Voices

By Dan Pearson,

Owner, PleasureLand RV

St. Cloud, MN

Warranty Service -- At Who's Expense?

Let's Be Fair to Each Other

Everyone knows and understands that warranty service is a critical part of customer satisfaction. Everyone also agrees that warranty service should be done as quickly as possible to keep our customers enjoying the RV experience -- and done right the first time. With this in mind, why is there contention between dealers/aftermarket service centers and manufacturer/suppliers? Warranty Reimbursement of course!

Manufacturers and suppliers do not understand why some dealers refuse to service products they have not sold. They do not understand warranty labor rates and refer to them as "excessive," feeling dealers are taking advantage of them.

Dealers are frustrated at losing money on every warranty job they complete. After all, they are repairing a manufacturers defect in production or the failure of a suppliers component. Is this fair?

Let's take a water pump as an example as almost every RV has one. Let's also assume this water pump has a cost of $50.00 for sake of conversation.

Parts Department,

Service Department,

Warranty Department Costs

1. The water pump order is placed with the dealers' vendor and is shipped from them to the dealer. Let's assume staff time for placing the order and the shipping costs total $5.
2. The part arrives at the dealership and parts personnel unpack, enter into the computer system, price and stock the water pump on the shelf. Cost $3
3. The RV is taken from the service storage lot and brought into the service department for technician to review job. Cost $6
4. The technician tests the water pump and decides the water pump must be replaced. Tech goes to parts counter and requests new pump. Cost $9 for diagnostic time and time to get the new pump.
5. The parts counter person gets the pump from the shelf and gives to the service tech, enters the pump onto repair order and places an order for a new pump for parts inventory. Cost $2
6. The technician returns to the job, replaces water pump, tags warranty part and brings to warranty manager. Cost $ 36
7. The RV is taken from the service department and returned to service storage area. Cost $6
8. The service writer completes the repair order, enters TIC codes, explanation of job completed by problem/cause/remedy and forwards to warranty manager. Cost $7
9. The warranty manager reviews the repair order, checks proper TIC code entries, completes a warranty claim form, boxes warranty repair part, and ships to the proper supplier or manufacturer for warranty reimbursement. Cost $9
10. Let's assume a $60 per hour warranty labor rate and the flat for the job calls for .5 hours to replace a warranty pump.
11. Let's assume the dealer is allowed a 15% mark up and warranty parts. (Keep in mind that many manufacturers and suppliers allow no mark up, 10% or worse, only will reimburse what the manufacturer pays its supplier which is always less than a dealer can buy them for. Winnebago Industries is the only manufacturer that allows 30% to the best of my knowledge).

It's no wonder dealers are angry! No consideration of our costs are considered when flat rates are given to the dealer. The parts don't automatically get into a dealers' inventory, nor do the RV's magically get into a dealers' service department.

The auto industry has begun to address this issue over the years raising the parts reimbursement from 40 to 50%, and work their way to retail reimbursement. A dealer deserves to break even.

Instead of doing battle with your dealers' over a small increase in warranty labor rate, manufacturers, consider our cost of doing business! We invest millions into our facilities, spend money having our people trained to work on the units you manufacture so we can repair your mistakes. We would be very satisfied to see your quality improve to a point where this would all be a moot issue -- No Warranty Work Required.

The gross margins on new RV's continue to be pressed. If dealers are not taken care of on the back end by their manufacturers, at some point a dealer will have to take a long hard look at what products they are selling -- maybe even wondering if it makes any sense to sell new units.

This issue has been pushed under the carpet for too long! It is high time to get this issue to the forefront and dealt with.

Let's Be Fair to Each Other.

RVN