Warranty Recovery

Tips for maximizing fleet profitability through a formalized program


Warranty coverage comes auto-matically with every vehicle, piece of equipment and component. A part of every dollar spent goes toward paying for that warranty. It makes good business sense, therefore, to get every possible return on these expenditures. To take full advantage of the warranty coverage available, there needs to be an effective program in place to successfully manage warranty recovery.

New commercial vehicles, due to longer ownership cycles, federally-mandated emission controls and, in some cases, increased utilization, represent an ever-increasing cost of ownership, observes Brian Tabel, retail marketing manager, Isuzu Commercial Truck of America.

“Warranty recovery for even minor repairs can help reduce the running costs,” he says. “Also, it gives the fleets a better understanding of the operating costs and, if properly tracked, can tell them what trucks are performing the best.”

“Warranty recovery is a major element of what fleets need to be considering,” Charles Bergeon, national account executive for Eaton, says. “It is a controllable maintenance expense that could represent anywhere from eight to 20 percent of repair costs. In addition, the process helps the OEM focus on how to reduce warranty claims and, thereby, improve the reliability of the product.”

Warrant recovery helps keep the manufactures in line and forces them to provide quality and durability,” adds Darry W. Stuart, president and CEO, DWS Fleet Management Services, an independent “Limited Time Executive” transportation and fleet management business.

“Warranty is one of the key indicators that all OEMs and component suppliers look at to determine where engineering needs to focus for quality and product improvements,” John Needham, Eaton’s manager of warranty operations, points out.

“It’s the customer’s right, under the terms of the warranty certificate, to not have to pay for a repair caused by a defect in material or workmanship,” notes Mike Kalkoske, quality services manager, Kenworth Truck Company.

“It is paramount that fleets recover any and all warranty costs they are entitled to in order to minimize the total costs associated with the repairs and to maximize their profitability, says D. Mike Pennington, senior director, global communications and industry relations, ArvinMeritor.

“In ‘olden days,’ fleets did not chase $200 to $300 warranty costs,” he says. “Yet today, they will pursue a claim for $50. In fact, the average claim is for $50 to $75.”

Additional, warranty recovery for a fleet is important because lifecycle costs are more accurate, and that allows for better new vehicle spec’ing and tighter cost containment, adds Richard L. Matosky, president, CASCOR, Inc., a company specializing in fleet warranty administration. One of the best ways for a fleet to improve its bottom line and reduce overall fleet lifecycle costs is to capture as much warranty reimbursement as possible or to direct work to vendors who will do the work under warranty at no or reduced cost, he says.

WARRANTY COVERAGE

“In today’s day of complexity in warranty coverages, it is critical that the end-user/buyer know what he is getting,” stresses ArvinMeritor’s Pennington. Reviewing and understanding a manufacturer’s warranty is critical, Eaton’s Bergeon and Needham concur. “Not fully understanding the warranty could adversely impact it if proper warranty practices are not followed.”

More and more, fleets are taking advantages of extensions of warranty offered by component suppliers and OEMS, says Pennington. “Some of these may overlap, causing a fleet to pay for coverages it may already be entitled to.

“In the case of Tier 2 suppliers, often they might provide warranty coverage in the actual part replacement itself, but not the labor costs nor the cumulative-damaged area.”

Many fleets don’t totally understand warranty and think that everything is under it, comments DWS Fleet Management Services’ Stuart. “Normal wear and tear is not covered, nor is ‘driver or operationally failed.’

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