Article

Should You Be Doing Warranty Repairs?

November 2017, Government Fleet - Cover Story

by Thi Dao - Also by this author

When the City of Tulsa, Okla., started its warranty program, Ford worked with the fleet on training for its administrator and technicians. Pictured is Senior Master Technician Jeff Ostler. Photo courtesy of City of Tulsa
When the City of Tulsa, Okla., started its warranty program, Ford worked with the fleet on training for its administrator and technicians. Pictured is Senior Master Technician Jeff Ostler. Photo courtesy of City of Tulsa

Here’s the worst-case scenario: A fleet has to take numerous vehicles in for warranty repairs, but the dealership is an hour away. Fleet staff members have to coordinate with the dealership, coordinate with drivers for vehicle availability, figure out who can deliver cars to the dealership (or pay for towing), and hope repairs get done quickly to minimize downtime.

That’s a clear instance when starting a warranty recovery program is a good idea. It’s usually not this clear, however. When is a warranty recovery program right for your fleet? And if you’re ready to start one, what should you expect? Learn from various fleets whose warranty programs have helped them become more efficient, reduce downtime, and streamline operations — and from others who say it’s not the right choice for them.

At a Glance

Fleets considering a warranty recovery program should:

  • Consider where dealerships that can do the work are located
  • Decide whether the fleet has enough manpower to handle the added workload
  • Understand software and training costs.

How to Begin a Warranty Recovery Program

Public fleets with warranty programs share the steps they took to get there.

Get a List of Requirements

Talk to the OEM district representative and get a list of requirements to become a warranty repair facility. This can include technicians being Master certified by the National Institute for Automotive Service Excellence (ASE), accessing the OEM’s warranty software, setting up transfers of funds for reimbursements, and making sure you have the OEM’s diagnostic software and stocked parts.

Obtain OEM Approval

The OEM has to approve the program, and it may be concerned about taking away business from local dealerships.

“You must show the manufacturer that you are capable of doing the work, have all the required software and tools, and that there is a business purpose for the request,” Isaac Astill, fleet director for Salt Lake City, said. His fleet has warranty programs for both General Motors and Ford. “Manufacturers are careful in this process as they do not want to hurt local dealers. In most cases you want this to be a win-win to make the process work.”

Tim Keiffer, warranty and training administrator, City of Tulsa, Okla., said he was surprised it took one month to get approval to become a Ford warranty shop.

During set-up, “use and abuse your manufacturer representative,” Keiffer recommended. “They are eager to help.”

Salt Lake City sends out most of its warranty work, keeping smaller repairs in house when it’s more efficient to do so. Photo courtesy of Salt Lake City
Salt Lake City sends out most of its warranty work, keeping smaller repairs in house when it’s more efficient to do so. Photo courtesy of Salt Lake City

Get Trained

Although it took just one month to get approved, getting everything in place at Tulsa took a lot longer. Technicians have to work toward becoming Ford and/or ASE Master technicians, and Keiffer also received a Master certification for warranty administration from Ford.

Hire an Administrator

Create a position to handle warranty and recall coordination. Before the City of Charlotte, N.C., fleet started its warranty program, warranty coordination with different dealerships fell on 15 different individuals. Chris Trull, fleet manager, was able to show that the process was time-consuming to do correctly and was approved for a full-time warranty administrator position with the new General Motors warranty program.

“In the first year, my goal was to recoup the individual’s salary for the position,” he said. “We actually doubled that in the first year just by focusing our attention in that area and making sure we were getting the money that we were supposed to get back.”

Keiffer previously worked in the parts room before transitioning to the newly created warranty and training administrator position.

The City of Charlotte, N.C., has a warranty program for General Motors vehicles, but it still sends out work to the local GM dealer. Photo courtesy of City of Charlotte
The City of Charlotte, N.C., has a warranty program for General Motors vehicles, but it still sends out work to the local GM dealer. Photo courtesy of City of Charlotte

Integrate With Your FMIS

Make sure to set up the fleet management information system (FMIS) to flag warranties and recalls. Trull said one stumbling block was learning how to use that part of Faster’s fleet software so service writers could see recalls.

Consider Costs

Becoming a warranty repair shop isn’t free. Training and diagnostic equipment subscriptions can cost thousands annually. In addition, technician training can be off-site, adding to travel costs and time away from the shop, Keiffer said.

Each warranty job has a time estimate. If a fleet technician takes longer than the time guidelines, the fleet may lose money. Or it can have the opposite effect.

The OEM’s labor rate is higher than Tulsa’s labor rate, and the city gets a small margin for parts, which help make up the cost of running the program.

Tulsa tends to keep quick jobs in house and outsource larger, time-­consuming jobs to the dealerships. This means techs get faster at doing specific jobs and are more likely to recoup costs.

Reap the Benefits

Trull said benefits include limiting downtime by being able to do a preventive maintenance and warranty repair at the same time. Another benefit is having control of when the repairs will be complete.

The program has also boosted morale.

“Some technicians don’t like sending stuff out to the vendor. They think they can get it done just as well,” he explained. This is especially true of technicians with General Motors experience.

Keiffer said the decreased downtime and flexibility from the warranty recovery program makes it worth it.
Another benefit is that the program gives technicians more access to training from the OEM, tech support with OEM engineers, and tech bulletins, he said.

The Experts

Isaac Astill, fleet director, Salt Lake City

Tim Keiffer, warranty and training administrator, City of Tulsa, Okla.

Chris Trull, fleet manager, City of Charlotte, N.C.

"I think it is beneficial to have in-house options any time you can save time, money, and if you have the available manpower. If you can’t save on all three, I would not recommend doing in-house warranty work."
"The name of the game is keeping units in customers’ hands. Being a warranty repair shop helps us do that. It takes time to get started, but the pros outweigh the cons."
"When we have multiple warranty repairs and recalls, we have found it easier to work with our local dealers to turn these around."

Ford & General Motors warranty repair shop

Fleet stats: 3,726 units, of which 628 are Chevrolet and 329 are Ford vehicles
Started in: GM in 2006, Ford in 2017
Averages: 19 claims per month

Ford warranty repair shop

Fleet stats: 4,000 units, 1,800 of which are Ford vehicles
Started in: 2015
Averages: 55 claims
per month

General Motors warranty repair shop

Fleet stats: 7,000 units, 1,000 of which are GM vehicles
Started in: 2005
Averages: 59 warranty repairs and 120 recalls
per month

The Salt Lake City fleet manages 1,409 vehicles and another 2,317 pieces of machinery. With this workload, the fleet sometimes doesn’t have the time or manpower to handle all warranty work in house. Photo courtesy of Salt Lake City
The Salt Lake City fleet manages 1,409 vehicles and another 2,317 pieces of machinery. With this workload, the fleet sometimes doesn’t have the time or manpower to handle all warranty work in house. Photo courtesy of Salt Lake City

3 Steps to Managing an Efficient Warranty Program

You’ve started your warranty repair shop. How can you make sure it’s run effectively?

1. Be Flexible

Just because your facility is approved to be a warranty repair shop doesn’t mean you have to do everything in house. A good mix may be the most efficient strategy.

Trull said the high number of recalls and current workload became overwhelming, so the City of Charlotte fleet management began sending out the majority of warranty repairs and recalls out to dealerships. Once workload decreases and the number of outstanding warranties and recalls decrease, the city will resume more in-house warranty services.

The City of Tulsa sends about half of its Ford repairs out to dealerships, usually the heavier, more time-consuming repairs. Keiffer said the shop does most recalls in house, but that’s not a rule. If a police officer with a take-home vehicle lives near a dealership, he can take that car to get serviced at that dealership if it’s more convenient.

Salt Lake City usually keeps small warranty repairs that are too cumbersome to send out to the dealerships, outsourcing other repairs and recalls.

“When you consider a patrol car that needs to go in for a warranty item, we have to have the officer remove their equipment and move it to another vehicle to use. Then the car has to be taken to the dealership, and we wait for the work to be done,” Astill said. “[In-house work] usually allows the vehicle to be in and out in under two hours rather than being gone an average of three days.”

The City of Tulsa, Okla., handles most of its own warranty work for Ford vehicles, but outsources these jobs if technicians are too busy. Pictured is Technician Sean Hawkins. Photo courtesy of City of Tulsa
The City of Tulsa, Okla., handles most of its own warranty work for Ford vehicles, but outsources these jobs if technicians are too busy. Pictured is Technician Sean Hawkins. Photo courtesy of City of Tulsa

2. Be Organized

The warranty administrator must be organized in keeping track of claims and follow all the rules and policies laid out by the manufacturer. The administrator also needs to ensure claims will get approved by checking notes, ensuring everything is filled out accurately, and that it’s filed in the specified time frame, Keiffer said.
Astill agreed, emphasizing that there’s nothing worse than having to reimburse for a billing mistake.

“You have to make sure you know the manufacturer’s process and provide all info required or you may have a hefty bill at year end,” he said.

And technicians must keep detailed notes on repairs.

“You can’t just say ‘replace starter.’ You have to put descriptive notes in of what the customer said was wrong, what you found that was wrong, and what you did to repair it,” Keiffer said. “You’ve got a guy in a different state reading what happened, deciding whether to approve the claim or not.”

In fact, Tulsa held a training class on taking notes for its technicians, which has helped with notes on non-warranty repairs as well.

3. Follow the Rules

“Have a good shop supervisor who is willing to enforce the rules,” Keiffer said.

What rules? Technicians must input good, descriptive notes on repair orders. They must use manufacturer parts. Only those who are authorized to conduct the warranty repair and are certified to do so should do so — or it’s checked by someone who is certified. Technicians should fix things right the first time and get the vehicle back to the customer quickly.


When Warranty Repairs Are Better Outsourced

Whether or not you should start a warranty program may depend on fleet size, the number of vehicles of the same make, and logistics.

Don’t Fix What Isn’t Broken

Ben Roueche, fleet manager for the City of West Jordan, Utah, manages a fleet of 800 units, of which 350 are on-road vehicles. The majority of his light-duty fleet consists of Ford vehicles, but he sees no reason to start a warranty program.

There are two Ford dealers nearby that pick up vehicles and drop them off. He calls them about once a week, and usually vehicles are back to the fleet facility within a day, Roueche explained. For recalls or services where many of his vehicles are affected, “I can coordinate with the dealership so they can buy parts in advance,” he said.

"We have low manpower and are in close proximity to [a dealer] that can service the vehicles."

-Ben Roueche, fleet manager, City of West Jordan, Utah 

For his situation, outsourcing warranty and recall repairs is the better solution.

This isn’t the same for everyone, however. A nearby city won’t allow dealership employees to drive city fleet vehicles for legal reasons, which means city employees have to bring vehicles in themselves, Roueche said. And if the situation were different, where a dealership was located more than an hour away, and he had more manpower, Roueche would consider a warranty program.

Not the Right Fit

Years ago, Snohomish County, Wash., attempted to start a warranty program, hiring a warranty administrator to help with the process. After several years of trying, “staff had been unable to secure any agreements to perform warranty service in our shops,” said Roy Scalf, fleet manager, who came on after the project had already begun.

He discussed the emerging program with shop supervisors, who agreed that they’d rather send out warranty work than do it in house. They didn’t have enough resources in their shops and realized that the dealership was better equipped and trained to do the work.

“It’s just more efficient for us to have the dealer take care of warranty, and use our resources to maintain our fleet and to make repairs to keep critical equipment running,” Scalf said. Fleet management has 1,500 units to oversee.

Scalf eliminated the program, re­assigning one employee to other work.

However, in cases where it might work, he’s all ears. Recently, a heavy-­duty truck manufacturer approached the fleet about doing limited in-house warranty repairs.

“In this case the dealer approached us. This promises to be a more workable process, since there is interest on both sides,” he said. 

COMMENTS

  1. 1. Daryl Greenlee [ December 01, 2017 @ 08:46PM ]

    Great Story! There are many benefits from being an "In-House" Warranty repair Facility with many manufacturers. In addition to Ford, GM and Chrysler, the City of Orlando took on Sutphen Fire trucks, Wheeled Coach ambulances, Heil refuse truck, Parker Hannifin, Autocar, Kenworth and other manufacturers in an effort to reduce down time and provide a convince to our clients so as they can get back to their task at hand. Our warranty administrator not only manages the FASTER updates and the manufacturer warranty and recall claims, but also assist with the coordination of the required training by the manufacturers for our technicins. Training on procedural requirements on proper descriptive notes on repair orders and RTY's is held quarterly for all current employees and for all new employees during their probationary period.

 

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