Service & PartsBest Practices

Service & Parts
With Connectivity, Dealers Can Get More from Courtesy Transportation Programs

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Most dealers have Courtesy Transportation, or CTP programs in place, with the support of their respective manufacturers. What dealers may not be aware of though, is that these programs are increasingly using Connected Car technology to track and manage the vehicles enrolled in them. Not only does this new technology create opportunities for better fleet management, but it also has the potential to create some exciting new revenue opportunities for dealers in the very near future. The same platform used to operate CTP can be used by dealers to operate Rental programs, Alternative Financing programs, or Demonstrations. Connected CTP Programs Manufacturers are increasingly equipping new vehicles with built-in telematics equipment. In 2021, over 90% of all new vehicles will be equipped this way. Fleet owners have long recognized the value of built-in connections for fleet management applications. Fleets can more accurately track vehicle location, maintenance needs, mileage, and driver behavior data using a built-in connection and centralized fleet management. Vehicle manufacturers are increasingly bringing connected fleet management tools to their CTP to let dealers more closely manage these fleets as well. These programs, operated by companies like  TSD Loaner ,  Connexion Telematics ,  Bluebird Auto Rental Systems , and  ARSLoaner , all enable Dealers to more closely manage CTP vehicles. Dealers can easily enroll vehicles from their inventory into these systems and then track which ones are rented out, how many miles have been driven, how much fuel is being used, and whether any of the vehicles need maintenance. In the event that one of the vehicles goes missing, it can also be located. To get the most out of Connected CTP, dealers should take full advantage of available reporting, such as: Mileage alerts to prevent vehicles from being used past OEM program mileage limits Fuel Usage, to recoup fuel costs Rental History, to identify which vehicles are over-and under-used Over-Time alerts, to identify vehicles that have been kept longer than planned Tolling Alerts, to recoup toll costs Some programs also include remote lock/unlock commands, giving the dealer the ability to easily help if a CTP customer gets locked out. Taken together, dealers can use these tools to significantly improve the efficiency of their CTP.   New Revenue Opportunities While Connected CTP can be useful in managing costs today, they can also create a platform for dealers to easily try out new revenue models. Technically, any connected vehicle on the dealer's lot – new or used – can be activated and managed from the same platform that is used to manage CTP. That creates some interesting possibilities, such as: Short-Term Rentals Any connected vehicle on the dealer's lot could be enrolled and offered as a short-term rental. The CTP platform could easily bill the rental customer for time, mileage, fuel used, tolls, etc., at a rate negotiated by the dealer. Rentals could be for use by individuals or businesses or could be offered to Uber or Lyft drivers. Dealers should seek information & guidance from their providers & OEM partners. Some of the providers mentioned above already offer integrations that can result in immediate revenue opportunities.  Alternative Financing Models The same CTP platform could also allow the dealer to experiment with alternative financing models, such as subscriptions or "loan to own." The platform can easily track vehicle usage, apply a metered price by day, month, or by mileage, and can apply additional charges for fuel, tolls, and maintenance. In the event vehicles need to be recovered, they can also be located. The platform built to enable a Connected CTP can easily be adapted to operate these programs, as well. Demonstration Programs The dealer's CTP platform can also be used to offer vehicles for demonstration. With the roll-out of Electric Vehicles, for example, many customers may want to have a trial of an EV before committing to an all-new method of propulsion. Any other vehicle on the dealer's lot can also be offered this way, with mileage and usage easily monitored for follow-up with the customer. These new applications are not yet widely deployed to dealers, but dealers should be aware of the potential of Connected CTP and press their manufacturer sponsors and platform providers to bring these capabilities forward.
What You Should Pay Attention to When Selling Parts Online

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Online parts and accessories eCommerce is a great source of revenue for many dealers. By moving their parts departments online, dealerships have the opportunity to tap into a market set to hit $20 billion by the end of this year. However, a 2018 Supreme Court ruling could be putting dealerships and their parts business at risk if they do not pay attention. South Dakota v. Wayfair, Inc.  ruled that states are allowed to charge taxes on purchases made from out-of-state sellers, even if the seller doesn’t have a physical presence in that state. What this means for dealers selling online is that if they are selling to customers in different states, they are on the hook for charging taxes to  the states the customers live in . It’s important that dealerships review the collection requirements and collection compliance regulations to protect themselves from unsolicited tax violations. It’s also important to educate themselves on the ways they can simplify taxes with regards to what are called  marketplace facilitator laws . Understanding a nexus To be liable for the collection and remittance of sales tax, a dealer must achieve a nexus in the state they are conducting business. There are a few ways a nexus can be established; however, the two most common are having a physical presence within the state they’re selling to and meeting an “economic threshold.” The criteria for a  physical nexus  can be met by having any of the following within that state: A physical storefront  A product warehouse Storage property within a facility Fulfillment centers On the other hand,   an  economic threshold  is based on a specific volume of transactions or revenue. There are more than 30 states that participate in these laws and many of them have different thresholds. This is why it’s important for dealers to find the least tedious way to monitor nexus compliance. Paying the states that you owe money Once your dealerships figures out the nexus for the states it is doing business or has done business in, you have to register with that state, begin collecting taxes, and remit tax payments to those states. This is where things get tricky. Many states have multiple tax jurisdictions that you might need to register for separately. Additionally, some states differentiate between sales tax, seller’s use tax, and consumer’s use tax on registration applications and tax returns. So, in addition to determining where to register, your dealership has to figure out which taxes it’s responsible for. It might sound like an overwhelming process, but the most important thing to do first is to get registered — collecting taxes without registration  is  illegal. Once the registration is complete, your dealership will have to start collecting taxes immediately. Avoid the risks When selling online, state government entities expect you to not only  charge  sales tax but to collect and remit it as well. Since sales tax is one of the largest income sources for states, they don’t take it lightly. If you fail to charge the correct sales tax to your buyers, they will come for you and expect you to pay that money somehow. This puts your dealership at risk of being audited, which could cost your dealership a lot of money. So, when selling parts and accessories online, it’s important that you are filing all the right taxes appropriately to avoid violations. Find a solution to streamline the process Dealers need the right people on their side when it comes to collecting and remitting taxes if they’re selling online across state lines. However, your internal finance team may not have the time or resources to handle all of the calculating, collecting, remitting, and reporting themselves. That’s why it may be easier to find a vendor that’s experienced with sales tax compliance. For example, RevolutionParts builds and operates online part-selling platforms on behalf of our partners. We are considered a “marketplace” with the legal authority to file sales taxes on behalf of our customers. We make sure that the proper tax is collected, dealers are in compliance with tax regulations, and they have access to all reports distributed to tax authorities. Find your dealership a partner that’s looking out for your best interest. The last thing we want to see is a dealer being audited for improper tax filing! Make sure you understand  the tax laws in the states you sell in , and that your dealership has the means necessary to collect and remit them legally. Sources: 1. Avalara, Sales tax laws by state 2. AICPA, South Dakota v. Wayfair
How Dealers Today Leveraged Fixed Ops and Digital Advertising for Quicker Recovery

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During the COVID-19 lockdowns, numerous automotive dealerships radically cut back their general ad expenses to maintain as much of their bottom line as possible. Furthermore, in April, the annual pace of sales dropped steeply to 8.47 million, a dramatic drop from the 17.05 million level it was pacing earlier in January. Nonetheless, dealers have seen significant recoveries in late spring due to their efforts and their swift willingness to embrace a message of wide-spread cleanliness and contactless business operations during the early stages of COVID-19. The dealers' quick and efficient response to the global pandemic helped them gain the confidence and trust of many drivers who still needed to service their vehicles during the most intense period of the stay-at-home executive orders which was enacted in various locations throughout the country. This brilliant tactic used by dealers benefitted their business significantly as the focus of car sales shifted to the maintenance of existing automobiles, as well as the sale of used cars and trucks which requires constant and systematic intervals of service. These strategies were enacted during early summer to assist their service and repair operations and began shifting digital ad spending over to Fixed Ops campaigns. Additionally, this technique focused on-site offers to convert low-funnel service/parts traffic to their websites.   An increase in repair orders and service revenue started during the early weeks of May as dealers increased their focus on repair order activities. The numbers continued to rise extensively by the month of June as dealers worked on improving the process of service to make it even easier for customers by offering enhanced contactless pickup/drop-off. For August, automotive digital advertising firm PureCars reported a 16.9% increase in dealers’ ad spending on Waze by leveraging digital channels that emphasized service-interest drivers.  The power of video noted The longevity of the pandemic has led many dealers to embrace video as another medium and advertising channel. In this present pandemic economy, video usage is significant for brand storytelling. It continuously proves to be a mandatory tool to increase conversion and exposure. Moreover, it allows for more efficient transactions between dealers and their customers. Overall, consumers engage with videos more and they tend to be more popular in comparison to other forms of advertising content today. It is proposed that by the year 2022, more than 82% of all consumer internet traffic will be from online videos, fifteen times higher than it was in 2017. Additionally, reports show that today, users view more than 1 billion hours of video daily on YouTube. Dealers have also learned that videos go beyond engagement and entertainment, and they offer a space to transmit emotionally charged, health-focused, and genuine messages to consumers during the pandemic. This platform allows dealers to convey their meanings and concerns for customers and employees in a more authentic way than any other channel would. Adapting a better strategy for the final months of 2020 Fixed Ops have been the main operator of revenue for auto dealers this summer thanks to this strategy. As 2020 draws to an end, it will most likely continue as long as they continue to emphasize on servicing used vehicles. Some dealers were concentrated on taking a proactive approach to change their operations to cater to the new pandemic customer. Because of this, they are seeing pre-pandemic figures in various cases today. As they worked on making operations safe and easy, they focused on evolving their service and repair opportunities and promotion by using digital advertising channels. Consequently, this approach resulted in a successful system that assists dealers in obtaining a lower cost per customer acquisition level, the ultimate business strategy that will guide them through 2020. Sources 1. https://www.autonews.com/sales/supply-crunch-still-hampering-sales-recovery   2. https://www.cisco.com/c/en/us/solutions/collateral/executive-perspectives/annual-internet-report/white-paper-c11-741490.html   3. https://www.youtube.com/about/press/  
Profitability: Rethink How You Approach Service Marketing

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Want to be Profitable for the Long Term?  Everything from thinning profit margins in new vehicle sales to increased competition from direct-to-consumer manufacturers – like Tesla and Rivian – is combining to put the squeeze on your variable operations. Indeed, recent NADA reports show the average fixed operations department provides approximately 50 percent of their dealership’s gross profits – and yet, most dealerships contribute less than 10 percent of their marketing efforts to fixed ops. 1 If you’re interested in long-term profitability regardless of what happens in the showroom, it might be time to rethink how you approach marketing your service department. The good news: it’s not all that different from successfully marketing any other aspect of your dealership – simply focus on the services customers want and need most. Here are some tips to get started. Be Proactive and Targeted Compared to sales, your service department has a built-in revenue advantage because it typically has a window of several years to market to consumers in their current vehicle. These folks are just a click or well-placed mailer away from being brought into your service drive! That means implementing a proactive, targeted marketing strategy that touches potential customers in multiple formats, whether it’s a newsletter that engages with lifestyle pieces or maintenance tips before throwing in a service offer or a customized mailer proven to convert at higher rates than digital methods alone. Know Your Base and Your Market A critical part of leveraging your service department’s existing customer base is making sure any information you have – names, emails, phone numbers, home addresses – stay up to date. With each service visit, send follow-up communications to customers via email and direct mail to schedule another appointment. Remember that if your follow-up process isn’t automatic, you’re potentially missing out on thousands of dollars in opportunities from declined service. I’ll say that again as it’s a point I don’t see emphasized often enough: customers who return to service are more likely to spend more with each visit. 2 Keep your customers satisfied and chances are they’ll return after their next vehicle purchase, too. Just as important as knowing your existing base, however, is knowing the larger market and what new revenue opportunities are out there. Customers won’t drive far for service when they’re looking for speed and cost efficiency, so knowing who to target in your backyard makes a huge difference. Social media advertising is great for targeting previous customers that haven’t been around for a while. If you have their current information in your database, you can target them with ‘claim offer’ ads for proactive maintenance work. Since vehicle owners are more likely to visit for reactive service than schedule proactive maintenance, paid search advertisements are great for service advertising as well. If you personalize your advertisements’ text, customers can call in, get directions, and book an appointment right from their mobile device or desktop. Google prioritizes mobile optimization, so making sure your content is accessible on all devices is crucial.  Get the Rest of Your Team Involved No one can blame your salespeople for not immediately thinking of fixed ops as they prepare to walk a customer over to F&I and potentially close a deal, but associating the excitement of a car purchase with the service drive is a great way to make that introduction. It certainly beats waiting until an F&I manager tries to sell service packages, or the first generic email for an oil change is sent out. When a deal is completed in your dealership, introduce the customer to the service drive. Have an advisor greet them and schedule their first regular maintenance appointment to establish that relationship moving forward, greatly boosting your chances of retaining that customer for as long as they’re in that vehicle. Conclusion No one wants to service their vehicle. People are busy, they can’t always afford hundreds in repairs, and it’s never a convenient time for their car to break down. That means the pressure’s on for your service department to deliver the best experience possible, from the first point of contact to watching a satisfied customer drive away from the dealership. Follow the tips I’ve laid out to revamp your approach to marketing your fixed ops, get off on the right foot by focusing on what customers want and need most, and set your business up for long-term profitability. 1 CBT Automotive Network 2 Smile.io
5 Steps to Tune Up Your Service Department Marketing

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Not too long after the first auto dealer sold a new car to a customer, the dealership service department became “Ol’ Reliable” as a source of revenue and return business.In the history of automotive retail, dealers have gone through many up and down cycles of new-vehicle sales because of the economy, world and national events, fuel shortages, shifting consumer confidence levels, and more. But the need to service the vehicles already on the road is a constant that, if anything, increases during the times when fewer new vehicles are being sold.Of course, dealers have a lot of competition when it comes to automotive service — there’s no guarantee their own buyers will ever come back to them for maintenance and repairs.More than ever, in this online age, consumers will seek out sources (competing dealerships of the same make or independent garages) other than the dealerships they bought from — unless those dealerships give them a reason to return by specifically targeting them with consistent and compelling marketing.What does it take to best market your dealership service department in today’s world of well-informed buyers, who have many options? We asked industry authorities with extensive automotive marketing and fixed operations knowledge to share the five steps they recommend for a dealership to optimize and fine-tune its service marketing efforts.One final thought on dealership service departments before we get to the advice from our experts: Stellar service marketing is a must for dealerships to maximize their revenue potential and weather sales slumps caused by the economy and other factors — but it alone isn’t a guarantee of success.Dealers need to ensure — and constantly monitor — that the quality of the service work being done on customers’ vehicles is first-rate, and that their service advisors and technicians are providing a consistently excellent customer experience.Remember, the best marketing in the world won’t overcome the harm done in the customer’s mind by service that is performed incorrectly or sloppily, or that results in cosmetic or mechanical damage to a vehicle. PARTICIPANTS Scot Eisenfelder is CEO of Affinitiv , a leading marketing technology company serving a dozen automotive manufacturers (OEMs) and more than 5,500 franchise dealers. Eisenfelder is a 25-plus year auto industry veteran who has driven innovation across multiple sectors. Prior to Affinitiv, Eisenfelder held positions as senior VP strategy and acting CMO at AutoNation, where he realigned marketing spending and led major change initiatives in e-commerce, pricing, and IT. Eisenfelder was also senior VP, product management, strategy and marketing at Reynolds and Reynolds. He has an MBA from Wharton School, attended Mannheim University in Germany as a Fulbright Scholar, and graduated summa cum laude in economics from Princeton. Dennis McGinn is founder and CEO of rapid reconditioning workflow software company Rapid Recon , and is the author of the leading text on reconditioning management time to line practices, RECON T2L – The Starting Line for Reversing Margin Compression. He leveraged a 21-year management career with Hewlett-Packard, where he specialized in applying continuous process improvement while working on advanced manufacturing software for major auto OEMs. He founded Rapid Recon in 2010. For more information, contact www.rapidrecon.com . Step 1 It starts with data Eisenfelder:  The key to successful service marketing lies in customer data. Blanketing your primary market area (PMA) with oil change coupons is ineffective and does nothing to differentiate your dealership from independent repair shops. With the right data, you can identify profitable customers and what their needs are, then deliver them the right offer at the right time.Your customer database is the most valuable strategic asset you own, more than your inventory or real estate. Set a goal to know a means of contact for every single household in your PMA. Invest in your database the same way you invest in your people and in your stores.Seek every opportunity to grow the breadth and depth of your data with vigorous data collection efforts: participate in local events, buy third-party leads, and hold staff accountable for collecting customer data.With good data, you can dominate your PMA. Recon fast to sell more cars McGinn:  Tips [about service marketing] offered by others will be sound, practical, and proven means for pulling service traffic into the dealership.I want to address another side of service marketing, an internal marketing focus that many service departments won’t have considered.For instance, as used cars sales have gained momentum over new car sales, at least in the short term, getting those cars retail-ready in two to five days of acquisition is critical. More units in operation raise the service department’s pool of potential ongoing service business.When sales use reconditioning service reports to demonstrate the quality of its used cars, confidence in the deal and in service goes up — and that should translate into a service customer. Step 2 Align service marketing budget with business value Eisenfelder:  Service is responsible for 47% of dealership gross profits, but in most dealerships, service marketing comprises less than 10% of the marketing budget.This is a huge misalignment. Dealers believe this is justified because vehicle marketing indirectly drives service profits by setting up future warranty and customer pay opportunities. In today’s climate, this argument doesn’t hold water.The average franchise dealership captures just 20% to 25% of revenue potential from its units in operations (UIO). That’s a 75% to 80% leakage rate to the competition, which means only 20% to 25% of service customers come from sales. At the very least, business flows equally in both directions. Loyal service customers are prime candidates for sales.Additionally, conquesting sales customers is expensive, ranging from $1,200 to $1,600 per customer. Service conquest campaigns are 20 times more cost effective, ranging from $40 to $80 per new service customer. Focus on used cars McGinn:  This may seem out of place here or not relevant, but it is. Dealers selling more used cars are generally more profitable than a dealer whose sweet spot is new cars.Service marketing increases retail parts and labor hours, but internal mechanical work for vehicle reconditioning is higher volume, and a constant.The service department’s biggest customer per contribution to dealership profitability is the used car department. By reconditioning more cars in less time, a dealer will increase inventory turn, meaning more cars sold in the same year.This increased volume also grows labor and parts sales — and creates upticks in F&I sales for service retention products such as service contracts and prepaid maintenance, which stimulate customer retention and propel service upsells. Step 3 Develop an omnichannel strategy Eisenfelder:  Multichannel marketing pushes messages out across multiple channels to increase audience reach. But reach is just one part of the marketing equation — you must also have frequency to make an impact. Unfortunately, increasing frequency across many channels can be prohibitively expensive.One way to address this is to ask the customer what their preferred method of communication is, but the problem is they might give you a junk email address, or their preferred channel might not be where they actually spend their time.When it comes to information, we are omnivores, processing messages on different channels at different times. For this reason, an omnichannel strategy delivers a more cost-effective ROI.Omnichannel marketing leverages predictive analytics to know where your customers’ attention is at any given time. Instead of pushing messages out at random times, messages are delivered to the customer at a time and place convenient for them. Focus on retail McGinn:  What I mean here is not a focus on selling cars, but on retail service.We know from our studies that a service department that separates its retail and internal service work does better on both. The goal here is more production out of both, and improved fixed-right-first-time and customer service satisfaction.You can invest heavily in service marketing programs, and if the shop misses on these metrics, it shoots itself in the foot.Whether you separate internal (including recon) physically from retail or in principle under the same roof, doing so will streamline shop output, eliminate friction, and improve the efficiency of both. Step 4 Leverage social media Eisenfelder:  If you still believe the main reason your dealership needs to be on social media is to increase “likes,” think again. Social media marketing has evolved in leaps and bounds in recent years.Currently Facebook has 207 million users in the U.S., and the average session is 20 minutes. Instagram has 96 million users and 80% of users follow at least one business. The reason your dealership needs to have a presence on these platforms is because that’s where your customers and prospects are spending their time.Advances in marketing automation make it possible to match the customers in your DMS with their social media profiles. It’s now possible to deliver service reminders, overdue maintenance reminders, appointment reminders, and relevant coupons right into your customers’ news feeds.When you cross-reference Facebook and Instagram users with your own customer data, these two platforms become highly influential channels that deliver incredible results. Focus on recalls McGinn:  With 12% to 18% of dealers’ inventory having open safety recalls — and inventory changing daily — it is essential to get a handle on managing the information.If you don’t know if a vehicle has an open safety recall, you can’t fix or disclose it.Marketing your service department’s ability to identify for customers any outstanding or new safety recalls shows your commitment to their safety and care of their vehicle — and that concern builds their confidence in the integrity of your department.Using an automated system with recall information available during the recon process will provide recall status and specific information within the system on each car, and deliver an accurate and timely listing of what is new for each day. Step 5 Measure success with the right metric Eisenfelder:  Service absorption is a frequently cited fixed ops metric, but it’s very outdated. The problem with service absorption is that it’s composed of two unrelated measures.Service profits are not driven by store fixed costs; in fact, you can have 100% service absorption yet be losing market share.Today’s dealers capture just 20% to 25% of the revenue potential from their UIO. The focus on service absorption contributes to these results because dealers are only focused on covering fixed costs, rather than competing on each revenue opportunity.A better metric to measure service marketing success is dollars per UIO ($/UIO). This metric better represents a store’s true service potential. With only 25% service revenue capture, dealers have the opportunity to dramatically expand store profitability, no matter what happens to new vehicle profits, but only if they are willing to look beyond service absorption. Mobile sells service McGinn:  When customers go through the sales process with a dealership salesperson, they are also evaluating the personality of the dealership itself.If your store sells 100 used cars a month, most of those buyers are potential new service customers. By using mobile apps that alert sales staff where cars are in their reconditioning process on their way to being show-ready, the sales presentation can begin about the vehicle, and not the buyer.This approach builds trust, which reflects positively on service.Of course, a correct and professional service handoff is critical here too, but [it’s] a process that begins in recon, flows to sales, and gives service marketing a qualified new customer opportunity.
How the Value of a Lifetime Warranty Beats Price Every Time

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Warren Buffet once said, “Price is what you pay. Value is what you get.” The distinction is one of great importance to car dealerships, and it’s why I want to talk about the difference between price and value. It’s also why, I believe, emphasizing the latter is how you grow your dealership. Studies have shown when it comes to selling a car, economic considerations, such as price, often fall behind emotional reasons, such as trust. According to J.D. Power, consumers see reliability as the most important factor when choosing a vehicle, after styling; price is much further down the list of why people buy. To be sure, people shop with a budget in mind. But only 38% of new-car buyers say that a vehicle’s price or its monthly payment was the main reason they chose a specific make and model. Seek a competitive advantage When it comes to product, price, or financing, all dealerships are pretty much equal. There is no clear competitive advantage to be won. Specific products may vary, but a Ford is a Ford and a Subaru is a Subaru, no matter whose lot it sits on. Price, too, is not much of a differentiator. Digital third-party lead providers often default to the lowest price. Appealing to consumers based on the lowest price, however, is a race to the bottom. And financing is almost identical at all stores because dealerships rely on the same credit sources. No edge there. So, how does a dealership separate itself from the competition? By making value its unique selling proposition (USP). Understand value Where price is the amount paid for a vehicle, value is what the vehicle gives back to the buyer over time. Put another way: Price is the amount of money asked for a vehicle, while value represents the amount of money someone is willing to pay. In the words of Buffet, value is what the consumer gets. Although price focuses on a single sale, value focuses on creating a lifetime customer. Which would you prefer? Deliver value As a retailer, you always want to put yourself in your customers’ shoes. And as a dealer, the first thing they buy when buying a vehicle from you is risk: will they have problems with the vehicle, how it was maintained, who owned it, what kind of issues will they have with it, and so on. Your goal, then, should be to give your customers peace of mind, to alleviate their fears, and help them build confidence in their purchasing decision. One proven way to bolster the value of the products you sell is by offering a comprehensive warranty. To the consumer, a warranty provides the desired peace of mind. All warranties are not equal — don’t put yourself on the hook Many new vehicles are covered by a manufacturer’s warranty for three years or 36,000 miles, which may not be long enough. According to R.L. Polk & Co., the average length of time a driver keeps a new vehicle is six years. This means many vehicle owners could be out of warranty for half of the time they own the car. If you plan to offer warranties beyond what the manufacturer offers, there are two types: administrator obligor and dealer obligor. The first puts the responsibility on fulfilling the contract with the warranty administrator, a company independent of the dealership; the second puts all the contingent liability and risk on the dealer. The warranty type typically doesn’t matter to the consumer, but it matters greatly to the dealer. That’s because dealer obligor, in my opinion, is a product that sets the dealer up to fail: all the contingent liability is assumed by the dealership, not the administrator that’s administering the program. If you ever want to sell your dealership, you could be accumulating a lifetime of contingent liability. Most administrators want to place all the contingent liability on dealerships because they don’t want the risk even though the Magnuson-Moss Warranty Act contemplates third-party obligors. Simply, administrators do not want the contingent liability on their books. This kind of contingent liability could make your dealership unsellable, however. So, although administrator obligor removes contingent liability from your dealership, be careful . Many unscrupulous administrators look at ways to minimize claim risk by adding gimmicks and gotchas to their warranty contracts so claim coverage can easily be denied at time of claim, and can expand contingent liability on a dealership. This can ultimately damage the relationship of the dealership with the customer. These agreements are written in a way to expand contingent liability for a dealer, and often violate Magnuson-Moss, which governs limited warranties. Violating Magnuson-Moss can set up a dealership for a class action lawsuit. Ultimately, this puts the dealer in the position of being the bad guy. The consumer may think he’s covered when he’s not. For example, a customer’s limited warranty may be voided because he didn’t have vehicle maintenance done at the selling dealership, or did not get prior authorization to get necessary maintenance performed away from it. Both scenarios violate the FTC Magnuson-Moss Act “tie back” provision. Don’t let an unscrupulous administrator put your dealership in harm’s way. Take some time to research administrators who provide honest, straightforward warranties — administrators who look out for the best interests of customer and dealerships as well as themselves. They are out there. Honest warranties create lifetime customers Consider offering a lifetime limited powertrain warranty that’s administered by a third-party obligor to avoid dealer obligor programs. You can tell a limited warranty is administrator obligor if it specifically reads that the limited warranty is between the consumer and the “named administrative company” that is the administrator obligor. The lifetime warranty should cover all the major powertrain components: engine, transmission, axle, and even seals and gaskets, as well as free towing and roadside assistance. The administrating company and representatives should provide comprehensive, dealer-branded marketing materials, education and training, digital content, videos, and guidance. The warranty should be included at no additional cost to the purchaser of the vehicle. Stand out and win Best of all, offering a lifetime warranty makes dealers better positioned to separate themselves from the competition, and enables customers to feel more secure with their purchase. It’s what my Dale Carnegie training course called a win-win, and the best way to start and build a lasting relationship with customers. Contact Binary Automotive Solutions at sales@binaryauto.com or 888-883-8557, ext. 307, to learn more about the warranty programs, tools, and training you’ll need to start building lasting customer relationships.