Fixed Ops Magazine 2022 Vol 19-6 - 37

practices listed below are easy to implement but require
discipline and diligence by service managers. Those
who are on top of these items make more money for the
dealer and their departments year over year:
1. Annual Rate Analysis - Just like when you get an
annual physical, you should do an annual analysis of
the customer pay rates vs. warranty rates. With inflation
at 7%+ and increase in technician pay, there
is a good chance that you may be eligible for an increase.
Every provider will gladly do a free analysis
for you. Make sure you ask the firm that did your
filing to do the free rate analysis for you.
2. Minimize discounting - Do this on all repair work,
especially on large complex jobs. There's a reason
those jobs are in your shop - you have the technical
skill to handle the work. Discounts on these types of
jobs disproportionately affect your ELR when calculating
the warranty labor rate increase.
3. Start at your door rate and go up from there -
Dealers who consistently get labor rate increases
from the manufacturer are always increasing their
door rates to equal or better annual inflation. They
also implement a rate matrix that increases the hourly
rate charged on repair type work which translates
into higher ELR and therefore better labor rate increases
from the manufacturer.
4. Evaluate your ELR by Op Code - Once you complete
a rate increase request, the vendor you utilize
should be willing to share the analysis that gets submitted
to the manufacturer along with your requested
rate increase. From that analysis, you will see exactly
which Op Codes are hurting your ELR. Focus
on those low performing Op Codes, highest volume
Op Codes, and large repairs with low ELR. If you
devise a plan to fix those problems, your next filing
will produce a higher rate request.
5. Don't forget about parts - many dealers are under
the impression that they are receiving list prices
from the manufacturer for warranty parts reimbursement.
Do you know what list price equates to on a
cost + basis? For most manufacturers, it's around
cost + 55%. How does that compare to your customer
pay amount for the same type of parts? In
most cases, dealers are getting cost + 75% or higher
on similar customer pay parts. This could be costing
you tens if not hundreds of thousands of dollars in
parts gross per year.
NOVEMBER DECEMBER 2022 || FIXED OPS MAGAZINE
37
Fixed Ops Magazine 2022 Vol 19-6

Table of Contents for the Digital Edition of Fixed Ops Magazine 2022 Vol 19-6
