Biggest No Brainer in the HIST STORY of the Automotive Industry! - - PowerPoint PPT Presentation

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Feb 13, 2024 169 likes •313 views

Biggest No Brainer in the HIST STORY of the Automotive Industry! Frank is a principal at OConnor & Drew, P.C., a regional accounting firm that services approximately 300 automobile dealers. He has served as the Director of

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Biggest No Brainer in the HIST STORY of the Automotive Industry!

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 Frank is a principal at O’Connor & Drew, P.C., a regional accounting firm that

services approximately 300 automobile dealers.

 He has served as the Director of Internal Audit and Fraud Investigation at

O’Connor and Drew, P.C. for the past 12 years and has serviced auto dealers for

ver 15 years.

 Frank has successfully calculated, submitted, and obtained warranty rate increases

for hundreds of dealerships in a variety of states across the country including Massachusetts, New Hampshire and New York.

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 First passed in the state of Florida in 2008  The Alliance of Auto Manufacturers filed two lawsuits:

Connecticut – Dismissed by trial court in 2014
Florida – Alliance dropped suit

 Approximately 37 states have favorable laws on the

books

 Approximately 22 state laws include the 100 repair order

analysis

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 Signed into law in June 2013  Strengthened language on warranty parts reimbursement

law

 Explicitly defines method of calculation (100 RO

analysis)

 Allows for one submission per calendar year  Hundreds of dealers have been approved in various

states including New Hampshire

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1. Minimal Bottom Line Impact
2. Manufacturer will seek Retribution
3. MSRP is Retail
4. Manufacturers Resist

Approval

5. Waiting is not Costly

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 Results in thousands of additional gross per month  Will vary based on the following:

Volume of warranty parts sales
Approved retail rate

 Maximizing rate by data analytics

Avoid landmines

 Time sensitive nature of submission

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A quick look inside the numbers:

Sales Gross Profit Cost Potential Additional Income

Warranty Sales Currently @ 40% Mark-up Warranty Cost Dealers @ 60% Mark-up Dealers @ 75% Mark-up Dealers @ 90% Mark-up $250,000 $71,429 $178,571 $35,714 $62,500 $89,285 $400,000 $114,286 $285,714 $57,142 $100,000 $142,857 $500,000 $142,857 $357,143 $71,429 $125,000 $178,571 $800,000 $228,571 $571,429 $114,286 $200,000 $285,715

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No evidence of direct retribution

Known Tactics of Manufacturers:

 Recoupment – Nissan & Infiniti  Failure to pay on all parts:

BMW, Hyundai, Mazda, and Nissan

 GM – Option A versus Option C

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 Don’t be deceived: Manufacturer’s Suggested Retail Price

is still a rate controlled by the Manufacturer

 MSRP is commonly thought of as 67% Mark-Up, however

Nissan: 49% - 55%
Toyota: 56% - 59%
Audi: 56% - 60%
Volkswagen: 56% - 60%
Mercedes*:

55% - 60% *Pays MSRP on newer models

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When you fail to submit for a warranty reimbursement you are losing:

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 Obtain downloaded report (in excel) from your operating system

containing required pertinent information

 Run advanced sorting software to determine your ideal range of repair

rders which will provide the highest mark-up rate

 Analyze and select the qualified parts  Trace the selection to the actual repair orders to account for discounts, non-

factory parts, aftermarket warranties, goodwill adjustments, etc.

 Calculate the mark-up percentage for the selected sample  Prepare package for submission to the factory

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 The New Hampshire law permits a dealer to submit for a

parts rate increase once per calendar year

 Very few dealers take advantage of it  Beware of the “Reasonableness

Clause”

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