To consumers, warranty work is straightforward: When something isn’t quite right with a vehicle, you take it to a dealership’s service department. The issue is fixed, and the bill is covered by the automaker.
Behind the scenes, however, warranty reimbursements have devolved from a cooperative joint venture between automakers and dealers into a test of strength taking place not in service bays but in state capitols across the country.
Frustrated by what some see as years of gamesmanship and heavy-handedness from automakers trying to keep their recall and warranty costs in check, dealers have turned to friendly state legislators to right perceived wrongs. State dealer associations in at least 10 states have lobbied for — and often won — clawbacks seeking to eliminate the discounted rates automakers historically paid for such work.
Dealer arguments are simple, if a bit disingenuous: For overworked technicians in understaffed service departments, a job is a job, and compensation shouldn’t ride on who’s paying the bill. Besides, dealers say, technician pay needs to go up to attract and retain talent.
For their part, automakers argue that they are captives to their dealer network, unable to shop around for better deals on a very large expenditure each year. Demanding full price fails to recognize the sheer volume of service revenue that flows from the factory. As for tech pay, dealers have ample service profits to boost wages, the automakers say.