Most dealerships know about the warranty reimbursement process available through OEMs, but not all dealerships take advantage of it. Some think it muddies the relationship between the OEM and the dealership, others think it’s more trouble than it’s worth and still more simply feel they don’t have the time or resources to wade through red tape involved in the process.
We recently spoke with Lumena Litts and Thomas Hall from QB Business Solutions who explained the process and elements involved. Their message is simple – going through the warranty reimbursement process may be complicated, but it’s well worth it because you can get the money you’re owed.
3 Cornerstone Issues
Lumena and Thomas said there are three cornerstone issues dealers need to understand in order to complete the process successfully:
- Understanding the Law – Laws regarding the reimbursement process vary from state to state.
- Following Manufacturer’s Protocol – In addition to state laws, there are the rules and protocols put in place by the manufacturers themselves. This includes everything from what’s included or excluded to how applications must be submitted.
- Attention to Detail – It’s vital that dealers examine their data and create their submissions carefully. Even being a few points off on the mark-up can translate into thousands being left on the table.
RYAN: Why don’t dealers know they’re entitled to this revenue?
TOM: The laws have changed drastically over the last 5-10 years and they still continue to dry today so a lot of that is just awareness. It’s just really getting the word out there and making sure they’re able to go through the process. It’s very laborious, it is definitely a lot of legal information and every brand is different in every state, so complexities are very high to actually get it done.
RYAN: Is a dealer inclined to not pursue the lost revenue because of that hassle?
LUMENA: No, it’s always worth it. I don’t know any owner of a company that would walk away from a $100 – 200,000 increase – it’s always worth it.
RYAN: Is that in a year’s time? What kind of returns do you typically see for dealers?
TOM: Our average is ranging from $100 – 400,000 annually.
RYAN: What does the process look like for dealers just getting into this?
LUMENA: We come in as a consultant to make sure the dealership’s business practices are lined up and they’re in place, which is very important. No two stores are the same, they all have their individual characteristics. So it can be anything from repair order documentation, service advisors staffing, there is a range of what could change.
RYAN: What’s the timeline for dealers from when they begin the process to when they start seeing that revenue?
TOM: All dealerships are different. Sizes and obviously the laws dictate basically how many issues there might be. But a dealership can easily be done in 30 days and, depending on the law, get paid in 30 to 45 days. If it’s a little bit slower, it might take 60 to 90 days and they get paid in 30. So I would say, realistically, 45 to 120 days depending on the volume.
RYAN: So once that’s done, what happens to you?
TOM: We don’t disappear, but it’s definitely not as much communication. We check up every two months, three months, four months, five months. Once they get their money, we want to make sure they keep the money that they have and people looking at ‘How do I make sure that I’m still compliant’? So we offer different services just to go back and look at their tickets, not to submit again but basically a review or a warranty brief review just to give them peace of mind that they’re on the right track.
RYAN: Bottom line, what should dealers know about the process?
LUMENA: Dealers shouldn’t fear getting their increase because it’s something they’re entitled to. In the last 10 to 12 years, manufacturers have come to understand this is the norm.