CONVENTION TOPIC: ALAN BERGMAN UNMASKS WARRANTY AUDITS AT AADA CONVENTION

Fulfilling warranty obligations is a necessary part of any Dealer’s business, but more and more the issue is becoming a potential legal minefield, clouded by matters such as parallel imports, fraudulent and deceptive customer behaviour and repairs undertaken by independents, with oils and non-genuine parts that do not always equal or exceed manufacturers’ specifications.

Drawing on more than half a century of practical, continual and evolving global experiences in the automotive business and industry worldwide, AADA National Dealer Convention special guest speaker, Alan Bergman, is set to demystify the complexity of ACL, Fixed Operations and Warranty Audit Unmasked.

Mr Bergman will share, in overview, unparalleled powerful insights and suggest practical strategies to deal with this complicated subject.

He plans to present educational, simulated ‘real world example case study’ scenarios. These will be used to impart a few important insights by way of easy-to-follow hypothetical examples of both Statutory ACL Consumer Guarantee and New & Used Vehicle Warranty obligation situations that are always additional to the ACL consumer guarantees.

Mr Bergman will cover what to expect when such matters are honoured in good faith by a dealership, and he will also explain the possible subsequent conflicts arising (for example) from a manufacturer’s compliance warranty Dealer audit perspective, say 12 to 24 or more months later. He will compare this to hypothetical examples of when ACL obligations conflict some of the multi-national Manufacturer/Dealership Contracts and Franchise Agreements.

“The conflicts, when they arise, are typically in relation to what a Dealer considered to be unfair in its warranty audit, or of a one-sided unfair ACL or warranty claim submission assessment determinations made by the manufacturer prior to approval for payment to the Dealer,” Mr Bergman said.

“Often, such conduct by the manufacturer is considered unconscionable by the Dealer, where that manufacturer’s warranty and policy ignores, is silent on or conflicts with ACL statutory obligations. In particular. where ignored are aspects such as ethical and moral fairness towards, say, the Dealer who took all reasonable, necessary, proper and prompt care of the customer’s (consumer) problem in good faith and in conformance with the ACL consumer guarantee obligations.”

Mr Bergman says Dealers’ thinking is that they are protected by the ACL ‘manufacturer’s statutory indemnity’ protection provisions for statutory reimbursement of (B2B) supplier (Dealer) who took care of their franchise manufacturer’s ACL Consumer Guarantee obligations AND which obligations under ACL may not be contracted out of or excluded. Sadly, this is not always the case. In Australia, all ‘manufacturer’s’ ‘express new vehicle warranty obligations’ at law are additional to the statutory ACL Consumer Guarantees, rights, protections and obligations, which obligations cannot be excluded, refused or denied. As such, ACL consumer guarantees still apply in certain circumstances, even after expiration of the limited manufacturer’s new vehicle warranty.

As a deterrent, certain violations, infringements or breaches of ACL by a manufacturer, Dealer or supplier may each carry fines of up to $1.1 million, or more as penalties.

Mr Bergman also plans to touch on related issues that directly and indirectly are the typical underlying key drivers influencing warranty and policy outcomes, contribute to dealership costs they can’t always control, and ‘Profit Leakages’, ‘Retention’ and ’Margin Erosion’ in their many guises.

He hopes to share ideas to strengthen processes and procedures in-house, on the front lines and in the workshops, that can help Dealers in ‘Building Better Outcomes’ so as to become fairer for all in the warranty chain in the future.

“To succeed in any dealership, business in my view needs to always start with integrity, mutual goodwill and transparency,” he said.
“Vitally important to ensure is that there are no unfair manufacturer, importer or distributor global and or local ‘Warranty & Policy’ or ‘Dealer Agreement’ business contract terms that would, could or may still continue to cause a ‘significant imbalance’ between the parties, their respective rights, obligations, entitlements, protections, statutory manufacturer indemnity reimbursement obligations, etc.”

That includes mandatory statutory obligations requiring any ACL-defined ‘manufacturer’ to fully reimburse or pay back, as applicable, a B2B ‘supplier’ for all reasonable, fair and necessary charges for warranty repair work done, warranty parts and materials supplied, sublet costs, loan car costs and other costs incurred in the process of taking care of any ‘manufacturer’s obligation’ to fix a manufacturer express warranty or ACL Consumer Guarantee problem and/or where issue is/was in breach of any manufacturer’s warranty or ACL consumer guarantee, or Australian Federal, State or Territory’s Law/s or codes that already apply.

Unfair contract amendments

Additional amendments to the unfair contract terms laws, and in particular those that also apply to `business to business’ and `business to consumer’ transactions, will in addition take effect in Australia on 12 November 2016.

Considering whether a term of a ‘manufacturer’s warranty & policy manual’, dealer bulletin or business contract is fair and free of any significant imbalance, will always involve a factual assessment of the available evidence and wording of each situation on a case-by-case basis.

The objective of the government, ACCC and ASIC is to also ‘Build Better Outcomes’ for all Australians, be they consumers, businesses, corporate taxpayers, overseas-owned or controlled Australian businesses or others, to ensure they always contain a clear, transparent and balanced fairness for all.

Refocus

Dealers, managers and staff attending Mr Bergman’s session will be encouraged to proactively and ethically refocus on the increasing emergence of unsustainable Service, Parts, Warranty and After-Sales ACL related costs recovery/margin erosion pressures and often underlying drivers of below-objective poor customer retention.

“With newly learned confidence, knowledge, ideas and an innovative supportive ‘handouts’ toolkit and my notes, attendees will be able to better detect, prevent, reverse and optionally recover certain losses in the future,” he said.

“The priceless tips, handout notes and information should enable you to determine and introduce, where needed, meaningful ‘business process improvements’ (BPIs), any necessary improved compliance, conformance and innovation methodologies into your business.

“All this is to counter the ever-growing ‘black holes’ I frequently discover onsite when drilling down the warranty repair orders data to uncover hundreds of often ‘lost bona fide warranty hours’ worked every year but not recovered. Many of the underlying causes are often found to be considered unfair by the Dealer, in particular where the circumstances and evidence are considered by the Dealer as being significantly imbalanced.”

Mr Bergman said some serious issues are considered potentially unlawful when certain manufacturer-determined unfair warranty claim submission adjustments or audit ‘warranty chargebacks’ of a supplier (Dealer) occur.

“Others I see from time to time applied by certain manufacturers suggest they engage unfair warranty prior approvals/unfair determination and ‘chargeback’ of a Dealer assessments; unfair reimbursement criteria basis of decisions where certain alleged unrealistic warranty labour rates and SRTs were enforced versus transparent and Dealer-justified times clocked and worked.”
Mr Bergman will, after his session, hand out tips designed to help Dealer and manufacturer reduce significant rise in incidences of certain consumer-related attempts to deceptively or unlawfully gain unfair advantage, betterment and enrichment out of the Dealership and/or manufacturer or insurer via warranty claims.

“Frauds and/or baseless claims or demands by consumers typically manifest themselves under the guise of ACL consumer guarantees that I see which, in the main, fail to have all of the necessary credible supporting evidence as required,” he said.

What to expect

Mr Bergman will provide brief, clear and specific ideas of what attendees will be able to better understand and/or consider incorporating as solutions for improved ACL, supplier or consumer statutory warranty compliance obligations; processes and outcomes for all concerned within the manufacturer/importer/B2B distributor, supplier (Dealership) and customer chain.

By the end of the session, attendees will be better-equipped to:

  • understand ‘what is’ and ‘is not’ Manufacturers, ACL, Statutory and Extended Warranty, so as to differentiate between legitimate eligible and not eligible Manufacturer Warranty, Statutory Warranty or ACL Consumer Guarantee obligations so as to build better outcomes AND improved vehicle sales and after-sales retention.
  • understand ACL five years on and what in fixed operations will build better outcomes, improved after-sales retention and dealership NPS/CSI scores, opportunities and results you can bank.
  • gain innovative ideas (if needed) and guidance suggestions for smarter methodologies, processes, techniques and knowledge to detect and/or reverse lost Dealer profit opportunities, margin erosion; improve warranty recovery/reimbursement outcomes and reduce future risk of ACL based claims or breaches. discover significant hidden fixed operations and warranty audit lost opportunities that, unless addressed, will continue to impact on lost dealership net profit results and brand loyalty, warranty costs/warranty hours worked but not recovered or reimbursed, after-sales business and customers for life retention, and
  • recover from ‘Fixed Operations Profit Leakage and Margin Erosion’ losses through other lost or not recovered hours worked; below the radar OEM Parts Discount Codes changes and subsequent margin and credits impacts, poor technician stories and weak warranty admin processes.

Workshop attendees will take away ACL-supporting handouts and invaluable actionable summary reference notes; a 2016 update containing Alan’s latest `Fixed Ops Trouble Shooting Poor KPI Results’ summaries with typical Causes & Corrective Action Checklists, Unique KPIs and Ratios to identify and ‘Build Better Outcomes’ and fairer ‘Warranty Recovery’ through future automated transactional data analytics, compliance, Service & Parts fixed ops performance, and warranty reimbursement and mock warranty audit conformance and performance reviews.
It all sounds complicated – and it is; which is why you should make sure you attend this critical but easy-to-follow session. It could, quite literally, save you tens of thousands of dollars, if not more, over the next 12 months.

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