While there have been complaints in some corners, other dealership service departments have shrugged off the return to in-dealership warranty audits this year.
“There has been no feedback to me from any dealers” complaining about warranty audits, says Mike Bowsher, CEO of Carl Black Automotive Group in Kennesaw, Ga., and chairman of the Chevrolet National Dealer Council.
For dealerships that stay on top of compliance, warranty audits are no big deal, says Dave Bergamotto, service director for Park Avenue BMW in Rochelle Park, N.J.
He has been audited six times in his career. The largest chargeback amounted to next to nothing, he says, considering the dealership averages $2 million per month in revenue for parts and labor. A BMW warranty audit in May resulted in “a very minimal amount” in chargebacks, he says.
He tells new hires on their first day that committing warranty fraud or performing unnecessary work will get them fired. “No warning, no second chances,” he says.
Veteran dealership consultant Rich Reinicke believes warranty audits became a higher priority for automakers during the Great Recession because the factories had been lax previously and then suddenly needed cash.
“Warranty has gotten so different over the years,” says Reinicke, president of Warranty Management Consulting in Littleton, Colo. “Before 2008, you’d get a slap on the hands, and a warranty auditor would tell you what you were doing wrong and tell you not to do it again. After 2008, the manufacturers started scrambling for money, and they discovered they had huge, huge cash gaps with warranty.”
