FROGDATA – Is your dealership getting reimbursed from the factory at a warranty rate that is equal or better than your door-rate? If not, then your service department is losing thousands of dollars in additional revenue month over month.
Frogdata has been helping their dealer partners throughout the country file under their state’s statutory guidelines. Each state has different guidelines and formulas that must be followed in accordance with OEM requirements. These mandated guidelines under state law allow dealers to seek an increase for warranty labor rates and parts mark-up percentages. Interestingly, dealers in Wisconsin have a unique opportunity when increasing their warranty labor rates, which has allowed dealers in the state to receive the highest returns in the nation.
Like many, dealers are asking how this is possible. Its simple! Frogdata is leveraging the guidelines that are written within the state’s laws under Warranty Reimbursement section 218.0125. This Law incorporates a formula on how to calculate the dealer’s ELR (Effective Labor Rate) for submitting a new warranty labor rate – using warranty times, not customer pay times.
The is a reminder and an alert – in a time where challenges are popping up around every corner. Dealers in Wisconsin are actively pursuing this approach for many reasons:
Were denied previously or in the latter portions of their OEM agreements for annual increases.
Historic low inventory levels = fewer sales, less warranty work, and fewer PDI’s.
Learning that some dealers in the state are getting warranty labor reimbursed between 100% - 150% of their current door-rate.
When dealers recognize these pain-points and are seeking solutions to increase their profitability this action becomes imperative. For example, one dealer explains why his organization decided to file. Peter Mueller, the Manager Partner of Chrysler World and All World Ford in Wisconsin was asked three questions:
1. What was the main reason(s) for hiring Frogdata?
“We had tried in the past for warranty labor rate increases to no avail. Frogdata approached us about applying for an increase. I was hesitant at first due to our past failings over the years, but once Frogdata explained the whole process, and how easy it was for us and their past successes, we decided to give it a try.”
2. Share your experience throughout the process?
“The whole process was relatively easy and not very time consuming on our part. We agreed to allow Frogdata to have access to our DMS. They logged in and gathered the information they needed. Once they reviewed the repair orders, they then had some questions for our warranty clerk to finalize the application for the increase. Very seamless and quick.”
3. Did Frogdata meet your expectations?
“We have two stores: Stellantis and Ford. We applied for the warranty labor rate with Stellantis first and were very pleased with the results. We were so happy with Frogdata, that we had them complete the same process with our Ford store. We received the labor rate increase and once again are very pleased with the results. Would not have been able to accomplish this without the help of Forgdata.”
Here are the facts about Wisconsin: dealers can file multiple times in a calendar year; the formula used to calculate the dealer’s ELR is the most favorable in the nation; and dealers are receiving door-rate or better for their warranty work; and gearing-up for less warranty work. Therefore, this action provides dealers with an immediate benefit to countering factory shutdowns, chip shortages, and ultimately fewer new vehicle sales and associated warranty revenues. While also offering a long-term strategy to staying current with inflation. Most importantly, this immediate benefit and long-term strategy is available to all dealers, mandated by state law, and allowing dealers to increase gross profits at a time when they need it the most.
