...Idea Time: HOW ONE STORE UPPED ITS WARRANTY WORK RATE

Have you ever received a letter telling you that your initial three-year agreement for annual Consumer Price Index-based warranty adjustments would be expiring at the end of the year?

Did this letter explain your options, making it obvious that it will take a far greater amount of effort to change your method and go through the process of applying for an increase in the amount you charge for warranty work? Since, over 78% of GM dealers are enrolled in the automatic plan, you might as well stay on for another three years.

But one store did their homework to find out what they could do.

Their current warranty rate of $58.88 would increase, as stated, 2.18% to $59.60 an hour. Some would be happy with this. They weren't. They did a 100-repair order survey and spent about three hours preparing a request. They submitted a request for $63.88 an hour. In a week, they received an approval letter.

Taking some initiative gave them an extra $4.28 per warranty hour billed in their service department. On an average month, with 395 hours of warranty labor sold, that equals $1,690 per month in increased revenue with no additional cost of sales.

That is quite a bit of an increase compared to staying on the "automatic plan."

Idea Time is a feature of NCM Associates, Inc., using ideas provided by dealers participating in 20 Groups.