Forty-six states, with others in process, now have legislation requiring manufacturers to reimburse dealers at retail rates for both parts and labor performed in warranty service.
In the past, dealers have been stuck with an artificially low parts mark-up as stipulated by dealer agreements. This mark-up is typically 40% over cost, although some manufacturers will claim to pay you list or MSRP.
Many dealers wind-up leaving a significant amount of money on the table by simply failing to consider a “true” retail reimbursement submission.
To put it simply: the playing field was lopsided. Now, Retail Warranty Reimbursement laws level the playing field between the manufacturer and the dealer.
Historically, manufacturers have limited the parts mark-up dealers can receive on warranty work to about 40%. This is significantly lower than the going rate for their products and services, but factories dictated the terms and dealers had to accept them.
Because of favorable state laws, dealers are entitled to collect retail from their manufacturer for parts used in a warranty claim.
The fact of the matter is this: some of the dealers in your area, large and small, have most likely taken advantage of Retail Warranty Reimbursement. At Armatus, we have worked with almost 4,000 dealerships in the past seven years, and they range in size from large public groups to single point dealers. We’ve also done work with virtually every brand. Nevertheless, there is a surprising lack of awareness in the market regarding this opportunity, but as more and more states strengthen their laws, dealers are catching on.
Within the past seven years, we have worked with nearly 4,000 dealerships, ranging from large public groups to single point dealers, and virtually every car brand.
Because many dealerships already do Factory Labor Submissions, they believe they can use the same approach to do a Statutory Parts Submission. However, most find out quickly that they made that assumption at their own peril.
In Factory Labor Submissions, you typically follow written factory protocols— and adhere to their rules. For Parts Submissions, however, doing it on your own is very challenging because of the nuances in the law and the written (and unwritten) rules imposed by manufacturers.
Doing a submission on your own can be very challenging because of the nuances in the law and the written (and unwritten) rules imposed by manufacturers.
Factory retribution is a widespread concern, and we understand why; most of our staff have worked in dealerships and are fully aware of the importance of maintaining a healthy dealer/manufacturer relationship.
To our knowledge, none of our clients have experienced any form of retribution. In fact, many state laws specifically prohibit retribution. Industry legal professionals have talked about this publicly in various conferences, and they all concur:
Industry legal professionals concur that retribution is largely a myth that is perpetrated to dissuade dealers from requesting a retail mark-up for their warranty claims.
Most dealers currently obtain a 40% parts mark-up. By submitting for Retail Warranty Reimbursement, though, a store with typical pricing and discounting practices could expect to achieve a markup in the 75% to 85% range, and dealers utilizing a list pricing model could expect something in the 60% range. Even taking into consideration a conservative pricing environment, a dealer should expect to improve their warranty gross profit by a minimum of 50%; however, doubling the gross is very realistic.
A dealer should expect to improve his warranty gross profit by a minimum of 50%; however, doubling the gross is very realistic.
Now that you better understand the process, where do you begin? By simply providing Armatus with three numbers, we can use our sophisticated software and knowledge of the laws and the manufacturers’ rules to provide you with a projection of how much money you could expect to get.
You can generate significant bottom-line results without any up-front investment, risk, or significant time commitment by letting Armatus perform a retail submission on your behalf.
Think about it: What else could you do to generate as much profit as you would by doubling your warranty parts mark-up? Same work, double the gross.
We are happy to perform a no-obligation projection for you.
Contact us at 888-259-4471or firstname.lastname@example.org to get started.
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