Warranty Tools

Secrets to making money, not mistakes

Want to save money by helping yourself and your customers? Then read on. I see used car dealers, franchised dealers, managers, sales people, lease companies, auto auctions, and independent garages making costly mistakes when it comes to factory warranty coverage on used vehicles. I am not talking about “certified-used” here.

New Car Dealerships often fail to realize the extent that used cars and trade-ins may be covered by factory warranty. In fact, used vehicles in anyone’s inventory, franchised or not, may be covered by the remaining portion of a factory warranty.

There are normally two types of warranty; that which is on the “vehicle” or that which is on the “owner”. Before you perform any warranty work you must be certain of which type of warranty applies and whether transfer requirements (if applicable) have been met.

A used car inventory is considered “neutral” since titles have not been registered to a retail customer. For example, certain 2001 Chrysler vehicles are covered with a powertrain “owner” warranty. The second owner must pay a transfer fee for the powertrain warranty to be valid. A 2001 Volkswagen has a 10/100,000 powertrain transferable warranty only to immediate family members; non-family members receive a 5/50,000 powertrain warranty. For some manufacturers, the warranty cannot be transferred beyond the second owner.

Repairing factory defects under warranty is permissible. What the factory frowns upon is reconditioning a vehicle to add value to it without the problem being a true manufacturing defect.

Used Vehicle Dealers can get factory defects repaired under warranty, but the franchised repair facility must have proof that a vehicle has a valid warranty and that the repair is of a warrantable nature. Dealers have a way to verify warranty eligibility by running a VIN through their factory communications computer. Most franchise dealers would not turn the extra work away.

Used Vehicle Managers make the mistake of packing after-market warranties on the vehicle when the manufacturer’s warranty is still in effect. Check your used car stock for “Buyer’s Guide” window stickers on late model vehicles that are checked “no warranty”. In many cases at least some portion (emissions, corrosion, powertrain) of the manufacturer’s warranty remains.

Used vehicle managers should be aware of any factory recalls or special policies that are available for repair at “no-charge”. Some items with longer warranties like emissions, corrosion, or safety belts and inflatable restraint systems, normally do not require a deductible to be paid. Extended powertrain warranties often require a deductible. Whenever possible, call the manufacturer’s customer assistance centers for help or clarification.

Get with it! Check your vehicles to determine what balance of the warranty applies. Check those VIN’s to see if any recalls are open on the vehicle. If repairs need to be made to your stock vehicles that are legitimate factory defects, then contact the service manager for approval, or make an appointment at a franchised dealer.

I walk into dealerships and see “Buyer’s Guide” window stickers on late model cars that are checked “No Warranty” when I know for a fact that there is warranty coverage. What a pity! Be sure to note correctly what balance of the factory warranty remains. This can be powertrain, basic, emissions, or corrosion perforation. This will keep after-hour tire kickers from being turned-off by “As-Is” noted on the sticker.

Finally, use the fact that a factory warranty exists to help sell those used cars. Franchise dealers should also pull the service history folders to sell the point that all prior work was done in your shop and that regular maintenance has been performed. Explain the advantages to the customer of having the remaining factory coverage.

Knowing and explaining the warranty to the customer will help to avoid any misrepresentations, minimize the chances that you will need to make an out-of-pocket policy adjustment, and may even prevent a costly lawsuit.

Buyers and auctions should consider whether any factory warranty is in effect when appraising vehicles. If a vehicle has a factory warranty, obviously its intrinsic value is higher.

Service Departments should be aware of what repairs on non-franchised vehicles might be covered by factory warranty. There is nothing worse than losing a customer because they later found that the work they paid you for would have been covered if performed at a franchise facility. If this ever happens, explain the mistake to the customer and have them take their original receipt to a franchised dealer. Most dealerships have the ability to reimburse the customer, but normally at factory rates. You may want to absorb any difference to save the customer.

Make money, not mistakes with factory warranties. Whether you’re in the market to buy, sell, or repair used vehicles, you can see that factory warranties can save you money. The secret is to know what factory warranties cover and to remember that the factory may provide assistance, even after a basic warranty no longer applies. The alternative is to ignore the value of warranties and let your competition get all the great deals.

Top ten mistakes when it comes to manufacturers warranty and used vehicles

Mistake #1 - Buyers and auctions miss out on great deals by not considering whether any factory warranty is in effect when appraising vehicles.

Mistake #2 - Used car managers don’t pay attention to factory campaigns, special policies, or warranty extension that are available for repair at “no charge.”

Mistake #3 - Some dealerships don’t know what to do with vehicles under warranty if the brand is not their own.

Mistake #4 - Service managers use the dealership’s cash to repair factory defects.

Mistake #5 - Service Manager’s underestimate the possibility of the factory repairing a vehicle, even after the warranty has expired.

Mistake #6 - Used car managers make the mistake of packing after-market warranties on vehicles that still have some factory warranty.

Mistake #7 - Used car retailers get fined for mislabeling stickers.

Mistake #8 - Sales people don’t know which type of warranty applies to a vehicle.

Mistake #9 - Sales people delay the transfer of a warranty.

Mistake #10 - You work with used vehicles so you don’t take advantage of factory warranties.

J&L Warranty Pros publishes the Official Warranty Guide® that details every manufacturer’s warranty guidelines, deductibles, warranty extensions, and other pertinent information.

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