The cost of preventable warranty from the supplier perspective is all too familiar to Automotive Aftermarket Suppliers Association (AASA) members. The 2013 AASA Pulse Survey previously identified that approximately $2.9 billion in potential profit each year winds up in the warranty pile; and that’s just in credit alone.
It additionally costs suppliers billions in manpower, training, marketing, cataloging and technical assistance in their efforts to grow brand awareness and prevent warranty. Technicians and shop owners have another name for preventable warranty that can’t be repeated here – but let’s just say that the most dreaded word in the bays is “comeback.”
The mutual opportunity to reduce preventable warranty was discussed on July 30 at the AASA Warranty Task Force meeting held in in conjunction with the CARS/NACE show in Detroit. Task Force membership was expanded to include service professionals when three highly successful shop owners and active members of the Automotive Service Association (ASA) joined the formerly supplier-oriented task force.
Participants in the AASA / ASA Warranty Task Force spent the day in open discussion of the effects of warranty on the shop, common causes of warranty and product categories that are experiencing high warranty rates due to a need for training.
The Task Force identified a common preventable warranty procedure: a “comeback” on a Honda Accord power steering rack that could have been prevented initially by properly flushing the system. The result? Instead of realizing $750 in profit, the shop now is losing $425 on the job – not to mention its reputation. This exercise reinforced the fact there is ample opportunity to collaborate in order to prevent lost profit.
The group determined that while there is ample training available, much of it is not reaching the technician, nor do many shops truly understand the ramifications of not performing the job properly.
The AASA/ASA Warranty Task Force agreed to narrow its focus and deliverables to the following:
• Concentrate on warranty prevention, not warranty process (labor claims, return process, etc.)
• Address the issue of technicians and shops not taking advantage of training and education programs provided by suppliers. This would include better cataloging and an industry campaign to heighten the awareness of manufacturers’ training programs.
• Highlight the financial impact of preventable warranty to the shop. The group proposed “hitting shop owners between the eyes” with messaging that preventable warranty has significant financial ramifications to their shop.
• Concentrate on problematic product categories that are prone to preventable warranty. These products should be incorporated into the AASA Know Your Parts® campaign to further educate shops and technicians on common installation or diagnostic errors that lead to preventable warranty.
• Build confidence in premium brands. Suppliers should communicate that they manufacture globally but, regardless of where the part is made or purchased, their brands meet their specific quality guidelines.
• Develop tools (a mobile device application and poster) that give shops quick, one-stop access to all manufactures’ tech lines and training – another natural fit for the proposed Know Your Parts application.
• Use both ASA and AASA resources to be a medium of the respective campaigns.
• Assign metrics to the various campaigns and initiatives in order to have a benchmark for future success.
All participants felt the direction of the initiative was in-line, achievable and possible to implement in a reasonable time frame. The Task Force participants included representatives from leading AASA supplier members and ASA members: Bob Wills, owner of Wills Auto Service in Battle Creek, Mich.; Terry Wynter, owner of Terry Wynter Auto Service in Ft. Myers, Fla.; and Gary Keyes, owner of E&M Motors in Stuart, Fla.
At the meeting’s opening, Wynter commented, “I have seen warranty grow significantly over the past 10-12 years and was beginning to wonder if anyone was going to stand up.” At the meeting’s conclusion, he said, “I wasn’t too optimistic going into the meeting but now am enthusiastic about our opportunities after developing this plan.”
The AASA / ASA Task Force will meet during AAPEX to review the plans developed by the owners of the various assignments. If you are interested in joining the warranty task force or learning more about it, contact [email protected].
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