The world is in crisis, and no one has escaped the financial and economic effects of the COVID-19 pandemic. Everyone in the retail automotive industry understands the true impact that this virus is having on dealerships and just how crucial it is for stores to find additional revenue now more than ever.
Even as many are forced to furlough or lay off employees and juggle payments to keep a skeleton crew running, there is a solution that requires no upfront investment and barely any work on your part: a retail warranty reimbursement submission.
Some dealerships might be reluctant to undertake this, citing concerns such as the fact that they’re focused on finding revenue immediately and can’t wait 60 to 90 days, they have a hold on spending, or they simply don’t have the time. The truth is that none of these issues are show-stoppers in submitting your retail warranty reimbursement. Let’s address each one.
We understand that money is needed now—there’s no way around that. But unfortunately, there may not be a direct answer to that besides government-funded loans and stimulus grants. However, once the economy reopens and society begins to slowly meld itself back into a shape of what it once was, dealerships are likely to be the beneficiaries of pent-up demand. Cars are going to be rolling in for repairs, and business will rebound. By submitting a retail warranty reimbursement submission today, you’re preparing your dealership for the inevitable economic uptick by starting the process now, which will put money on your bottom line that you’ll have access to a few months down the road.
Setting yourself up for the future should be an important focus today. Not only does a retail warranty submission help you in a few months, but it is tantamount to an annuity, the benefits of which will be perpetual.
Submitting a retail warranty reimbursement with vendors that operate with a win-win philosophy, means you don’t pay any of the cost of services until the manufacturer approves your submission. When you do pay, it is out of found money. Additionally, one way to determine whether a submission is worth your while is to request that your vendor provide you a no-cost projection of just how much more you could be adding to your bottom line if you were to move forward. There should be no strings attached—you should only have to provide a few labor and parts figures on your end, and you’ll immediately have a good sense of how much you could stand to gain.
This makes it easy to see how profitable a submission could be because you’ll have a good estimate of just how much you may be getting and how quickly your pay-back period is on all fees. Even before the reimbursement is in your pocket, you’ll have a projection of the profit number you’ve been looking for to start strategizing around your sustainability plans. Especially in these critical times, a vendor should ensure that their clients feel comfortable and satisfied by walking in the dealer’s shoes, and not expecting fees when the dealer can least afford it.
One of the most common objections to performing a retail warranty submission during a crisis, is not having enough time, and this is especially true now. Dealerships are scrambling to keep paychecks coming and maintaining any semblance of normalcy during the crisis, so where would they have time to prepare and submit a complex retail warranty submission? That’s exactly where a true professional services firm comes in.
A dealer’s participation should be limited to providing minimal access to the DMS and signing a pre-written letter; the vendor should do the rest. Dealers should be wary of vendors asking them to perform services, such as pulling potentially thousands of repair orders, in order to assist in preparing the submission. There are some true nightmare stories, where dealers have been forced to perform the work multiple times, based on lost shipments between the dealer and vendor, or even the vendor and manufacturer; in some cases approvals were delayed for months.. There should be limited distractions or side projects handed to your skeleton crew: With the proper vendor, all you’ve done is added a few no-upfront-cost team members to your arsenal.
A quality vendor saves you time, sure. But another great reason to have a competent third-party prepare and submit your retail warranty reimbursement is because of how well versed they are on every state’s law and the manufacturers’ requirements. Factory auditors jump at the chance to rebut or deny submissions, and drag out the reimbursement process because manufacturers don’t want to pay you more than their standard rate—a common fact of the trade. A top-flight firm knows how to follow submission guidelines to a T and make sure your reimbursement comes as quickly as possible and gives factory auditors no leg to stand on. Although no one can foreclose on all manufacturer tactics to reduce or deny a dealer’s submission, it makes sense to leverage industry insider knowledge to assure the best possible result.
Sometimes dealers’ reaction to retail warranty reimbursements is that it seems too good to be true—that’s certainly understandable. But the reality is that retaining the right vendor who can guide you through the experience, including what behavior to expect from your manufacturer, can make the process as painless as possible. If you take the time to consider all of the nuances involved, you’ll realize this is not the time to take this on yourself— it’s not always a walk in the park.
Now, in times of crisis, it has never been more important for dealerships to see the light at the end of the tunnel. The veil of uncertainty will lift sometime in the future—is your dealership ready with the revenue it needs to get a running head start?