Fixed Ops Journal - June 2021 - F25

FIXED OPS JOURNAL
"
JIM HENRY
foj@autonews.com
R
ob Gehring has seen a lot in his 35
years in the auto industry, 20 of them
as a dealership management consultant.
But his latest work helping a
client fi ght a warranty audit chargeback of
$250,000 has surprised him.
Automakers assign a standard number of labor
hours each warranty repair should require. If a
dealership service department exceeds that, it
can expect a possible penalty. But Gehring's client,
whom he wouldn't name, got in trouble - in
part - because the technician billed what the
automaker considered too few hours, and the
automaker felt the repair wasn't done. Th e audit
was eventually settled for $55,000, Gehring says.
" Dealers I know are having issues, " says
Gehring, president of Fixed Performance Inc.
in Huron, Ohio . " But they
shut up in public because
they are fearful of the
manufacturers. "
Automakers have reGehring:
Surprised
by chargeback
sumed warranty audit visits
after they mostly shelved the
practice last year because of
the pandemic. Some dealers
consider the return of audits
to be business as usual. But
others complain the automakers
are being less forgiving and more punitive .
Service managers say the margin for error is
now tighter. As a result, what might have triggered
a phone call in the past now leads to an
in-person visit and potential audit.
For their part, automakers maintain they are
interested in enforcing standards but say they
don't regard warranty audits as moneymakers.
Clock is ticking
Th e factories may be feeling some urgency to
ramp up warranty audits because, according
to laws in most states, auditors typically can't
go back beyond one year to review past claims,
says dealer attorney Richard Sox, managing
partner at Bass Sox Mercer, of Tallahassee, Fla.
" What we've seen, really, since the beginning
of the year, maybe a little earlier, was audits for
sales incentives and warranty reimbursement
The 7 dirty words not to use in a claim
Much like the late comedian George
Carlin, dealership consultant Rob Campbell
has seven dirty words. But Campbell's
words are those he says
shouldn't be used on a warranty
claim, lest they raise a red fl ag for
auditors. Th ey are:
 Broken
 Bent
 Cut
 Punctured
 Dented
 Torn
 Bad
Campbell emphasizes that
honesty is the best policy with warranty
claims. But those seven words, if used by
themselves, could imply a part needed to
 Whether an audit is in person or remote
can make a big difference I PAGE 26 I
ramping up - I would say, to make up for lost
time, " Sox says. " Yes, it's going back to normal,
but they went out very aggressively to capture as
much of the time limits as they could. "
Rob Campbell, a dealership consultant with
WithumSmith and Brown in Princeton, N.J.,
says automaker audits fi nd plenty of mistakes
within the typical one-year window, so there's
no need " to dig deeper. "
Business as usual
While there have been complaints in some
corners, other dealership service departments
have shrugged off the return to in-dealership
warranty audits this year.
" Th ere has been no feedback to me from any
dealers " complaining about warranty audits ,
says Mike Bowsher, CEO of Carl Black Automotive
Group in Kennesaw, Ga., and chairman
of the Chevrolet National Dealer Council.
For dealerships that stay on top of compliance,
warranty audits are no big deal, says
Dave Bergamotto, service director for Park Avbe
replaced because of a crash or owner
abuse - situations that aren't covered by
a warranty. Only failures that are the factory's
fault are " warrantable, "
Campbell says.
For example, a part that breaks
Campbell: Don't
raise red fl ags.
because it was poorly designed
or wasn't attached properly at
the factory would be covered. In
a repair order that becomes part
of a warranty claim, Campbell
says, it's better for a technician to
say a piece of plastic molding
broke because of " poor adhesion "
- assuming that's accurate
- instead of simply saying it's " broken, "
with no other explanation.
- Jim Henry
enue BMW in Rochelle Park, N.J.
He has been audited six times in his career.
Th e largest chargeback amounted to next to
nothing, he says, considering the dealership
averages $2 million per month in revenue for
parts and labor. A BMW warranty audit in May
resulted in " a very minimal amount " in
chargebacks, he says.
He tells new hires on their fi rst day that committing
warranty fraud or performing unnecessary
work will get them fi red. " No warning, no
second chances, " he says.
Veteran dealership consultant Rich Reinicke
believes warranty audits became a higher
priority for automakers during the Great Recession
because the factories had been lax
previously and then suddenly needed cash.
" Warranty has gotten so diff erent over the
years, " says Reinicke, president of Warranty
Management Consulting in Littleton, Colo.
" Before 2008, you'd get a slap on the hands, and
a warranty auditor would tell you what you
were doing wrong and tell you not to do it again.
After 2008, the manufacturers started scrambling
for money, and they discovered they had
huge, huge cash gaps with warranty. " 
JUNE 2021 PAGE 25
" Dealers I know are having issues. But
they shut up in public because they are
fearful of the manufacturers. "
ROB GEHRING, president, Fixed Performance Inc.
WARRANTY CRACKDOWN
Some dealerships say in-person audits are back with a vengeance
"
Fixed Ops Journal - June 2021

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