They have the option to reject the repair payment, call for the involved parts for inspection, or to send in a team for an audit and chargebacks when there is too much discrepancy.

The internet is full of mechanical warriors who know far more than the dealer or the manufacturer about the product and how to repair it...or so they claim. The people who designed the product, built the product, pay the warranty costs, and process millions of warranty claims yearly would most likely have a better chance to have this knowledge. Every warranty repair order claimed is computerized and analyzed. Every repair is compared to thousands of other similar repairs, repair policy and procedure, and the guidelines established by the supplier of the components. I will guarantee you the dealer cannot just claim additional parts for the repair for higher profits and the manufacturer just casually pays them.

Well said Jallen4. One thing I would add is a warranty job has a fixed rate for payment to the tech which can be challenging to meet and some techs will rush a job just so they're not at a loss, but can mean the job was not thorough.

[hone_eagle]

mich800 wrote:

JALLEN4 wrote:



What I describe is but a small microcosm of the warranty system of major manufacturers. Anyone with even a base understanding of the actual warranty reality would laugh at your guy's claims and assertions and be greatly offended. Sure there are dealers that cheat and or do a very poor job just like every other profession. In reality, pulling the wool over the manufacturers eyes does not last very long. You either do it their way or you do not long exist!

I agree your your analysis 100%. Some are confusing ones expertise at fixing things with expertise on the financial or administration process. When you think of it critically it is somewhat of an absurd statement that the OEM's have no control over what and how much is paid for warranty claims.

This exactly
I worked in auto engine manufacture for over 30 years could tell volumes
but
I cant possibly know a thing about how the warranty and repair process works and neither can any engineer in the plant.
Sometimes smart people think they know everything...... they do not.

[mich800]

JALLEN4 wrote:



What I describe is but a small microcosm of the warranty system of major manufacturers. Anyone with even a base understanding of the actual warranty reality would laugh at your guy's claims and assertions and be greatly offended. Sure there are dealers that cheat and or do a very poor job just like every other profession. In reality, pulling the wool over the manufacturers eyes does not last very long. You either do it their way or you do not long exist!

I agree your your analysis 100%. Some are confusing ones expertise at fixing things with expertise on the financial or administration process. When you think of it critically it is somewhat of an absurd statement that the OEM's have no control over what and how much is paid for warranty claims.

[JALLEN4]

bob_nestor wrote:
Not sure if this applies to RV service (it probably does as I've given up on them and do the work myself), but this is the way it works in the auto industry.

Dealerships no longer hire mechanics directly, they're basically contract labor working at the dealership. Their pay for a job is based on the Clinton manual which spells out how long any particular repair should take. So most of the mechanics will try to find short-cuts and work-arounds for any particular problem. If they can "fix" something in less time than it shows in the Clinton manual they can move on to the next job and in doing so increase their take home pay. It's usually worse for warranty repairs because they have to rely on what the factory tells them about how long a repair should take and what parts will be used since Clinton doesn't have the info. And in many cases the factory won't pay for warranty work that is "speculative", i.e. could be one of three failed parts but the dealer needs to identify which one actually failed first, they can't just replace all three.

Generally you fare better with an out-of-warranty repair then an in-warranty repair because of this, and you'll typically receive much better service from an independent mechanic who knows your type of vehicle and charges you for time and material for any repair. Yeah, warranty repairs are no-cost to you and dealership repairs and usually fixed price once they've diagnosed the problem, but as the old saying goes, "You get what you pay for".

Hillary wrote the Clinton manual about Bill. What you are referring to is the Chilton manual. Dealerships generally use either Chilton or Motors for customer pay work flat rate and are required to use the factory manual for warranty work. Chilton and Motors is approximately 40% higher than warranty.

[jsr21]

JALLEN4 is legit..check him out. This is also another reason that sometimes a dealer doesn't want to do the warranty work on a unit he didn't sell. No guarantee he will 100% get paid for the job from the manufacturer. Our biggest chargeback for warranty audits was around $49K

[JALLEN4]

brulaz wrote:

JALLEN4 wrote:

...
Do you really think some second rate factory engineer is going to know more about the process than the dealers who have their money invested?

In short, yes.

Your attempts to "shoot the messenger" don't help your credibility.

I have no idea whether you are who you say you are, or if what you say is true or not. Whereas transengineer has been expertly helping folks on various RAM forums with their transmission problems for years.

Besides, your claims that the current system of warranty repair cannot benefit the dealers is just implausible. Transengineer points out one weakness: poor quality warranty repair (like not following the instructions) leading to further warranty repairs, all paid for by RAM, and the profit going to the dealer.

My hope is that dealers do not deliberately play this system. But there is no $$ penalty to the dealership when their staff make mistakes for whatever reason (untrained, rushed, bad work ethic), as RAM pays the bills for warranty repair.

I have been on this forum for a long time and a number of people know exactly who I am.

Here is the problem with the argument from your muse. Every warranty claim by every Dodge dealer goes into the same system. There are around 2500 FMCA dealers currently that are making millions of warranty repairs annually. The manufacturer has to process every one of these for payment and all dealers have a Sales and Service agreement outlining their responsibilities to get paid.

The manufacturer, because of the tremendous volume and expense, converts all the variables in claims by every dealer to a common denominator. They can tell you to the penny which dealer spends more money per claim. They can tell you which dealer has too high an incidence of a particular claim and which area they exceed the group average in whether it be body, engine, electrical. etc. If a dealer does not read the bulletins and is spending more money than others on transmission repairs, for example, they will then start reviewing every claim coming from that dealer.

If the manufacturer determines that a particular dealer is spending too much on warranty repairs, they then will forward this information to their field people who will review it with the Service Manager of the facility and the Dealer or General Manager. If that does not cure the problem and reverse the trend, they will then send in an Audit Team. This team shows up with a list of hundreds of repair orders they want to see. They will review each repair order checking for any abnormalities. When the team leaves, they will sit down with the Dealer and 99% of the time issue a chargeback to the dealership of tens of thousands of dollars. I have seen the chargebacks exceed a half million dollars and personally was hit with one for $200,000.

What I describe is but a small microcosm of the warranty system of major manufacturers. Anyone with even a base understanding of the actual warranty reality would laugh at your guy's claims and assertions and be greatly offended. Sure there are dealers that cheat and or do a very poor job just like every other profession. In reality, pulling the wool over the manufacturers eyes does not last very long. You either do it their way or you do not long exist!

[bob_nestor]

Not sure if this applies to RV service (it probably does as I've given up on them and do the work myself), but this is the way it works in the auto industry.

Dealerships no longer hire mechanics directly, they're basically contract labor working at the dealership. Their pay for a job is based on the Clinton manual which spells out how long any particular repair should take. So most of the mechanics will try to find short-cuts and work-arounds for any particular problem. If they can "fix" something in less time than it shows in the Clinton manual they can move on to the next job and in doing so increase their take home pay. It's usually worse for warranty repairs because they have to rely on what the factory tells them about how long a repair should take and what parts will be used since Clinton doesn't have the info. And in many cases the factory won't pay for warranty work that is "speculative", i.e. could be one of three failed parts but the dealer needs to identify which one actually failed first, they can't just replace all three.

Generally you fare better with an out-of-warranty repair then an in-warranty repair because of this, and you'll typically receive much better service from an independent mechanic who knows your type of vehicle and charges you for time and material for any repair. Yeah, warranty repairs are no-cost to you and dealership repairs and usually fixed price once they've diagnosed the problem, but as the old saying goes, "You get what you pay for".

[brulaz]

JALLEN4 wrote:

...
Do you really think some second rate factory engineer is going to know more about the process than the dealers who have their money invested?

In short, yes.

Your attempts to "shoot the messenger" don't help your credibility.

I have no idea whether you are who you say you are, or if what you say is true or not. Whereas transengineer has been expertly helping folks on various RAM forums with their transmission problems for years.

Besides, your claims that the current system of warranty repair cannot benefit the dealers is just implausible. Transengineer points out one weakness: poor quality warranty repair (like not following the instructions) leading to further warranty repairs, all paid for by RAM, and the profit going to the dealer.

My hope is that dealers do not deliberately play this system. But there is no $$ penalty to the dealership when their staff make mistakes for whatever reason (untrained, rushed, bad work ethic), as RAM pays the bills for warranty repair.

[JALLEN4]

The only BS going on here are the ravings of the lunatic on another forum brought over to this one and those who comment on the system without a clue as to how it works! What has already been pointed out as BS by those who do know can easily be verified by anyone who has ever worked in a dealership service department dealing with warranty claims. Of course that would mean some people would have to suspend their beliefs that it is all a conspiracy.

Dealers do not get paid to replace items that the manufacturer knows are not a legitimate part of the repair. Period! Warranty claims that do not have a failure code when submitted are not paid until they do have a failure code. Period! Warranty claims that do not repair the vehicle and require a subsequent repair are subject to being charged back to the dealer as a comeback. Period! It is utterly STUPID to think the reason dealerships are profitable is because of warranty work. Period! Warranty work is one of the least profitable items a dealer does. A full 50% of dealers do not make a true profit in their service department. Period!

Of course dealers want to get paid all they can get to repair a car. Of course the manufacturer wants to pay as little as they can for warranty costs. In case you have not looked, that is the American economic system we live in and it works pretty well. Major manufacturers measure their profits in billions of dollars yearly. Dealers don't. Manufacturers spend huge sums of money on systems to limit their warranty costs (one of their largest expenses) every year. To imagine that some mom and pop store in rural Iowa has figured out how to beat the manufacturer and their massive assets at the warranty game is simply ludicrous.

[moresmoke]

Whole lot of BS here. It is a constant cat and mouse game. The dealer tries to get paid as much as possible for warranty claims. And the manufacturer tries to pay as little as possible. Hopefully the customer is still happy when it is over.

[JALLEN4]

brulaz wrote:

JALLEN4 wrote:

...
I operated and owned multiple new car dealerships including a Dodge store. I will guarantee you I know more about the warranty claims business than any engineer because millions of my dollars were at stake. Believe what you wish, but there are at least two ex-dealers telling you how the system really works!

Somehow it's not surprising that dealership owners would disagree with transengineer's viewpoint.:)

Do you really think some second rate factory engineer is going to know more about the process than the dealers who have their money invested?

[brulaz]

JALLEN4 wrote:

...
I operated and owned multiple new car dealerships including a Dodge store. I will guarantee you I know more about the warranty claims business than any engineer because millions of my dollars were at stake. Believe what you wish, but there are at least two ex-dealers telling you how the system really works!

Somehow it's not surprising that dealership owners would disagree with transengineer's viewpoint.:)

[JALLEN4]

brulaz wrote:

JALLEN4 wrote:

brulaz wrote:

Lessmore wrote:

brulaz wrote:
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.
In summary:

transengineer wrote:
Yes, this is one reason why new vehicles are so expensive. And why dealerships are such profitable businesses. The more they screw up, the more money they make.

Are other manufacturers this bad? Maybe the Tesla model of manufacturer provided warranty repairs is better.

That's quite a jump implying Tesla would somehow be better.
...

I made no such implication. "Maybe" is the term I used. The "somehow" is that with Tesla, the manufacturer, is directly responsible for warranty repairs of their cars. Thus they have more control over how they are done.

With the franchise or dealership model, RAM apparently has little control, and "the more they screw up, the more money they make."

It has nothing to do with Tesla per se :R , but is all about how best to handle warranty repairs.

Whether the other manufacturers have such loose control over their dealers is another question. And maybe RAM could step up and improve how their dealers handle this.

What bugs me is that such sloppy repair work under warranty will prolly translate to sloppy repair work out of warranty. And if your local RAM dealer is all that's available to you, you are screwed.

I am afraid your assumption about Ram not having any control over the dealership's repair process is very wrong. Any and all warranty repairs must be approved for payment by the manufacturer after being submitted to them. Every major manufacturer has an incredibly sophisticated system controlling their warranty process and approval process. Their warranty algorithm will immediately flag a suspicious repair that falls outside the parameters of repair set by their engineers and the engineers of the suppliers. They have the option to reject the repair payment, call for the involved parts for inspection, or to send in a team for an audit and chargebacks when there is too much discrepancy.

The internet is full of mechanical warriors who know far more than the dealer or the manufacturer about the product and how to repair it...or so they claim. The people who designed the product, built the product, pay the warranty costs, and process millions of warranty claims yearly would most likely have a better chance to have this knowledge. Every warranty repair order claimed is computerized and analyzed. Every repair is compared to thousands of other similar repairs, repair policy and procedure, and the guidelines established by the supplier of the components. I will guarantee you the dealer cannot just claim additional parts for the repair for higher profits and the manufacturer just casually pays them.

Pretty much everything you say is the opposite of what transengineer said. Not sure if you even read transengineer's rant.
He is generally believed to be a RAM engineer specializing in transmissions (esp. the 68RFE) and is a well-respected member of that forum. I'll take his opinion over yours anytime, anyday.

And there-in lies the problem! He is "widely believed to be". This is exactly how this nonsense gets started. While the guy on the forum is "widely believed" he is in fact anonymous without resume and the dealer is somebody who has millions invested and is not a moving target. You can go find him and look at what is real 24/7.

If in fact he is right and the part replaced was not needed, the dealer did not get paid for the part and ate the part cost and the labor to install it. This is how the system works and exactly what the manufacturer employs all these engineers to do. If in fact the "believed to be" knows what he is talking about, he has already told the manufacturer and would be the reason the dealer did not get paid. He would not be trying to sell the idea that the dealer was trying to pad his bill because he would know better.

I spent 40+ years in the business. I was the Service Director of one of the largest Chevrolet dealers in the country doing hundreds of thousands of dollars of warranty work. I operated and owned multiple new car dealerships including a Dodge store. I will guarantee you I know more about the warranty claims business than any engineer because millions of my dollars were at stake. Believe what you wish, but there are at least two ex-dealers telling you how the system really works!