Florida Service Departments

[Jim Lloyd]

As most FL Service and Parts managers are aware, the new law requiring that dealers be reimbursed for parts at their non-warranty retail rate became effective on July 1st.

On the advice of counsel, we sent a letter to GM's SE Region requesting guidance on the matter. To date we have not received a reply. My guess is GM is formulating a policy so they can respond to everyones' questions at the same time.

If you represent another manufacturer in Florida, have they provided any guidance to your dealership regarding this law yet? My biggest concern is the factory will agree to pay retail for warranty parts, but will try to recoup their "losses" somewhere else.

If memory serves, similar legislation was passed in NJ with Mercedes and they responded with a surcharge on NJ-bound vehciles.

Thanks,

Jim

[This message has been edited by Jim Lloyd (edited 08-08-2007).]

[scotstrong]

The original NJ suit I believe involved Ford. They also tried the "backdoor" fees on new vehicles, and they were overruled on this and pretty much told that no "tit for tat" fees of any kind would be allowed. I do not know where this stands today in NJ.

I hope the recent Florida law has similar measures to prevent the OEM's from simply recouping this additional expense elsewhere.

Considering that parts departments cannot go for the equivalent of a "labor rate increase", have had their margins continually eroded by the OEM's (as opposed to actual market forces), have had huge amounts of expense passed back to the dealer that were the OEM's; this is something that is LONG OVERDUE.

My guess is that the fight is just now starting in your state.

Scot Strong

[apollo]

APPLIED FOR IT JULY 1ST FOR CHRYSLER..JUST GOT A PACKET JULY 30. BASED ON ADP SET NOT REYNOLDS,CANT PULL HOW THEY WANT IT DONE..
SUBARU WAS EASY THE REPS HAD A SHEET WITH WHAT THEY NEED AND THEY FILLED IT OUT ALL IN
30MINS POW RETAIL WARR......LOTS OF WORK FOR CHRYSLER......

[robc]

I've done a couple of surveys for FL dealers now and are awaiting word from manufacturer on issues. So far Ford has been the impossible one. Here in NJ te battle is long over for the domestics and most imports. NJ is different from FL in that they outlined a specific procedure for doing the survey. FL forgot that part but has some great additions to start - including no surcharge/recoupment and triple damages. Some makes so far have just thrown in the towel and said they will begin to pay list for FL stores.

We won't know until we get some surveys approved, but like NJ we ave some dealers that are requesting over 100% mark-ups. The highest surveys I have worked on in NJ was 105%.

And absolutely - Chrysler is a nightmare to deal with as they recently have begun redefining some of their specific exclusions and inclusions for the survey.

== Rob ==

[possum]

These "retail reimbursement" laws are on the books in at least a dozen states, including ours, NC. However, until you take them to court, and depending on how strong the legislation is, the Mfgrs control the game. The only exception I am aware of is VW, which started retail reimbursement on 2004-up vehicles. But VW is also the one who dropped prices 75% or more on high volume warrantty parts. Good luck to "Y'all" in FLA.

[sermgreby]

I recieved an e-mail from the Southeast region office from General Motors yesterday stating they sent letters out to the dealers that requested retail reimgursement explaining their position. I do not know as of yet what that letter will contain but it should arrive tomorrow.

Mitsubishi has all ready sent a letter back asking what we want reimbursed at, did not say if we would get it.

We did a 100 RO survey, took out tires, maintenance, warranty and service contracts. We established our average parts markup on these types of repairs and effective repair labor rate and submitted our request based on those surveys.

The law states the manufacurer has to demonstrate the dealers charges are improper. We understand that to mean they have to show that the dealer used an improper method to determine that rate. As I understand it the 100 RO survey has been upheld in other states. Also most manufacturers have all ready used it to set labor rates.

The law does prohibit surcharges, provides for 30 day payment and also provides for treble damages if the manufacturer does not comply.

[This message has been edited by sermgreby (edited 08-22-2007).]

[sermgreby]

I forgot to mention in the previous post that the way the law reads a dealer does not have to use the factory time guide either. I know of one dealer doing his Ro survey and is going to request to be reimbursed for labor based on Alldata times.

[Jim Lloyd]

Well, the two-page letter from the SE Region arrived today. In summary, GM doesnt feel they are being treated fairly because they claim the warranty transaction is fundamentally a wholesale-to-wholesale transaction in which dealers incur no marketing cost, credit risk or any of they other distinguishing indicators of a retail transaction. In addition, they claim it will force them to discourage broad warranty coverage and encourage administrative controls. The finish of this paragraph states, GM will, of course, comply with the law.

The basic procedures (again summarized) are as follows.

1.Written request for parts AND labor.
2.GM will conduct a full-blown warranty audit.
3.Results of the audit and a 100-repair order review will be used to determine whether GM approves or disapprovesor determines an alternative rate supported by the data.
4.Semi-annual validation review to insure payments to dealer are in compliance with state requirements.

Last but not least, they will cut off self-authorization for Claim types B, E and P. All B-type parts claims will be subject to inspection and approval by wholesale personnel.

If they want to discourage a dealership from claiming a higher parts reimbursement rate, they have certainly accomplished it.

[sermgreby]

We have recieved our letter also. We will still ask for the reimbursement to be done at retail rates. I do not understand logically what the warranty audit is going to prove other than a means to intimidate dealers to prevent them from requesting retail reimburment.

In the meantime we will tighten up our warranty controls although we have been under our peer group in expence for a long time.

They say, and I quote, "adding economically unwarranted cost into the distribution system will ultimately disadvantage GM and it's dealer's". Since all manufacturere's need to comply this is a blatantly false statement.

We were origanally going to ask for parts only but after recieving this letter we are going to ask for parts, labor and the use of a different time guide.

[Jim Lloyd]

The whole tone of the letter disturbs me. It's like they are daring us to request the increase.

We haven't made our decision, yet.