Prepare for Judgment Day

Has anyone in your dealership read the warranty administration manual? I mean read it, not skimmed through.

If you have not yet gone through a warranty audit, insist that the general manager, parts manager, service manager and warranty clerk (if you're fortunate enough to have one) get reading, today.

When the auditor comes a knocking he will be looking for the most trivial details that may be missing from the front and back of your work order. Believe me, when he finds something missing, the complete work order becomes a charge back.

What should you look for in the manual? Let's say that you have claimed for diagnosis and replacement of a valve body in a transmission, and it turns out that a tube of sealant has been charged, but one has not been purchased from the parts warehouse.

Or the parts manager has a gasket kit that is split up, so in an effort to use up all of his leftover parts, he supplies a technician with a pan gasket from that kit. Fine, except you do not have a paper trail showing a purchase of that particular pan gasket.

The auditor armed with his trusty laptop will find these discrepancies and will be in the position of charging back the complete job.

Auditors work on the basis of “show me the paper trail or you're potentially submitting fraudulent warranty claims.” Of course, fraudulent warranty claims should be charged back. But otherwise, please!

The auditor had the capability of tracking and comparing your parts purchases to your warranty claims.

The first thing that the auditor is going to look at is the technician's explanation of what fault was found and the measurements to back up the explanation. Explanation like “shot,” “no good,” “beat,” “toast” and “NFG” will not suffice in an audit.

The next thing that gets examined is the time ticket. Do your techs know that if a warranted job requires more than the warranty flat rate for the particular job, they must punch out and punch back in?

The extra straight time may be claimed if it is punched separately and a thorough explanation is recorded. Makes you want to supply each tech with an alarm clock doesn't it?

How about an internal repair order with a legitimate claim, with all the right stuff on it including the right mileage, serial number, stock number, date, right part numbers, and of course an excellent explanation of the problem in the technician's handwriting?

You ask what could be missing. Well, some manufacturers will not warranty a dealer's vehicle.

Those that do will require that the dealership name and address be filled in as the customer.

Forget that this is the dealership's paper work, that it's still in the possession of the dealer and will never be in anybody else's possession and this missing info could be entered at any time. If the auditor sees it first, it becomes a charge back.

Look up what the warranty manual tells you to do with up-selling warranty. Your customer comes in and requests a 30,000-mile servicing, which includes an inspection of the vehicle. Read the manual closely because more than likely you will be allowed to up-sell a safety-related item. But don't even think about anything else. Everything else the customer is paying you to find is considered “reconditioning” the vehicle, and that is definitely not allowed.

You might even call the head office to find out what the warranty department considers a safety item. Don't be surprised to learn that the pulsating brakes on your customer's vehicle are not a safety concern, but rather a wear-and-tear concern.

All service personnel should learn the proper procedures for warranty work. When management starts checking, the staff responsible will get it right.

Bryan Goudy is an instructor at the Automotive Sales College Inc. He's at 888-681-7355.