What is a Warranty Reimbursement Rate? The Warranty Reimbursement Rate is the percentage of labor and parts that manufacturers will reimburse to dealerships for warranty repairs. While the rate is different for each manufacturer, a dealer can negotiate a better rate with a car manufacturer. Dealers can increase the warranty reimbursement rate by submitting at least 100 customer-pay repair orders in the last 90 days. The warranty labor rate is the same as the cost of service for retail customers, with the exception of routine maintenance repairs. Dealerships must follow state laws regarding warranty reimbursement.
Applicants for a higher warranty reimbursement rate should submit 100 customer-paid repair orders within 90 days. The rate must be consistent with other authorized dealers in the same geographic area. The rate can increase once per year. However, dealers must be prepared to face rejections when applying for higher reimbursement rates. A consultant can help them create better cases and make better submissions. This way, they can get approved by the manufacturer. There are several requirements for establishing a higher warranty reimbursement rate.
Manufacturers have limited discretion when adjusting the warranty reimbursement rate for dealerships. Typically, manufacturers compare retail warranty reimbursement rate to determine if the dealer’s rate is too high. However, this argument may be invalid if the manufacturer is prohibited from increasing the warranty reimbursement rate based on market norms. Moreover, it is not uncommon for a manufacturer to implement a law prohibiting the increase in the warranty rate.
While most states have a standard rate for warranty repairs, some states do not have a set rate for dealer reimbursement. Moreover, some manufacturers have the flexibility to change the reimbursement rate, disregarding state laws. These manufacturers have implemented a system that calculates the warranty reimbursement rate, based on market rates, so they can lower it. Get in touch with Warranty Part for Dealer Warranty Reimbursement. This method is not widely accepted, but GM has made sure it is consistent throughout the company.
The issue of warranty reimbursement at retail has been a hot topic for legislative action for many years. Although most manufacturers have endorsed the right to full reimbursement, a few have resorted to policies that hinder dealerships’ rights. In addition, the new provision will establish a market rate for warranty parts and labor repair reimbursement. This rate will ensure that the dealership will have an adequate amount of cash to pay for warranty repairs.