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  • Understanding Your Vehicle's Factory Warranty

    Understanding Your Vehicle's Factory Warranty

    A listener called  the CarPro Show recently, perplexed over the fact that his truck had been in a dealership service department for eight weeks with no end in sight, due to a parts issue. I see this with every brand vehicle made. Parts shortages have been a way of life since the earliest days of Covid-19 and remain today.

    I suggested he contact the manufacturer directly and if not resolved, to try to invoke the Lemon Law, which every state has. I get a lot of questions from listeners and website visitors about their vehicle warranty. Not just the initial warranty, but the powertrain coverage and extended warranties. I get enough that it is pretty clear that the majority of people do not really understand how the process works from the dealership side. So, here's a look at how the factory warranty process works from my perspective as a former dealership owner.

    It is your dealer with whom you interact when your vehicle needs a repair that is covered by any manufacturer's warranty. Not all automakers handle warranty repairs exactly the same, but generally here is the way things work. 

    Although it is a complicated process, I will do my best to make it simple.

    Let's call the car manufacturer Acme Automaker just for simplicity sake. Acme Automaker builds a vehicle and sells it to Roadrunner Auto Sales (your dealer). Roadrunner Auto Sales then sells the vehicle to a consumer. At the time of purchase, it is explained what your warranty coverage is for the vehicle you purchased. One of the main things you need to understand is that it is Acme Automaker, the manufacturer of your vehicle, that is responsible for, administers your warranty coverage, and pays for your repairs, not the dealership.

    Given that, what is the responsibility of the dealer, Roadrunner Auto Sales? It is simply to make the repairs as prescribed by the manufacturer of the vehicle. This is one of the biggest challenges dealers face today - how do they make you (their customer) happy, while at the same time get the manufacturer (Acme Automaker) to pay the bill? You can see the problem here for the dealers.

    So, you have a problem pop up with your car, either major or minor and you return to the service department of a dealership. You just want your car fixed, but the dealer also wants to be reimbursed by the factory for making the repairs, so there are complex procedures that have to be followed with every repair order that is written on your car. If the dealer does not do everything exactly right, it doesn't get paid for performing the repair.

    Most people think it is the dealership that decides what is a covered repair and what is not, but that is not true. It is all laid out by the manufacturer. On the other side of the coin, the manufacturer opens itself up to abuse by some dealers who would cheat the system if not for the rules set forth by the warranty policy manual.

    The dealers are always stuck in the middle on warranty repairs, they have to please you so you will come back and continue to do business with them AND they have to satisfy the entity paying the bill, which is the manufacturer that built the car.

    Luckily, for most dealership customers, the process of getting your vehicle fixed and all the "behind the scenes" paperwork and computer entries are transparent, but sometimes the dealership has to call the factory for approval before the work can be done, especially with extended warranties. If the factory declines, the customer will generally get mad at the dealership.

    It is also noteworthy to mention that the factory pays the dealership very well for work performed, but only once. If you take your car back for the same problem, the dealer generally eats the second and subsequent repair costs. This can be why cars sometimes have to be taken back multiple times for the same repair. If the technician is not very good, or inexperienced, it can be a real issue for the customer.

    Since dealers are paid well to perform warranty work, the dealers welcome you with open arms no matter where you bought your vehicle. That is a little different than it was some years ago.

    I hope this gives you a little insight into what dealers go through to repair your car under the factory warranty. It is not easy, but the goal is to keep both the consumer and the factory happy

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    Photo Credit: GM Optional Extended Warranty. (2018.)