Warranty repairs!!!!

[JDseller]

I also so posted this on the tool talk forum.

I have a good laugh every time I see some yahoo on here talking about warranty repairs. I have worked at four different dealerships in my lifetime. They handled over fifty lines of equipment between them.

The dealer broke even about 20% and lost money 80% of the time on warranty. The bigger the company selling/making the product the worst the warranty coverage is for the dealer.

Examples of this: Have any of you read the back of the purchase order that you sign when you buy a piece of John Deere equipment??? There are several areas that the dealer loose money in.

1) The farmer is responsible for getting the equipment to the dealership for repairs. So you have a new tractor with like 50 hours on it and it quits/breaks. If I would send out a service tech than the service call is NOT covered under the warranty. If I send a truck to pick it up that is never covered either. So how would the average farmer react if I billed him for the service call or the pickup charge???? HE would raise cain. So most dealers end up eating this cost.

2) The repairs are covered at a flat rate labor time and parts are credited at dealer cost with no freight. So if the tech take more time than the warranty says it should then the dealer has to eat it or bill the customer. If the dealer needs to get the parts faster than his stock order then he has to eat the freight or bill the customer. How many times do you think that a customer would pay for the extra labor or freight??? I have only seen it happen a handful of times in the forty plus years I have been around dealerships.

3) Loaner equipment for the customer to use while his equipment is repaired is never covered either. Most dealership will try to cover the customer during the real important seasons. This cost is not covered.

4) Most of the short line equipment companies ONLY cover parts AT dealer cost, NO LABOR.

So you tell me why the dealer is an A$$hole for not wanting to do warranty on things he never sold???? Many of you think that every business other than yours should operate at a lose or at the best a break even. Many act like everyone other than them is making a fifty percent profit on everything they sell So they should be able to give the "special" customers a break. The average special customer is a guy that has never bought anything new and very few parts from the dealership. Plus complained that what he did buy was way too high priced. ( Sound like any of you on here????)

These attitudes are what most of the public around me has. I will not take any new repair customers unless they are referred by one of my current customers. I DO NOT MAKE VERY much on my repair work usually less then 15% of the total bill, most times it is closer to 10%. So I am not going to take grief for the little profit that you make any more.

So all of you "special customers" lay it on.

 

[chuck41]

As a former dealer I fully agree. Also most short
lines had no warranty labor policy. Parts markup
less than auto or regular mdse. We just took it as it was and knew we had to try to make a profit
on a piece of mdse to stay in business. Also had
to stock whole goods and parts that only sold 2
months out of the year-and parts that may only
sell once in 3 yrs but had to be there if needed.
Chuck

 

[Mike (WA)]

If non-customers want warranty work (on something they bought on "super special" half a state away), I'd lay it out just the way you did in your post. "I'll do the work, but won't eat anything not covered. You bring it in, or I'll pick it up and charge you accordingly. Any extra freight will be billed. If the company won't reimburse labor at my customary shop rate, you pay the difference." etc., etc. If you do it right (not snarky, or belittling him for not buying from you, but just matter-of-fact), he'll not only understand, but you just might gain a future customer.

Most of the bigger operators in my area have figured out that buying outside the area is a fool's mission, because they have to depend on the local dealer for emergencies during the busy season.

One local operator (who could buy both local dealerships (JD and New Holland) out of petty cash, if he wanted to) comparison shops, decides what he likes, then asks for their bottom line price. He doesn't dicker, and dealers know he won't- so they give their best price, right off the bat.

Of course, he's a big enough operator that he has the luxury of calling his own tune. Your results may vary. But the good dealers look out for the little guys, as well. When I was haying, my tractor transmission had problems- called the dealer, he came out that evening, with another tractor on his trailer. My first thought was, "How is he going to haul mine, with that other one on there?" Turns out the other tractor was for me. He said they were completely plugged with service orders, didn't know when they could get to mine, so this ones off the lot, and use it like it was yours. He even helped me switch over the 3 point disc mower. Hay season was over when mine finally came back, but I got through it fine with the loaner.

 

[NEsota]

Seller, I am willing to accept everything as true that you claim in your post. You know your business and customers. If you could change the behavior of your suppliers, you would have. With all due respect to you, thank you for your remarks, but you remind me of an employee that does not like their employer's policies, but has it good enough to not want to start over.

 

[Pat-CT]

I agree. Having worked for a dealership, and taken classes on dealership management, Most of the costs that dealers eat is just to keep the customer happy. This way they tell friends or farmers that they had a positive experience with the warranty work and also they keep the customer.

The shop is a very hard thing to get profitable. LRR on a good- very good mechanic I think is 85%. Most average between 60-75, when I took the class. Billing of materials is another problem with the shop. Oil is a HUGE money loss if not billed correctly. I could go on forever about what can be done but thats not the topic here.

JD seller, Ive only done warranty repair work, never delt with the money side. For flat rate, they usually pay pretty good for a fix, I would think for the dealer to recoup some of the costs they would only have to pay the mechanic, minus overhead etc .... and the rest would be towards recovering the lost costs, for transport, the truck drivers wage etc correct?

I have a pretty funny story about your shipment claim, My teacher at school worked for a dealership, The parts guy had a customer come in and order paint. The parts guy accidentally ordered the paint on an overnight delivery, not stock order. If i remember right he ordered it after 5. 5 was our cutoff time. I think the shipping bill came to something like $200.

Needless to say, the owner couldn't sell the paint. He kept it as a reminder to the parts guy, and ordered more paint for the gentleman that day.

 

[MSD]

Yup, those poor John Deere dealers loosing money makes it hard for them to pay for their fancy new dealership buildings and buying up the smaller guys.

 

[Tx Jim]

JDseller
The way you stated it is exactly the same as it was back when I worked for a JD dealer. I'll add that I think JD isn't as helpful as they were when it comes to unusual failures.

 

[Billy NY]

I think in the case of new equipment, be it implements or tractors, the specifics you mention, coverage the manufacturer provides, in addition to exclusions, has to be understood and accepted by the customer UP FRONT, at the time of purchase. The customer is buying that particular piece of equipment, as well as the warranty, both need to agree on it, so that when or if a claim arises there are no surprises. It is obvious that it would be next to impossible to get the manufacturer to change policy, to absorb these kind of claims the dealer takes a hit on, funny though, you have to sell their product, they need you to sell their product, but really crimp you tight on the warranty.


I recall our days in the business, mind you I was just a youngster, but spent as much time there as possible, ( what kid wouldn't ? ... and the new sale business in those days was contingent on service work, one sale to the local power company was 29 Ford backhoes, they bought 1 first, left it unplugged in cold temps, no start, few other odds and ends, just like that prior to the subsequent purchase of the remaining machines.
Many of us know how the parent company, (Ford in our case) can be difficult to work with, we were supposed to sell ag, we did and it went well with hay equipment, still have a plaque to that effect, but the dealer across the river was to sell industrial, but we did it anyway, to survive, Ford imposed ridiculous financing terms, we were larger than our competitor, huge shop, the business was established in the 30's, was the largest in the area, our lot was always stocked with new tractors up to 8000 series, was not an easy business to make profit, and agriculture was in such a downward spiral.

 

[NY 986]

Most of that is pushed by the manufacturer regardless of the brand. Once the Case IH merger happened it was the end of the road for for a lot of 1 location IH dealers that may not have had the nicest buildings but had very loyal customer bases here in NY. They were not even given the chance to join together among themselves as one unit. Deere had shot themselves in the foot with a couple of dealers that failed just prior to the Case IH merger but a lot of the IH guys had such a distaste for the "Red" successor that Deere equipment started turning up in a lot of those farmers' yards. It probably helped that Deere was a couple of years in to its very successful 50 series tractors and improving its tillage line.

 

[Leroy]

From what I remember JD Seller has written in the past he has started over a few times and is now to the age that he is only working for himself, the age when a lot of people have retired.

 

[oldtanker]

Some dealers are making good money. Generally they are in areas with larger farms that buy a lot of equipment and use the dealers for services and repairs. In smaller market areas the dealers move a lot less euipment and get a lot less repair work. Some of those delers don't make a lot. Good example is 25 miles west of me is the Red River Valley area. Big CaseIH and JD dealers. Most of their sales are aimed at the big guys over there who lease or buy big new equipment every year. These guys don't talk about how many acres they plant, they talk how many sections. Now 12 miles southe east of me is a AGCO/MF delers. Much smaller farms in that area. I don't think he sells more than a handful of new tractors a year. I've never seen a new combine on his lot. He has about 5 guys working in the shop. Warrenty work can kill this guy. The thing that keeps him in business is keeping his customers happy. Drive by, most of his new equipment is impements and maybe 2 or 3 farm sized tractors, the rest is lawn mowers and utilities.

When I worked in auto repair I was at a small shop. We needed to average about 20 an hour (late 90's) to keep the doors open. Another 15 an hour to keep me in there with just my actual pay. Most of the time when we had to warrenty something we did it was a part failure. The parts houses would gladly replace the part but had tons of paper work to get reimbursed for the labor that was a lower labor rate than the 40 an hour we were charging. So most of the time we just ate the labor.

Also consider that dealers pay property taxes at the commericial rate. Items setting on the shelf that don't move often are eating up square feet. So is that tractor setting on the lot. If they can't turn that stuff over it's costing more money cause they still have to pay taxes on that space.

Rick

 

[pete 23]

I will agree with Seller. Another thing that is over looked is diagnostics. There is just no way to recoup the time you spend doing that. Part of the reason parts are thrown at a problem. I used to get my rear in trouble a lot for trying to figure out what was wrong rather than just trying this and that. IH has a place on the warranty claim at one time they called T time. You could try to add some extras like diagnosing a problem but they cut that out too in later years. Getting help from the co. service reps was way less than satisfactory most of the time. Also, one of our service reps for a short time was very honest about how the flat rate manual was set up. He was the guy doing the wrenching on the 86 series for the flat rate manual. He wasn't searching for any problems, just taking them apart and putting them back together just as fast as he could and had help standing by when he needed it , ready to punch in and back out when no longer needed. All tools were lined up ahead of starting job. All tractors were clean and fresh. Not a very accurate measure in my book. I know that It always takes me way less time to rip something apart just after I got it together because something was left out or isn't working right. Oh, yeah, I have done that. Flat rate beaters are skipping a good share of the operations that are called for in the book if they are beating it consistently.

 

[Goose]

Yeah.

A John Deere dealer I know lost so much money he could barely pay for a $500,000 house next to a golf course, an $80,000 Cadillac, and a $50,000 Corvette when he retired in his fifties.

 

[LAA]

You described about 90% of the Pikers and dead beats in my area.

Buy something without reading the contract and don't like the warranty -- they were cheated.

Need a vehicle, appliance or equipment fixed and get charged service call, labor and parts --- service man is a crook.

Get docked 20% at the sale barn because they won't worm, castrate, vaccinate and wean there calves -- Auctioneer let his buddies steal them.

Won't lime and fertilize their hay ground but want someone to cut, rake and bale on halves.

My personal favorite --- expect a small welding shop that has payroll, utilites, insurance and taxes to pay to drop everything to fix a garden rake or weld a jack on a utility trailer and then bad mouth him all over town because he charged $5.00.

 

[bison]

One can circumfence the whole warranty issue forever.
Do like me and buy well used/not abused equipment and learn to fix yourself when it breaks down.
Better yet buy 2 or 3 of each and you have always a spare to keep going or to rob parts from.

My whole line of tractors and other stuff was purchased for less than 1 new 120 HP tractor,and i can keep it all rolling for the payment one new tractor.

 

[tlak]

Kinda wondering that too, if they're losing so much money they must be in it to do us a favor.

 

[Ultradog MN]

Life is tough. And the words "life, liberty and the pursuit of happiness" do not guarantee you get to make a profit.
Big box stores have people who buy tools, use them for their project and then return them as unneeded or defective.
Milk prices sometimes do not pay for the cost of farmers planting crops and buying equipment.
Cattle owners have calves die.
Mechanics sometimes install defective parts and have to eat the cost of labor to do the warranty work.
Landlords have deadbeats who don't pay their rent and trash their houses.
Photographers and writers have computer crashes and lose their work.
Beauty queens get fat or old and can't model anymore.
OTR truck drivers can't buy fuel for the price loads are paying.
Liquor store owners get taxed to death.
Marines and Army men and cops get shot just doing their job.
I have to do a warranty job next week on a shower wall that went south - a couple of days labor and a few hundred in materials.
Myself and every other person I've mentioned has just as much right as you do to go through life saying Wah wah wah! Poor me.
There is a certain amount of risk and a certain amount of stress involved in being in business for yourself
If you want a job with no risk I hear the Government is hiring.

 

[Two Dogs]

I had intended to will my son a couple of hundred thou. but I know he'll just throw it away on frivolous things like food and college for his children. Instead, because of your heart warming sob story, I'm going to leave it to my local John Deere dealer, bless his heart. TDF

 

[in-too-deep]

I think we're practically neighbors. Where ya at?

 

[Goose]

And this is your worry instead of your boss's because???????????

If they come up short on warranty work, they make it up somewhere else.

How many John Deere dealers do you know that weren't wealthy when they retired/sold out?

 

[bradk]

The local JD dealer is doing SO POORLY that they're building a new multi-million dollar facility.Poor fellas.

Livin' on Ramen noodles too,I'm sure.

 

[pete 23]

I kind of thought the gist of the post was profit on warranty work. He didn't say dealers didn't make a profit over all. If one end loses money some place else has to pick it up. Last place I worked the sales dept was always catching heck. Shop did real well. Previously, I had been told by many dealers that shop was a necessary evil. I quit the CaseIH dealership (swallowed my pride and went to work for John Deere and they treated my great) after my employer of many years retired and sold to a new corporate outfit. I didn't like the way they did bussiness and told them so. Warranty work was a big part of that reason also. They went out of bussiness within a few years so they got their just deserve.

 

[Pete76NY]

JD...these guys amaze me...no one seems to understand that businesses are in busuness to make money! If they cannot make money, they won't be in business PERIOD.
You nailed it as far as the loaners, hauling, flat rates etc... I sold Kubota against your Green ones as well as Case Industrial. We tried to average 16% profit on the Kubota stuff and were fairly happy anywhere from "break even" to 4% on the Industrial side ( I hear Ag is even worse!) That 16% Kubota profit allowed us to truck with no charge, do loaners... When someone came in and priced us down we would go so far and tell 'em to walk. They would run to the internet and have something shipped in from 100s of miles away or accross the Pa border to a dealer that had no trained techs or inventory to speak of (we had 4 techs that were certified and always going for training which costs a few bucks too). When we got the warranty call for one of those purchases, we always told 'em what the rates were for trucking and rental, and told 'em that when there was absoulutely no trucking needed for our customers we would get to them. Their equipment would be put in the shop line and when absolutely no work was neeeded for our customers we would get to it. Kubota backed us on this.
Yes the Owner does well for himself, and yes as employees we did well too, but isn't that how it's supposed to be? Amazes me how all these BIG time external_link socialism bashers (yes I am one too!) want to start redistributing dealers wealth when they have to deal with the costs of doing business!
The really great thing about working for an independant owner like that was his ability to tell a real pain in the a$$ customer to just take a hike! I have had him tell a customer "here is a one time put your money where your mouth is good deal...take it or leave it NOW, but don't come back if you don't!" Occasionally we would have them come back and the Owner would tell 'em, "Nope not dealing with you...don't need customers like you...leave!" No "I wanna talk to your boss, runnin' scared from the corporate biggies...just "LEAVE!"