Hi,

I don't really have any idea how the financial side of a car dealership works. I was wondering, what is the difference between a warranty repair and a non-warranty repair?

Obviously they are at full profitability on a non-warranty fix (get a mark up on parts and the difference between technician salaries and their billing rates). But how does this change on a warranty repar? Does Miniusa give them full billable hours (book time) on repairs, but only actual cost on parts?

The reason I ask is that I feel a bit like a second-class citizen when I go in for warranty repairs at my local dealer (I'm a second owner and didn't buy the car there, so that may have something to do with it too). I thought it might also be because they were making less money off of me.

If they are making equivalent money off of warranty vs. non-warranty repairs, wouldn't it be in their interest to always give the benefit of the doubt to the consumer? This would generate goodwill and loyalty, possibly resulting in future new car sales.

Just curious - what are your thoughts?

bonmot

 

Most dealerships are payed a set rate for warranty work. Depending on the Manufacturer this can either be a reasonable rate, or unreasonable rate.
I bought my Mini second hand and have brought it to the only Mini dealer in my area and have had great luck with warranty issues. It could be that your dealership is just "one of those" dealerships.

Two choices really, grin and bear it, or find a new dealer.

 

Not sure, but I've always had dealerships push 'warranty repairs', i.e. ("I hear your windows squeaking, there's a TSB on that, so we'll replace the regulators.") I didn't notice any squeaking until AFTER the 'repair'. :impatient

 

The get paid "book rates" for all warranty repairs, and they make profit on the parts as well. The reason some dealers want warranty work is that it's going to get paid for, it keeps the techs busy, they make money on it and the parts and so on. If the shop is completely full for all available tech hours with customer pay work, well more power to them, but I doubt this situation exists based on the current labor rates. Warranty labor rate is based on what's customary for the area, it's not the same nationwide..........

 

This is a tricky question, because it varies.

As others have said, the dealership gets paid book rate for warranty repairs and on some this is a good deal, but on others it is not. In general, the dealer tends to make more money on cash repairs, especially the pencil-whipped 30K and 60K inspections which they get $500-$1000 for $40 worth of parts wholesale and an hour or less of tech time.

Mfgs deliberate keep the book rates pretty aggressive so as to discourage dealers from padding their bays with excessive warranty repairs. But it varies from repair to repair and with the quality of the techs they have. A really good/experienced/fast tech can beat book rate by half sometimes, but a new/slow buy may take 2x or 3x book to finish the job and have a high rate of callbacks to boot.

Where dealers really get screwed on warranty work is diagnostics - the customer complaining about an odd squeak or rattle or some odd intermittent electrical issue. The dealer totally gets screwed on this stuff and they generally eat almost all the diagnostic time.

Another factor is simply how busy the dealer is and how they're doing with the mfg with respect to their volume of warranty work which is carefully tracked. A service bay that sits empty isn't generating any profit so if the month is slow, the dealer will be more receptive to the generation of warranty work, even warranty work that is relatively non-profitable. OTOH, if the dealer has been "too generous" with warranty work, they may be in trouble with the mfg and find that every item the warranty is being reviewed with a high percentage of charge backs. In this situation, the dealer will be fighting with every customer tooth/nail to avoid doing warranty work. It's definitely not a blank check because if it was, the dealers would abuse it out the wazoo.

- Mark

 

Thanks for the replies guys.

It sounds like they are making roughly the same on a warranty job vs. a non-warranty job, but that they have to avoid overdoing it so they don't raise the ire of MINI corporate.

If there is a situation where a repair is on the razor edge between warranty and non-warranty (though still well within the warranty period), what can be done to push the dealer in your favor?

 

Worked in a service dept. at one time, and I can tell you from experience that over a years' period, the warranty work is a 'break even' proposistion. Markjenn had it right about the diagnostic aspect: The less they have to do, the more money they make. TSB's list the billable hours for repairs; they do not list time for diagnostics. If you want to help your service dept., collect every bit of information you can that applies to the problem and pass it on. "It makes a funny noise" really doesn't help much. For you second owners, if it's still under warranty, take it in. It doesn't change anything from the dealers perspective whether you're a first or second owner.

 

Actually, they do get paid for some diagnostic time, if it leads to a warranty paid repair........

 

Which dealer are you going to? You can PM me with the answer. I got my MINI at Patrick and I too am the second owner. I have had my car in a few times and never felt like a second class citizen ever. I have heard good things about all three dealers in Chicago but my good experience at Patrick brings me back. I live only 20 miles from Bill Jacobs but I drive the 53 miles to Patrick.