Warranty Parts Reimbursement Analysis
It’s the Law! – Auto Manufacturers Are Required to Reimburse Dealers For Warranty Parts and Labor
The majority of states have passed a warranty parts law requiring automotive manufacturers to reimburse dealers retail rates for warranty labor and parts.
Most automotive manufacturers reimburse dealers for warranty parts at a rate of cost, plus 40% which differs from the average dealer who marks up retail parts at cost, plus 70% to 90%. The impact that it will have on the dealership’s bottom line will vary based on the markup percentage of retail parts and the volume of warranty part sales they generate. On average, it should add thousands of dollars of gross profit per month for a dealership.
O’Connor & Drew, P.C. has assisted hundreds of dealers in various states, including Massachusetts, in obtaining retail rate reimbursement for warranty parts under the old law. This includes virtually all franchises.
Because of our extensive experience and knowledge on this issue, we have a solid understanding of the process and the parts that each automotive manufacturer will accept as qualifying.
Dealers should submit for a rate increase as soon as possible in order to start capitalizing on the additional revenue.