Interesting information about warranties in general

[filcee]

Don't know whether this belongs here (as it's maintenance) or in general or chit-chat as it's maintenance but vehicle industry related rather than MR2 specific.  Mods please move as you see fit (Ta).

Given the many and various discussion on here about how easy it is or isn't to get work done under warranty, I thought that this information would be useful.  It comes from talking to my father about the 'warranty process' in commercial vehicle dealerships, although his view is that it shouldn't be that much different for cars.  (The old man has worked in commercial vehicle servicing nearly all his working life.)   The process goes something like this:

When a vehicle comes in for repairs during its warranty period, and the repairs fall under the warranty, then the dealer gets reimbursed for the labour and parts direct from the factory.  There is an amount built in to the vehicle price to cover the cost of warranty, and this 'fund' is used to reimburse the dealers who carry out the repairs.

The dealer does not recieve the the 'retail rate' for labour.  They get a different, lesser rate.  For example, you might pay 45/hr for labour as a regular customer, but for warranty work the delaer might only get 30/hr  depending on how this is worked between the dealers and the factory.  I'm not sure that this also applies to parts (i.e. they get cost back, not retail price), but I suspect it probably does.

Dealer payment for warranty work is near instantaneous.  Pretty much as soon as they tell the factory it is done, they will get paid.

'Broken' parts that are replaced during warranty work may have to be returned to the factory for either investigation (unusual) or refurbishment (more usual, especially for large items like clutches, gearboxes &c).  The refurbished parts can then be re-sold/re-used elsewhere to offset the cost of warranty replacement.  The dealer will either know that certain things have to be returned, or will recieve a request from the factory to return parts.  If the parts are not returned within a certain period (usually 14 days), then the factory will recoup the money paid to the dealer for the warranty work. The net result of not returning requested parts is that the dealer has to do the work and supply the replacement parts, but doesn't get paid by the factory and ends up with a room full of broken bits that they could get paid for if they were organised enough to send them back.

The theory I have is that if a dealer is reluctant to do warranty work, then it's likely that they feel they don't get paid properly for it.  This might be because of the rates agreed between dealer(s) and factory for warranty parts and labour, or it might be because they don't return enough parts on time to hang on to the money. Either way, the lack of 'profit' in warranty work would make for a reluctance to do the work.  The opposite might also be true - a well organised dealership might be happy to do the work because it is at least cost neutral to them (no money made, no money lost, but everyone is kept busy).

[Slacey]

Interesting. The dealer I use is a very efficiently run organisation - the garage is brand new and is run very well - you never see old parts hanging around the place, and you have all access to the worshops so you can see for yourself.
They are always happy to take on warranty work (as I've said, they asked me if they can do warranty stuff), so maybe they do return a small profit on it.

[Anonymous]

To add to this, I'm pretty sure that dealers also only get paid for the number of hours for a job according to the book (the BGB?). Whereas they might charge you or me for the number of hours actually taken for a job, they'll only get the official number of hours from Toyota.

[Anonymous]

I believe the dealers definately only get the book time for warranty work. (ie replacnig the hood is booked at 6 hours, but seems to take much much longer), although other jobs probably work the other way (oil change is booked at half or one hour, when it only takes about 5 minutes), so they should win some and lose some on book times.

Also, whilst the warranty hourly rate may be a bit lower than retail, it is still much more than they pay the fitters, so there is still profit in warranty work.

Apart from anything else, if the dealer doesn't complete warranty work professionally and willingly, owners are unlikely to come rushing back for servicing or repairs in future, and the dealer would deservedly go bust.

Also, I understand certain warranty claims are refused, if the manufacturer inspects the part and does not consider it to have failed due to a manufacturing fault.

Given that modern dealers seem to struggle to diagnose faults without replacing parts almost randomly until the problem is gone, I can imagine a large proportion of warranty claims may be disputed, which obviously requires a lot of admin and possible losses for the dealers.

Obviously the dealers who manage to correctly diagnose most problems first time and therefore only replace parts that have really failed, will probably be the happiest to undertake warranty work, knowing they will profit from it.

Do I win five pounds for not using any smiley faces ??

James.

[paul russell]

I've been experiencing clonking noises on full lock. Several others on here have suggested it is the front suspension mounts. The car has been in with the dealer twice now and they have been unable to fix the problem. When I suggested to them might it not be worth changing the front mounts to see if it solved the problem, they told me that if they replace parts that turn out not to be faulty they don't get paid by Toyota. I would have thought that if they suspected a part to be faulty, they shouldn't be penalised if it turns out to be ok.

[Anonymous]

When I suggested to them might it not be worth changing the front mounts to see if it solved the problem, they told me that if they replace parts that turn out not to be faulty they don't get paid by Toyota.

That's their problem though, not yours.  Your car is faulty, they need to fix it.  If they can't do that, then they should refund your money or provide a working replacement.  

If they chose to sell Toyota cars then they assume the terms that are set out.  If that means that they don't get paid for certain parts, then that's between them and Toyota.  It's not between you and them.  They sold you the car, they have a duty to make it work, sale of goods act etc. etc.  If that means they are out of pocket then they need to take that up with Toyota, not grumble to you.

[filcee]

If that means they are out of pocket then they need to take that up with Toyota, not grumble to you.

Toyota would probably argue that that is the penalty paid for not being sufficiently skilled to diagnose the problem correctly in the first place.  If this didn't happen there would be bits and pieces flying back to Toyota all the time.  Toyota would then be carrying the cost of the dealer not being able to diagnose and fault-fix properly, and there would be no incentive for the dealer to improve their skills in this area.  

I guess in a roundabout way that last stamement means find another dealer, who is better able to do the diagnosis?  (Not much help if your motor is a bit donald at the moment.)

[Anonymous]

If that means they are out of pocket then they need to take that up with Toyota, not grumble to you.

Toyota would probably argue that that is the penalty paid for not being sufficiently skilled to diagnose the problem correctly in the first place.  If this didn't happen there would be bits and pieces flying back to Toyota all the time.  Toyota would then be carrying the cost of the dealer not being able to diagnose and fault-fix properly, and there would be no incentive for the dealer to improve their skills in this area.  

I guess in a roundabout way that last stamement means find another dealer, who is better able to do the diagnosis?  (Not much help if your motor is a bit donald at the moment.)

No argument with that, and I think the advice is sound.

However I'm still pretty sure it is the dealer's problem, not Pauls.  Although in this situation it is his problem because they're passing the buck and making it his.

[filcee]

However I'm still pretty sure it is the dealer's problem, not Pauls.  

Agreed.  The dealer should be sorting it out.

Although in this situation it is his problem because they're passing the buck and making it his.

Buck passing is inexcusable.  Even more so when it is back to the customer.  For me, that is the first indication that I should be looking elsewhere. I want the problem dealt with, which means I am willing to expend time and effort to find a dealer willing to help me - once I've found them (hopefully) I won't need to spend the time and effort again.

[Anonymous]

Paul.  Go someplace else.  I think that's the advice t'other Phil and I have settled on  s:) s:)

[paul russell]

Paul.  Go someplace else.  I think that's the advice t'other Phil and I have settled on  s:) s:)

I think you're right. I wrote to Toyota stating my problem and the fact I had somewhat lost confidence in the car and the dealer. I got the usual reply saying that they were very sorry etc, etc, and that they would work together with the dealer to get the problem resolved. They said they had passed my letter on to the after sales manager at the dealer and he would be contacting me. I've heard nothing yet (2 weeks).

[filcee]

I have found the most efficient way to get the dealers attention is to be brutally honest (not rude) when the feedback form arrives, usually a few weeks after a service.

I was so honest once, that the dealer principal 'phoned me to find out why I felt like that.  So I told him (what I had written on the form  s;-) ;-) s;-)  ), then had the immense pleasure of telling him that I had gone elsewhere to purchase my new '2, and that I would go elsewhere to get it serviced.  At that point a smug satisfaction overcame me  :-) :-) :-)