2014 Predictions

Over the years we’ve made predictions of what was coming down the pike.  Many are based on trends we see, or feedback from the field, while others are just gut feelings.  In either case, many of our predictions have proven remarkably accurate.  Here’s what we see coming in 2014.

Increased Audit Scrutiny—Audits are a way of life in the industry, but what’s happened since late 2012 and continued in 2013 hasn’t been seen since the ’80s and dealers have paid dearly.  GM spent a good amount of 2013 beefing up their corporate audit teams.  Unfortunately, the early teams were inexperienced, non-professional and just plain sloppy.

By now, much of their routine has been refined, as they’ve gained experience and learned lessons from dealers that refused to roll over and play dead.

Some years ago, we interviewed the manager of the Warranty Parts Center.  Although she declined to disclose total annual debit amounts, it was clear the WPC pays its own way in not only debits, but product improvements.

The Warranty Parts Center is here to stay and will continue to debit “big ticket” claims, but appeals will increase as dealers stand up against unjust debits.

Soured Relationships—You don’t have to spend long in the field to sense the frustration from dealers across the country—particularly when it comes to warranty administration and payments.  We feel this trend will continue and factory “support” will dwindle even further.  Somewhere down the line, GM moved away from the “partnership-based” business model in favor of an “us against them” one, or so it seems.

Oh, they’re still creating incentives that can/will benefit the dealership, such as the DRAC and maintenance programs, but these are focused on selling vehicles, rather than aftersales.  More and more, dealers are left to their own devices, often at their own expense, to do what’s right for the customer.

Dealers report increased difficulty in obtaining wholesale (H-Route) approval.  In some instances, approval is straight out denied by these non-GM employees and authorization responsibility is shifted to Regional personnel, often delaying payment for several weeks, or reducing the claim total.

Even then, the approval comments are sometimes accompanied by threatening essays, disclaiming any future consequences, such as an eventual WPC debit for the repair that had already been reviewed and approved by the District Manager Aftersales and possibly the Powertrain Quality Center.

The frustration is predictable when you consider 3 or more people may have approved the repair, but the claim can still be debited by some anonymous face behind a computer screen at the Warranty Parts Center.

Less Policy Repairs—Dealers are growing “gun shy” over all this and thought patterns are shifting.  Instead of looking for a way to help a customer, they are, unfortunately, looking for reasons not to help.

It doesn’t take too many after-the-fact debits to cause a dealer to modify their own internal policies to minimize liability.

Retail Parts Reimbursement Laws—This has been available for years in the majority of states, yet many dealers don’t apply for fear of retribution.

Companies are popping up everywhere to assist dealers with the application process, which can prove lucrative if approved.  One dealer reported an additional $800,000 parts gross profit on YTD sales than before receiving retail parts reimbursement.

That’s just too much money for some to overlook, especially when they feel slighted in other regards. 

In addition to the aforementioned issues, GM has quietly required dealers to shift to Option A labor rate if they choose to be paid retail mark-up on parts.

Additionally, we’ve all noticed the GM trend to only pay a pittance “handling allowance” for assemblies under certain programs.

Of course, we’ve reported the Alliance of Automotive Manufacturers, of which GM is a member, is preparing a counter-suit against Florida dealers over this very thing.  Expect this suit to hit the courts in 2014 and the outcome will be closely monitored—not only by non-retail reimbursement states—but by dealers who’ve been on the fence about applying.  We predict state laws will prevail.

Dealer Push Back—It’s just a matter of time until dealer principals begin to become personally involved to a much greater extent when it comes to warranty reimbursements and debits.  For obvious reasons, they avoid conflicts with factory personnel when possible.

An appeal decision is easier denied with a manager than with the owner, regardless of who’s right.  But how many owners actually know the intricate details of warranty reimbursement?

Certainly they notice when a large amount is debited to the warranty receivable schedule, but do they really understand why it happened?  Do they assume it was their personnel who screwed up?

We predict someone within GM, with an ounce of a brain (and we’re going out on a limb here), will step up and attempt to repair the eroding relationships between GM and their retailers.  We can only hope someone listens.

In March, the Carlisle Survey goes out, allowing dealers to rate their manufacturers.  The results are taken very seriously.  We predict poor results for GM, particularly when it comes to warranty and debits and this might be what it takes to get the attention of the GM executives that can actually get something done.

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