Editors note: This article is part of a several-part package dealing with operating costs in 2019. Read related articles that offer and in depth look at tire prices, fleet maintenance, and preventive maintenance.
With a few exceptions in select segments, warranty recovery has remained fairly stable in 2019 when compared to 2018. All new vehicles are covered under a factory warranty program. Warranty recovery can help manage fleet costs.
One ongoing trend is more stringent enforcement of manufacturer recommended services to be eligible for warranty coverage.
“As we began to see in 2018, and even more so throughout 2019, there is a noticeable trend of OEMs becoming more stringent in terms of warranty recovery and support,” said Chris Foster, Manager, truck & equipment maintenance for ARI.
The trend of more stringent enforcement of manufacturer recommended services to qualify for warranty coverage continues, so fleets should be aware of the recommendations and follow the manufacturer’s guidelines. Again, technology can help in this case, tracking when preventive maintenance is needed and providing alerts so that nothing is missed.
“Specifically, the OEMs are looking for additional documentation to support warranty claims in an effort to ensure the units were properly maintained prior to failure. This really underscores the importance of PM compliance. Adhering to consistent preventive maintenance schedules to minimize PM variability is something the OEMs are stressing across the board. During the warranty claims process, PM variability is closely scrutinized,” said Foster of ARI.
Accurate and complete maintenance history, as well as technical expertise, are critical for warranty recovery efforts. Some manufacturers have reduced powertrain warranty coverage periods, which increased the need for warranty recovery. It is critical to follow the manufacturer’s recommended PM schedules to maximize chances of warranty being covered at the dealership.
“We observed slight increases in CPM (cents per mile) in all segments with warranty recovery this year compared to last year. Fleet powertrain warranty coverage among the manufacturers has remained consistent for fleet vehicles. Some OEMs have elected to reduce bumper to bumper warranty offerings in exchange of offering 12-24 months of maintenance coverage beginning at the time of vehicle purchase,” said George Albright, director of fleet maintenance for Merchants Fleet.
Post-warranty recovery claims have come under greater scrutiny, with increased emphasis placed on customer loyalty. Post-warranty policy adjustment decisions are often being made at the dealership level.
Accurate and complete maintenance history has become increasingly important to warranty recovery efforts. “Vehicle manufacturers continue to place great emphasis on customer loyalty and complete maintenance history when considering post-warranty goodwill assistance. It’s important to note that powertrain warranty coverage varies among brands, which can affect the level of assistance needed when fleets are made up of many vehicles of the same brand,” said Kelley Hatlee, CAFS, national service department technical support supervisor for Enterprise Fleet Management.
Most warranty recovery is occurring during the term of the new-vehicle warranty. Longer base and powertrain warranties have led to a reduction in post-warranty recovery.
Warranty coverages that extend comprehensive and powertrain coverages as well as offer free maintenance for some period of time have all worked to impact warranty coverages and “good will” or post-warranty recovery.
“Increased warranty rental recovery requests have been the norm as vehicles are down awaiting back order parts or waiting to be diagnosed at backed up dealerships. These rentals can be very costly for the client when not tracked,” said Ackerman. “We have been involving the manufacturer up front when we are running into these issues to assist in expediting the situation proactively.” said Mark Ackerman, director, maintenance and repair for LeasePlan USA.
A similar observation was made by Mark Donahue, manager of fleet analytics for Emkay.
“Rental costs for lengthy warranty repairs have risen. OEMs have also started tightening their rules for recovering these rental costs. Fleets should proactively plan for replacement units in these cases. Whether it’s reassigning a pool unit or transporting a vehicle from another location, the cost of these alternative options could be less than that of an extended rental,” said Mark Donahue, manager of fleet analytics for Emkay.
Additionally, in recent years, some manufacturers have reduced powertrain warranty coverage periods, which increased the need for warranty recovery.
“Specifically, more warranty coverages extending comprehensive and powertrain coverages, as well as offering free maintenance for some period have all worked to impact warranty coverages and good will extended,” said John Wuich, vice president of strategic consulting for Donlen.
Improved Vehicle Quality
Higher vehicle quality is another factor decreasing warranty recovery monies. Increased quality, extended emissions and powertrain warranties are contributing factors.
The timeframe in which dealers are completing warranty claims is increasing. This can be due to delays in part manufacturing in some cases. Also, as OEMs become more competitive in the preventive maintenance and general repair market, they are becoming busier, which puts pressure on the service departments to complete warranty repairs quickly.
“We’ve seen no change from the previous year regarding warranty recovery from the OEMs. Parts delays, and subsequent rental vehicle costs on warranty repairs, represent the most common client concern related to warranty issues,” said Chad Christensen, strategic consultant for Element Fleet Management.