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Old 08-26-2007, 05:43 PM   #1
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Who Pays/gets paid for Warranty Work?

Reading threads in this area, I got to thinking, Who pays or gets paid for warranty work? I have seen several posts that people have posted that their dealership makes the "quick fix" to fix a problem as opposed to replacing a part etc.

If a warranty repair comes in, my first assumption is that the manufacturer reimburses the dealership for the repair, however why would the dealership make a quick fix as opposed to making a permanent fix if the manufacturer wasn't directing them to do so? My assumption is that they'd be reimbursed for the final fix if they chose to do so.

Is this a band-aid approach? Or does Honda rely on dealerships to take care of problems in a decentralized/independent fashion?
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Old 08-26-2007, 07:04 PM   #2
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Re: Who Pays/gets paid for Warranty Work?

The manufacturer reimburses the dealer for parts cost, plus pays flat rate (book time) for labor.

The reason many dealers don't like to do the right thing is because they can't do the repair in the published time allowed. For example the transmission software updates... I think the dealer gets paid .3 hours for doing the update... 18 minutes. They have to pull the vehicle in, download the update, install the update, and get it out in 18 minutes or less to "make time". Many dealers also have a policy that they vacuum or wash your vehicle after a repair. You can see this is a loser for the dealer in many cases.

There's also all the mechanic politics involved. A good mechanic can often beat flat rate time and as a result get paid for more hours than actually worked. Many mechanics know which jobs they can finish in less than flat rate time, and which jobs they'll lose time on. The mechanics don't want to touch some of those jobs... this is money out of their pocket.

Is the flat rate time fair? That's a discussion that we'll not solve here. I've seen some major repairs that take twice as long as the flat rate time allowed... others are as far off the other way. A mechanic is working for his/her pay and will do what they can to take the good jobs.

I've over simplified the situation, but I can assure you there's a LOT of politics going on behind the scenes. Service managers and writers know which jobs they'll have a problem with and often shy away from them.

It's a lot more complicated than is often thought. A mechanic may have to look for an hour to find a problem and only get paid for 12 minutes of that work. That doesn't make them happy.
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Old 08-26-2007, 07:20 PM   #3
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Re: Who Pays/gets paid for Warranty Work?

Warranty book time pays roughly half of what regular (non-warranty) work pays, (at Lexus at least) and sometimes less. For most warranty work, the time paid usually doesn't cover the actual time taken to complete the work, because of all the warranty paperwork involved. For a simple example, at Lexus, changing most tail light bulbs under warranty pays .2 (two-tenths) of an hour. That includes the time it takes to pull the vehicle in, make certain it is just the bulb, walk to or wait for another bulb from parts, replace the bulb, and take the car to the car wash, then fill out the warranty paperwork. I couldn't even fill out the paperwork in two-tenths of an hour. That's a simplified example of why techs don't like warranty work. After practice, most techs can complete warranty work in approximately the time given by the factory, but usually not much quicker.
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Old 08-26-2007, 07:22 PM   #4
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Re: Who Pays/gets paid for Warranty Work?

And when you figure in the differences in technicians abilities and training, the situation gets even more muddled.
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Old 08-26-2007, 07:30 PM   #5
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Re: Who Pays/gets paid for Warranty Work?

I didn't mention the reimbursement rate since that varies from state to state and dealer to dealer.

Several states have passed laws that require the manufacturer to pay the posted labor rate for warranty reimbursement. That's why you see a big sign with the labor rate posted in some dealerships. The manufacturer's can spot check to make sure discounts off the posted labor rate are not commonplace.

Other states have no regulations and the labor rate reimbursement is negotiated between the dealer and the manufacturer.
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Old 08-27-2007, 09:36 AM   #6
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Re: Who Pays/gets paid for Warranty Work?

The previous answers are all correct for the most part. The manufacturer reimburses the dealer for parts and labor of a warranty repair. There are many reasons a tech may opt for a quick fix as opposed to a longer, more involved repair. The tough part is determining when a quick fix is acceptable and when it is not enough.

The fact of warranty work is that it doesn't pay as well as customer work. For the individual technician it is not nearly as profitable. The tech will often choose to make a quick fix and get the vehicle back out, so that he (or she) can move onto a different, better paying job. It really sucks to be stuck on a warranty job for several hours while the good work - the gravy - is done by somebody else.

At the end of the day, it all comes down to the dollar. I'm not going to be coy, I want to make as much money as possible, as quickly as possible. That's why I come to work everyday. However, warranty work is a part of the dealership environment and there is no way to prevent doing it.

This is where the huge world of politics - shop politics as it's called, comes into play. There are many ways techs can get out of doing warranty work. Some more honest than others. I have even known techs that will deliberately do a poor job on a vehicle so they will not to be considered for that type of job the next time one comes in.

In my own experience, I have found it more rewarding to take the time to do the job that no one wants to do. You do it, and do it correctly, and make the customer happy. More often than not, the service adviser will remember the "favor" you did for them and compensate you with a good job when one comes in. Quid pro quo. It's the way ALL politics work. Some people - like myself, are just better at playing the game.


Bottom line is this - and I have stated it before. You should build a relationship with your particular service adviser and even the technician. Always ask or request for the same ones. That way... you become a customer, a friend. When you come in with a warranty issue, they will take more care and more time and make sure you are happy - they will go the extra mile for you, because they know you will be coming back for more business, and next time it might be a really good, well paying job.




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Old 08-27-2007, 09:57 AM   #7
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Re: Who Pays/gets paid for Warranty Work?

Quote:
Originally Posted by HondaTech View Post
Bottom line is this - and I have stated it before. You should build a relationship with your particular service adviser and even the technician. Always ask or request for the same ones. That way... you become a customer, a friend. When you come in with a warranty issue, they will take more care and more time and make sure you are happy - they will go the extra mile for you, because they know you will be coming back for more business, and next time it might be a really good, well paying job.
Here is a pseudo-related story....

When I lived in NY, I had a couple of friends (softball teammates) that worked at a muffler (Midas type) shop. I would bring them some pizza and beer occasionally for the favors they did for me, and a 12'er the day of "my service". Sure I knew these guys well, but won the management over with the "goodies".

"FREE" items that they did:
tires rotated numerous times, oil changes, spark plugs, they surprise-ordered me a nice exhaust tip for one of my cars, rotors turned, had to pay cost for new pads, My parents got a new muffler (just the end, not pipes) put on their Chevy conversion van for $20, which they probably pocketed
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Old 08-27-2007, 06:35 PM   #8
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Re: Who Pays/gets paid for Warranty Work?

Great info. My initial assumption was that techs were salary, but sounds like that isn't the case. I built a pretty good relationship with my local Nissan dealer due to my many warranty issues with the TITAN, always polite and realizing that they didn't manufacture the truck. Sad to hear though that they probably weren't happy when they opened the garage door and see me there...
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Old 08-27-2007, 06:45 PM   #9
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Re: Who Pays/gets paid for Warranty Work?

A good friend of mine is a mechanic. Basically he is a salesman. He tells the service adviser what he "thinks" the customer needs.

If he only does oil changes, he cannot make ends meet. That must put the techs in a bad moral position at times.
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