Perfect Compliance?

The question often comes up of whether we’ve ever seen a store with perfect warranty compliance.  Of course, the answer is no, but some have come close.

We’ve always heard and quoted that human error accounts for 5% of compliance errors and our experience in audits tends to support that percentage. 

When you consider the number of people who may have played a part in any given warranty claim, that’s a remarkable achievement, as anyone down the line could have forgotten a signature, approval, failed to attach a required piece of paper, clocked an improper time record, made a misdiagnosis, applied an incorrect labor operation, etc.  The list goes on and on.

Experience has also shown us that “average” non-compliance tends to fall in the range of 12 – 16%.  From time to time, we will encounter a 30+ percentage of non-compliance, but those cases are actually pretty rare.  Nonetheless, 16% debits in a warranty audit can add up to a good piece of change that will never be recovered.

The nature of our business allows us access to most every manufacturer’s warranty policy and procedure requirements.  By far, GM requires more management approvals than any other manufacturer.  That fact alone makes perfect compliance a near impossibility.

Still though, there must be a way for a dealer to achieve 95%, or possibly even the elusive 100% level of compliance, right?  Over the years, we’ve seen dealers go from a 30% non-compliance down to less than 10%.

In every case, the technicians were the same ones as from the 30% chargebacks.  The primary changes were a strong service manager who made compliance a priority by holding all parties responsible and conducting monthly “spot check” reviews of paid claims, along with meetings to outline shortcomings.

In fact, one of the largest dealer groups in the country requires their service and parts managers to re-review 10 random warranty claims each month and file a report with the corporate office.

We have conducted reviews at several of these stores and find their non-compliance to be below the national average in most cases, so the exercise is worthwhile.  Initially, many of the managers complained about the additional work, but over time it’s become just another part of the job.

Another beneficial change is making photographs of anything that might be questioned down the road.  This includes items that were replaced because of “stress cracks,” “trim defects,” “paint flaws” and anything else that could be challenged.  These can be stored electronically by VIN/RO (with a corresponding note on the repair order), but we prefer you have them printed and attached to the claim.

Last, but maybe more importantly, is a warranty administrator that understands the consequences of non-compliance and takes the responsibility seriously.  This person views the position as more than a job—it is their field of expertise and a direct reflection of their ethics and professionalism.

As ironic and unfortunate as it may sound, it sometimes takes an audit before shortcomings are even detected.  We urge our readers to be proactive.  If you are in this business long enough, you will be audited.  Don’t wait for the auditor to point out shortcomings.  Take a subjective look at your processes and initiate a game plan to minimize exposure.

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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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Retaining Bulletins

I’ve fielded a number of calls lately asking whether or not copies of bulletins should be retained with the repair order.

Although there isn’t a specific requirement we can find in the P&P, we strongly urge clients to retain a copy.

As you know, bulletins are constantly updated to reflect revised diagnostic or repair procedures.  Perhaps by design, all revisions tell you to “discard” the previous version.

For example, an initial bulletin dealing with “zebra striped” cylinder walls directed dealers to replace the engine.

Within a short time, that bulletin disappeared altogether and was replaced with another that said GM engineering had determined the zebra stripes were not detrimental to the engine’s durability.

The Saturn VTi transmission is yet another example.  Early on, bulletins had dealers replacing the assembly to address a noise in the Vues and Ions.

Later revisions started with a fluid change, a little snake oil and PCM reflash.  Only after that was done, and the condition persisted, could you replace the assembly.

Unfortunately, the audit team didn’t have access to the original bulletin and debited every assembly replacement on the basis of the revision, regardless of the repair date.

In their defense, they can’t keep up with every bulletin update any more than we can.

The only saving grace was a tech who had a copy of the original in his toolbox. 

As I recall, we had 6 assembly debits reversed during the audit process—saving about $15,000 in potential debits and avoiding a lengthy appeal.

I also prefer retaining an electronic PDF copy of bulletins on your PC along with the revision date, just like you should retain old copies of the P&P Manual.

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Tech Comments

Back before the regional training centers were closed, they were slated to spend time in each class instructing technicians on proper comments and other compliance requirements to support their repair.  Somewhere down the line, that idea fell by the wayside.

As we’ve said many times before, as long as you’re in this business, you’ll need to be diligent with insuring technician comments meet the requirements to list the cause and correction.  It sounds simple enough, but there’s really more to it than meets the eye.

In addition to the cause and correction, techs have to explain the diagnostic process that led to their conclusion.  If they claim a certain test, the test results must be listed.  Along with that, they must detail all steps taken that would lead to a request for straight time.

Many times we tend to fall into a lull of accepting inadequate write ups simply because of the repetitive nature of the repair, perhaps assuming it’d be common knowledge, but that’s not always the case.

There was a manager disputing a claim debit because the tech didn’t list the cause of failure.  His reasoning: “You know what happens to those, right?”  The auditor had a simple reply: “Yeah, but I don’t know what happened to this one.”

In another case, a technician had spent two hours of OLH to locate and repair a wiring short, but the write-up was an abbreviated version saying something to the effect of: “Found pinched red wire in LF kick panel.”  Even though the time records and approval were in place, the auditor felt the comments didn’t justify 2 hours and only allowed 0.5 hr.

As our friend Don Kelley of Jim Keras Chevrolet pointed out recently, if you really think about it, “leaking” isn’t a cause, it’s a condition—even though it’s listed as a cause code.  The cause would be something to the effect of poor sealing, poor fit, improper installation, worn, or so forth.

All too often we see technicians use “Per bulletin xxxxx” to justify a repair.  Unfortunately, experience has shown that the bulletin will usually have certain specifications or other requirements that must be met before the part is condemned and that information must be documented. 

Another common shortcoming is using the term “below specs” without providing those specs.  By the same token, stating “Had code for O2 sensor,” without providing the actual code could subject the claim to debit.

Of course, you have to be on the look out for the phantom part that ended up on the repair order, but doesn’t have an explanation.  Familiar examples would include a water pump and thermostat, or an A/C compressor and belt.  That’s not to say these parts weren’t required, but they still have to be supported.

Any conversation about tech comments wouldn’t be complete without mentioning the use of terms such as “broken,” “bent,” “torn,” “damaged,” “ripped,” etc. 

Granted, these are all listed as potential cause codes in GWM, but if one of

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Regions Scramble to Warn Dealers

Various GM regions are scrambling to inform dealers of looming corporate-level audits.  For a recap, GM reactivated the General Motors Audit Services (GMAS) teams in September 2012 after a 13-year hiatus.  From what we’ve seen, these audits have been nothing less than brutal, often exceeding $80,000 to $120,000+.  Regional audits have been fair, for the most part.  These are not.

As we’ve reported, there seems to be no rhyme or reason behind the audits.  Even the regions are perplexed as to the risk factors that trigger these visits.  After all, if there were truly some red flag “indicators,” the regions would have been the first to know and would have acted on that basis.

Some have suggested GMAS is either “throwing darts at a map,” or going in because they wanted to “catch a ballgame,” “visit family,” or “go to a warmer climate.”  In either case, these corporate junkets have everyone on edge.

So concerned are GM regions that they’ve taken to conducting meetings to warn dealers of the potential chargebacks.  Dealers who didn’t make the meeting are being visited by their reps and required to sign a statement that they have been warned.  If the regions are nervous, you should be too.

The warnings consist of providing the “Top 5 Warranty Deviations” report along with the updated “Required Operating Procedures” bulletin (04-00-89-015E).  The “Top 5” are as follows:

1. No Customer Signature or Service Management Explanation

2. Add-on Not Pre-approved, No Date/Time of Approval

3. Improper Documentation for Other Labor Hours, Straight Time not Pre-approved

4. Job Card Required Information Missing or Incorrect, Overlapping Time Records

5. Missing Diagnostic Trouble Codes

As we’ve said before, this list is based on regional-level audits and isn’t entirely consistent with corporate-level audits, as they assume you are guilty.

Nonetheless, most corporate-level audits we’ve been involved with have made OLH a mainstay debit category, although they have applied “new” rules to claims before the changes were made official in the P&P or bulletins.

The Required Operating Procedures bulletin has undergone some warranty compliance changes, as has the Policy & Procedure Manual.  First of all, the bulletin was formerly 18-points and has now been condensed to 10-points.

One significant change relates to authorization for Other Labor Hours.  It is now a requirement that OLH approval includes the time of day the approval was initiated.  The P&P was updated in June to reflect this change, although it seems a bit redundant when the tech’s time record is right there too.

Another change to OLH requirements is: “Technician must detail failure and steps taken to facilitate repairs.  Vague comments such as ‘metal throughout’ are not acceptable.”

With all this in mind, you must view OLH approval as a two-part process.  The

first part is providing approval to proceed on a straight time basis.  This is when you would include the time of day, along with signature and date.  The second part would be determining how much time is being approved.

For example, a single statement of “OK 1.5 hours straight time” would be a clear indication the approval was after-the-fact since no one knows beforehand exactly how much straight time will be required.

As for a technician detailing the failure and steps taken to perform the repair, well, GM was a little “vague” themselves by saying “metal throughout” is not acceptable, yet it can be, based on the failure.

Certainly that reference is directly related to transmission recondition times.  While “metal throughout” might seem acceptable to the technician who performed the repair, or even most of us, GM auditors obviously can’t grasp the concept.

Since GM didn’t provide an example of what they might find acceptable, we solicited advice from an expert on transmission failures.

Our friend was quick to point out that many transmission recondition comments read something like this:

“3-5 reverse wave plate broken.  Metal throughout.  Disassemble and recondition transmission.”

Obviously that explanation would fall short of expectations.  Instead, technicians should list the failure and which components were affected by the failure.  If the filter is stopped completely by the component failure, that should be noted, as it could support the reasoning behind OLH.

Depending on the nature of the failure and how long the vehicle might have been driven can create cases where parts might become seized.

Technicians must list every component affected by the failure (i.e. planetary kit, clutches, etc.) along with how far they disassembled the transmission and what they found.

Cleaning and inspection of the valve body is required with any internal transmission failure, but techs must be specific as to why they did it and what they found in that process.

Our contact agreed the “normal” OLH for transmission recondition falls in the 1.5 – 2.0 hr. range, although some “extreme” cases may justify up to 5.0 hrs. but only with supporting comments.

Typically, this is because disassembly times can be more difficult if the vehicle was driven extensively after the damage occurred.  Once parts are cleaned and inspected, reassembly is fairly straightforward.

We’re certain it’d be worth your time to sit down with your transmission technicians and review this newsletter along with the relevant bulletins to make sure everyone is on the same page.

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Claim Coding Wars

Most of our readers and clients are fairly certain their warranty compliance is acceptable, if not stellar.  In most cases, an independent review would probably bear that out, but warranty rules can be a virtual minefield.

Let’s take add-ons for instance, we’ve often addressed claim coding and how unrelated failures found in the shop are considered add-ons. 

Scenario 1: An example could be the customer who comes in with a concern of a “Fluid leaking under vehicle.”  On inspection your technician finds an oil pan gasket and valve cover leak.

The proper procedure, of course, would to have it inspected and approved by service management as an add-on repair (this could be either the oil pan gasket or valve cover repair), as GM policy has always been:

“A single line of Repair Case Information Data on the Warranty Claim will, unless otherwise instructed, include all parts, labor and any net amount required to complete repairs resulting from a single failure.  Multiple Repair Cases from the same RO must be submitted as separate lines of the Repair Case Information Data.”

Granted, this statement comes from the old WINS Claim Processing Manual (Article IV, item B), but the process has never changed and is an industry standard to identify all repair costs associated with a single failure. 

Scenario 2: A water pump fails and causes an overheating condition that damaged a cylinder head gasket.  GM, or any other manufacturer, wants to understand exactly what the water pump failure cost, which would include the consequential damage to the head gasket.

In this instance, the claim would be coded to the water pump, with the additional parts and labor submitted on the same job line, with appropriate approval for Other Labor Hours and Excessive Parts.

If these repairs are coded as separate job lines, there is no way to quickly associate the failures as being related and hold the water pump manufacturer responsible for the entire cost of the repair.

Where Problems Can Arise

Even though we’ve described proper procedure in both scenarios, as we’ve seen recently, an auditor might wrongly view things from a different perspective.  Not only that, but your H-Route rep could direct you to manipulate the claim in a manner that would not follow procedure.

With Scenario #1, we’ve seen an auditor take issue with the service manager’s approval not including the words “saw,” or “verified” when approving an add-on repair.

To be clear, policy does require service management to “see,” or “verify” the failure, however, there is no requirement that add-on approvals contain these specific words, as it states under Article 1.6.2.14:

“Any warranty/policy concern not expressed by the customer must be first inspected and verified by the service manager before it is added to the job card, multi-point inspection form, or other supporting documentation. If the service manager determines that the additional repair is necessary, he/she must document the date, time,

explanation and signature on the job card prior to the work being performed and prior to the customer being notified that additional work is necessary. Multiple additional concerns must each contain this approval. The explanation must specifically describe what the service manager saw or verified upon inspection or road test.  The added repair work must state ‘added operation’ on the job card.”

As you can see, the only thing an approval “must state” is “Added operation,” along with the date, time, explanation and signature.  Nonetheless, we have known auditors to essentially deny a manager actually “saw,” or “verified” a needed add-on repair because the approval did not contain one of these two words.

In yet another way we’ve seen add-on repairs go south, there are occasions where the H-Route rep instructs dealers to combine unrelated job lines into a one-line claim, by submitting the unrelated repair time as Other Labor Hours.

In defense of H-Route reps, they’re well aware of the effect of Repeat/Related Repairs on Differential Points and submitting unrelated repairs as one-line claims is a way to circumvent that.

This is not the proper process and they’re more than likely just trying to simplify the submission and avoid Differential Points for their dealers, but may be inadvertently setting you up for a debit.

You see, an auditor may view this as being a properly approved add-on repair, but when it gets submitted as OLH instead, you are now missing straight time approval.

From a dealer’s standpoint, you probably know that’s the wrong way for the claim to be submitted, but here you have the person paying your claim telling you to do it a certain way and you go along.  What else can you do?

Scenario #2 can be just as perilous.  As we know, GM does not require time recording for established labor operations, with the exception of transmission claims.

While some GM dealers do time record everything, many will only time record for OLH and transmission repairs.

In this case, there are established labor times for both the water pump and head gasket, so if you’re not time recording every individual repair it may be you won’t have a time record for the consequential damage to the head gasket.

Common sense says you are justified using the established time (less any potential overlaps) for the head gasket and submitting that as Other Labor Hours, with approval.

But yet, common sense isn’t so common with some auditors, particularly when they have little real-world knowledge of how the submission side logistics work.

As nutty as all this may sound, rest assured it happens and debits have resulted.  Even if you’ve been audited in the past and made adjustments to your process, a different auditor may turn the tables and come up with a whole new set of “rules,” even if they don’t exist.

On one level, GM has created a Catch 22 by not requiring dealers to time record each individual repair.  While we hate to admit it, that’s the best way to minimize exposure in most cases, although it won’t do you a bit of good if you’ve done everything by the book and are instructed to submit it differently by your H-Route rep.

In that situation, we urge you to either get something in writing, or make notes on the repair order to explain why you submitted it differently.

Even if you’re 100% in the right, there’s no guarantee a specific auditor will be able to—or even have the desire to—reason it out.

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Suspected Tampering

Back in July 2011, we published an article titled “Tamper Proofing Vehicles” that outlined efforts by some manufacturers to stem the tide of Lemon Law buybacks, particularly in California, but becoming more common across the country.

Although GM doesn’t have such a program in place, they do have a means of reporting suspected tampering, or vehicle modifications that could affect the vehicle’s performance—even reimbursing dealers for the time required to identify customer concerns directly related to tampering or modification—whether you repair the condition or not.

Bulletin #09-00-89-016A defines the process in detail and we wanted to outline the process.

First off, GM describes tampering as “causing intentional damage to a vehicle [that] is not covered under the terms of the GM New Vehicle Warranty.”  Examples include such things as:

  • Inducing electrical component and/or system failures
  • Disconnecting wires or connectors
  • Intentional contamination of fluids

Non-GM modifications that could result in non-warranty concerns include:

  • Installation of non-GM accessories
  • Installation of suspension lowering or lift kits
  • Installation of aftermarket tires and/or wheels
  • Installation of “power chips” and/or non-GM control module calibrations

Because of the serious nature of making accusations, if tampering and/or non-GM modifications are suspected as the direct cause of a customer concern, the dealer is directed to:

  • Thoroughly document the RO, including facts supporting the decision
  • Straight time must be documented and supported with time records
  • Documentation should include photographs as appropriate
  • Must notify factory rep of situation

Dealers are to use labor operation Z1111 with a base labor time of 0.2 hr.  Straight time, if required, is submitted in the OLH column. Parts and/or net items are not allowed.  All Z1111 claims require wholesale approval (H-routing).

If dealership management decides to perform repairs related to tampering or non-GM modifications, a separate job line must be submitted using the appropriate labor operation from the Labor Time Guide.

In those cases, dealers must handle it like any other non-warranty repair by flagging the transaction as a “Customer Enthusiasm” repair.

Z1111 becomes ingrained in the vehicle’s history and will alert other dealers to the suspected modifications or tampering.

If the dealership management team and your GM rep agree, there are provisions to initiate warranty block procedures addressed in section 1.4.14 of the P&P Manual.

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CPVS & Goodwill

Should Goodwill be included in Cost Per VIN Serviced (CPVS) calculations? Warranty Matters received a call from Consumer Reports magazine several years back. Their question was simple: Do manufacturers pressure dealers NOT to perform Goodwill (or After-Warranty-Adjustments) on vehicles?

I was surprised to find the reporter assigned to this story so well-versed in one of the industries’ best-kept secrets. Obviously, he’d done his research. Although he had suspicions that it could be true, contacts with spokespersons from various manufacturers had been fruitless. In almost every case, he was stonewalled with, “We never pressure our dealers to avoid meeting ‘contractual obligations’ of vehicle warranty.”

He was suspicious of the double talk, however, and called us for an opinion. We were pleased to offer one. Without doubt, Goodwill repairs are not part of contractual obligations of vehicle warranty. This has been pounded into our heads for years. I recall a rep that would go ballistic if we referred to a Goodwill repair as “warranty.” “It’s NOT warranty,” he would exclaim anytime we made the mistake of calling it such.

Clearly, Goodwill is intended for repairs beyond the scope of warranty. With the majority of manufacturers, this usually includes repairs that would have been covered only if the vehicle was within time and/or mileage limits of warranty. Some manufacturers may also consider items such as broken windshields, scratched paint, etc. eligible for Goodwill consideration.

Punished?

Regardless of their use, they all have one purpose: Retain customers. Why then, are Goodwill repairs included with CPVS calculations? Honestly, we don’t feel they should be. Customer retention is a primary concern of all of us. Why then should we be punished for making a decision in the best interest of customer retention and satisfaction.

Think “punished” is too strong a word? Well, look at it a minute. Let’s say your store has already replaced four warranty transmission assemblies this month. Near the end of the month a customer’s vehicle is towed-in with a transmission problem just beyond warranty coverage and s/he’s asking for help.

Because of circumstances beyond your control, you’re put in the position of adding a $2,000+ repair to your CPVS calculations. While the manufacturers are always emphatic that a single repair shouldn’t, in itself, bring on an audit, the fact remains that a $2,000 repair doesn’t help!

Even though we’ve touched on this before, I will remind manufacturers that a customer doesn’t normally ask for Goodwill consideration over a dome lamp bulb. More often than not, it’s a substantial hit in the engine or transmission category. Can one really make an unbiased decision about a Goodwill repair knowing that it will affect CPVS numbers? The answer is: not really.

Service Directors often tell me they, or their counterparts in different parts of town, will sometimes avoid certain repairs—acutely aware of warranty expense ramifications. They’re not denying contractual obligations mind you. It might be that their transmission technician is “backed up,” or “in a two-week school.” Chances are that everyone reading this has either used one of these excuses or knows someone who has.

Even though manufacturers claim they leave Goodwill decisions to the dealership service managers, who hasn’t been asked or told to, “help someone out,” or “take care of it,” by their rep or Customer Assistance? Most managers routinely make a walk-around of a potential Goodwill vehicle, not to evaluate the condition, but to see where it was purchased. Customer loyalty is, and should be, a three-way street—good for the customer, good for the dealer and good for the manufacturer.

The majority of dealers recognize this, and spend Goodwill dollars wisely. Often I find dealers are tighter than the manufacturer when it comes to Goodwill. More often than not, they’re in the best position to make the best decision anyway.

Editor’s note: Shortly after Consumer Reports published the article regarding Goodwill/AWA repairs, Ford Motor Company removed After-Warranty-Adjustments from the Cost Per VIN Serviced calculations. Unfortunately, FMC again (April 2002) started using these calculations as part of dealer warranty expense calculations. Warranty Matters strongly disagrees with this practice. In the end, only the customer will suffer. GM recognized this problem a number of years ago and no longer includes Goodwill in the CPVS calculations, allowing dealers the freedom to make fair decisions regarding Goodwill repairs —Dave

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Ford’s WCP

If you have been entered into Ford’s Warranty Counseling Process, we can help. Make no mistake, this is a serious matter. As you may know, this multi-step process begins as follows:

Step 1: Dealer Self-Review – Dealership is allowed to self-review warranty issues and compliance from a computer generated list of claims. Although Ford suggests “two thirds of all dealers who enter this process exit at this stage,” our experience has shown this only to be true if the dealership can isolate the cause(s) and implement corrective action immediately.

Step 2: Warranty Root Cause Review – Actually a low-level audit, this step usually lasts less than a week. Depending on your situation, this audit may be conducted by either Regional Auditors, or Select Dealer Region Auditors. Because chargebacks are limited to the Standard Charge-back List, debits are typically less than $10,000.

Step 3: By this point the dealership has been under probation for at least a year without showing significant improvement on the GWMS report. This is a full-blown audit and chargebacks are not limited in scope. Any deviation from guidelines in the Warranty & Policy Manual are subject to chargeback. This audit may consist of either a face-value audit or an extrapolation audit. In an extrapolation audit, each debit is multiplied by eight. For example, a missing hard copy of a $1,000.00 repair will cost the dealership $8,000.00. These audits can easily top $40,000 – $100,000 and usually last at least 2 weeks and, on occasion—more than 6 weeks.

Step 4: Once you’ve made your way through Step 3, FMC will schedule a follow-up audit—with all claim deviations subject to debit—to the store within 6 to 12 months.  This is to insure the dealership is following guidelines.

Don’t fall victim to the Warranty Counseling Process. Many managers fail to recognize the factors that can drive out-of-line conditions on the GWMS report. We have the experience and knowledge to isolate these conditions and implement changes while insuring you are being paid for every legitimate warranty dollar.

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Warranty Matters Named Outsourced Audit Firm for Jaguar Land Rover

Warranty Matters has been retained by Jaguar Land Rover North America to conduct “high profile” warranty compliance audits throughout 2008 and 2009. Company president, David Henson, will work directly with JLRNA’s audit department and bring expertise of retail operations to the process.

Mr. Henson will also consult with JLRNA’s staff regarding Policy & Procedure updates and benchmarking of audit standards.

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