As long as I can remember warranty parts prices were calculated by taking dealer cost and adding 40% markup. Now in many states laws exist that have forced the manufacturer to compensate dealerships at retail pricing. This new law almost doubles the gross profit from warranty parts sales. My experience with this new law is interesting as it illustrates the true nature of a company. I can’t say that any manufacturer loves the new law, however their response to it is vastly different. One of them wants to add sales fees to new cars to compensate for the loss incurred if dealerships take advantage of the new state law. They want to change the way labor rates ae calculated and force the dealership into additional work. In my opinion this is a terrible reaction that doesn’t illustrate that dealerships are customers. Other manufacturers have chosen to comply with the state law and provide dealers the revenue required under it. The complexity of this issue is amplified as the law varies in every state and in many hasn’t even been passed yet. Let me say that every dealership in a state that has this law on the books should take advantage of this parts pricing. In a few instances our clients have refused to proceed because in their state with their manufacture it is an issue that is still in the courts of appeals process. My feeling is dealerships need to stand up for what they are rightly owed. The manufacturers already pay ridiculous warranty repair times causing many technicians to leave the industry. This should be a part of state law also that manufacturers need to pay retail repair times on warranty. For now I challenge every dealership in every state to be involved in developing the law or taking full advantage of the law to maximize warranty labor and parts rates. Fixed operations are a critical source of revenue that should never be minimized. Margin Plus is our favorite vender of this issue and provides us information we need for our clients. Call Bart at Margin Plus, his cell phone number is (419) 282-1351 or visit their website at www.marginplus.net.
Sincerely,Fixed Performance complete fixed operations coaching consulting
Rob Gehring, President
1 (888) 205-8718
Fixed Performance Inc.