How do warranties work?
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Posting Guru
Joined: Sep 2009
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From: Lakehills, TX
How do warranties work?
I always thought that what happened is that the manufacturer (e.g. Ford) paid the dealership to do the work and either shipped the parts for free or reimbursed the dealership for the cost of the parts.
If that's the case, why does it seem like sometimes dealerships scrap and claw for any excuse they can possibly think of to avoid fixing things under warranty? Does Ford only pay them a cut rate and only reimburse them the original cost of the parts, so that the dealership feels they're not being properly compensated for their time, causing them to want to keep shop bays open for full-fare customers? Or is there something else I'm missing?
If that's the case, why does it seem like sometimes dealerships scrap and claw for any excuse they can possibly think of to avoid fixing things under warranty? Does Ford only pay them a cut rate and only reimburse them the original cost of the parts, so that the dealership feels they're not being properly compensated for their time, causing them to want to keep shop bays open for full-fare customers? Or is there something else I'm missing?
MMNC (SS)(Ret)
Joined: Mar 2004
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From: SE Georgia
You have a claim
If it's under $100, the Dealership can fix it and file a claim against Ford. Simple process.
If you are over $100, the Dealership has to take photos (if applicable) and file a claim. They have to get prior approval from Corporate. The higher the $$$, the more problems they have.
Ford also uses a man/hour determination. Claims are charged according to this. Job "X" will take 10 hours of labor. Ford will pay only that rate. Reality of the situation is that Job "X" will take 15-20 hours, but the Dealership only gets $$$ for the 10 hours.
Dealerships then have to cover the difference for the extra 5-10 hours of labor their tech expends. That is also 5-10 hours of labor they aren't making money off another customer.
It's all part of the major drawback Ford started with Warranty claims about 5-6 yrs ago. It made sense from a business stand-point, but it certainly kills a lot of customer relations IMO.
If it's under $100, the Dealership can fix it and file a claim against Ford. Simple process.
If you are over $100, the Dealership has to take photos (if applicable) and file a claim. They have to get prior approval from Corporate. The higher the $$$, the more problems they have.
Ford also uses a man/hour determination. Claims are charged according to this. Job "X" will take 10 hours of labor. Ford will pay only that rate. Reality of the situation is that Job "X" will take 15-20 hours, but the Dealership only gets $$$ for the 10 hours.
Dealerships then have to cover the difference for the extra 5-10 hours of labor their tech expends. That is also 5-10 hours of labor they aren't making money off another customer.
It's all part of the major drawback Ford started with Warranty claims about 5-6 yrs ago. It made sense from a business stand-point, but it certainly kills a lot of customer relations IMO.
Postmaster
Joined: Feb 2006
Posts: 3,201
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From: waynesville, mo.
You have a claim
If it's under $100, the Dealership can fix it and file a claim against Ford. Simple process.
If you are over $100, the Dealership has to take photos (if applicable) and file a claim. They have to get prior approval from Corporate. The higher the $$$, the more problems they have.
Ford also uses a man/hour determination. Claims are charged according to this. Job "X" will take 10 hours of labor. Ford will pay only that rate. Reality of the situation is that Job "X" will take 15-20 hours, but the Dealership only gets $$$ for the 10 hours.Only about a third right. Add in there that you return replaced parts, they inspect them, then if you're wrong, they charge all parts and labor back to the dealership.
Dealerships then have to cover the difference for the extra 5-10 hours of labor their tech expends. That is also 5-10 hours of labor they aren't making money off another customer.
It's all part of the major drawback Ford started with Warranty claims about 5-6 yrs ago. It made sense from a business stand-point, but it certainly kills a lot of customer relations IMO.
If it's under $100, the Dealership can fix it and file a claim against Ford. Simple process.
If you are over $100, the Dealership has to take photos (if applicable) and file a claim. They have to get prior approval from Corporate. The higher the $$$, the more problems they have.
Ford also uses a man/hour determination. Claims are charged according to this. Job "X" will take 10 hours of labor. Ford will pay only that rate. Reality of the situation is that Job "X" will take 15-20 hours, but the Dealership only gets $$$ for the 10 hours.Only about a third right. Add in there that you return replaced parts, they inspect them, then if you're wrong, they charge all parts and labor back to the dealership.
Dealerships then have to cover the difference for the extra 5-10 hours of labor their tech expends. That is also 5-10 hours of labor they aren't making money off another customer.
It's all part of the major drawback Ford started with Warranty claims about 5-6 yrs ago. It made sense from a business stand-point, but it certainly kills a lot of customer relations IMO.
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From: Isanti, MN
I'm sure Vince will correct me if I'm wrong, but I believe they pay a much lower rate for warranty work than Joe Public can get if it's a customer pay. They also pay less hours; Alldata lists both mfg warranty hours and regular book hours. The warranty hours are typically 30-40% less.
Vince, do techs make less per hour on a warranty claim?
Vince, do techs make less per hour on a warranty claim?
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Posting Guru
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From: Lakehills, TX
OK, so some of this is starting to make sense. Do we have people on here who actually work these cases who can testify authoritatively as to the answers, including the one like Tom's above? Actually, speaking of that I would be surprised if the individual tech's pay rate changed at all. Just what the dealer collects.
Postmaster
Joined: Feb 2006
Posts: 3,201
Likes: 4
From: waynesville, mo.
I'm sure Vince will correct me if I'm wrong, but I believe they pay a much lower rate for warranty work than Joe Public can get if it's a customer pay. They also pay less hours; Alldata lists both mfg warranty hours and regular book hours. The warranty hours are typically 30-40% less.
Vince, do techs make less per hour on a warranty claim?
Vince, do techs make less per hour on a warranty claim?
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Super Moderator
Joined: Aug 2003
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From: Isanti, MN
Nope, same pay per hour. For instance, you make $20 per hour, warranty time says 1.5, you made $30. Customer pay says 2.5, you made $50. Now, if it comes back because of a mistake, you get nothing for the re-repair. Warranty calls for specific testing procedures that must be followed or the claim is denied. Connector numbers, circuit numbers tested, readings you found, pinpoint test numbers, etc. Customer comes in saying "I know what the problem is, just do this....." Nope, claim denied. Verify the symptom is the first step in any warranty diagnosis. If you just replace something on a guess (or customer suggestion) and it comes back for the same problem, you do it for free, parts and labor. Remember, (unpopular statement coming), Customer is always right. And when Ford is paying the bill, Ford is the customer' and I fix it the way they say to. If you were paying the bill, you are the customer, and I'll fix it anyway you want it.
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Postmaster
Joined: Feb 2006
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From: waynesville, mo.
THAT, is the part that I'm not privvy to. I'd say, different shops, different areas, different rates (but, thats just a guess).
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