Work your warranty program year round

No one likes dealing with warranty red tape. But pushing this administrative task to the lowest level of the priority totem pole might decrease the number of repairs that qualify. And running a less-than-competent warranty program will virtually guarantee costly results if your store becomes the target of a manufacturer’s audit.

Putting the right person in charge

Organized dealers with dedicated warranty administrators have less to worry about when factory auditors arrive. They anticipate auditor requests, have paperwork and faulty parts ready to go, and set ground rules when factory personnel arrive.

Assign an employee with mechanical and electrical knowledge to serve in this critical role. The warranty administrator should be responsible for handling warranty claims from start to finish. Train this person on how to effectively process claims using your manufacturer’s online warranty systems.

Your warranty administrator also should be familiar with all current technician service bulletins (TSBs), because they recommend service solutions for common customer complaints and address whether the fixes are covered under warranty. TSBs are available through each manufacturer’s service portal.

Getting service techs up to speed

Service technicians also require training in warranty protocol, including how to write a comprehensive customer concern description and how to split time between warranty and other repair work. You’re more likely to be audited if you submit more claims per vehicle serviced — or if your technicians spend more time completing the work — than other dealers do.

Examples of paperwork blunders in protocol include missing customer signatures, mileage readings that end in “000” and ambiguous customer concern descriptions. Verbiage that implies wear and tear, such as “bent, cut, dented or torn,” also raises a red flag.

Testing the program in advance

Proactive owners don’t wait for the dreaded “We’re coming . . .” letter. They mock-audit themselves each month by reviewing a random sample of warranty repair orders. Evaluate each claim as if you were an outside auditor. Also check the repair backlog to ensure timely completion of warranty claims.

Consider asking your manufacturer’s representative for an honest assessment of your warranty claims processing. If the rep spends hours each visit helping the warranty administrator code simple claims, pick a new administrator. Your rep is there to evaluate more complex claims that require the manufacturer’s approval. Routine fixes often can be self-authorized online with proper coding.

Knowing what to anticipate

Auditors will tour the shop to look for obvious concerns — packaging from aftermarket parts in your trash, for example — and then sift through a sample of warranty claims, looking at the three C’s: complaint, cause and correction. In addition to incomplete descriptions and administrative omissions, common reasons for expensive chargebacks include nonwarrantable add-on repairs, repeat claims and improper handling of battery claims.

Most manufacturers require dealers to keep records for a minimum of 12 to 24 months. Any of these records might be subject to scrutiny during an audit.

Following up

A few weeks after your audit is over, your manufacturer’s rep will meet with you to discuss any proposed chargebacks and ways to improve your claims processing. Don’t be afraid to appeal unfair warranty audit findings.

If there are legitimate chargebacks, consider them a wake-up call and learn from your mistakes. Sloppy claims processing hurts both you and the manufacturer. Prove to yourself and your manufacturer that you can be highly efficient in this area.

A proactive measure

Running an effective warranty program will save you time and money in the long run. Your dealership can potentially benefit from thousands of dollars in warranty claims if they are filed properly. And, if your store is selected for a warranty audit, you’ll have nothing to fear.