CAMPOBELLO, SOUTH CAROLINA, January 16, 2017 – Auto dealers could add tens of thousands of dollars a year to their bottom line by asking their OEMs to increase their parts and labor reimbursement rates, says OEM warranty reimbursement expert Mike Volkman, founder and CEO of Service Department Solutions.
Most OEMs will not voluntarily increase their standard rates, though, he noted.
At NADA, Booth 5847, Volkman will reveal for dealers secrets for appealing to OEMs for obtaining higher warranty claim reimbursements. See Volkman at the convention for show specials.
Most dealers fear retribution by doing that, said Volkman, a former dealership technician who then spent 34 years with General Motors and FCA in positions of dealer placement, parts and service operations before opening Service Department Solutions.
“In our history of providing warranty parts and labor reimbursement services for dealers, that fear is unwarranted,” he said.
Most OEMs extend their dealers a 40 percent markup, the standard reimbursement rate, less than OEMs should pay, Volkman stressed. Petitioning OEMs for a scaled up parts reimbursement rate to 50 to 60 percent is why dealerships employ his services. A dealer that uses matrix pricing for parts can expect a 100% increase in markup; a dealer using list pricing can expect to increase gross profit by about 50 percent.
Currently, 38 out of 50 states have some variation of the law which requires auto manufacturers to reimburse the dealership for warranty repairs at the average rate of what the service department would charge the retail consumer.
“That is a huge amount of money we generate for dealers, and our success is founded in knowing the right way to approach and appeal to OEMs on this matter,” Volkman said.
Service Department Solutions is a full-service fixed operations audit and consultancy, specializing in helping franchise automobile dealerships drive cost out and profitability into their service, parts, and warranty departments. Company experts have experience interacting with all domestic and foreign automotive manufacturers. For more information, contact Volkman at info@ServiceDepartmentSolutions.com or telephone 412-651-2356 or www.servicedepartmentsolutions.com.