Understanding OEM Warranty Reimbursement Submission Responses: What Dealers Need to Know
Understanding OEM Warranty Reimbursement Responses

What they ask dealers to provide doesn’t always coincide with statutory requirements.

This article provides a look at the current landscape of OEM warranty reimbursement processes, highlighting how various OEMs handle submissions, common pitfalls to avoid, and recent changes and trends in the field.

OEM Warranty Policies and the Current Warranty Reimbursement Space

In response to warranty reimbursement submissions, OEMs exhibit varying approaches. Some OEMs respect state statutes and dealer submissions, responding in a timely and cooperative manner. They operate within the law, only asking that dealers also do so themselves, ensuring a smooth reimbursement process.

On the other hand, other OEMs seem to struggle with compliance, often requesting dealers to follow unnecessary procedures that may even contradict state laws. Whether this is out of negligence or a failure to understand state statutes, is difficult to discern.

A third group of OEMs complicates the process the furthest by doing as much as they can to curtail the submission process for dealers. Some of the tactics employed by these OEMs are as follows:

“Speed Bumps” from OEMs

Certain OEMs introduce “speed bumps” by requiring dealers to jump through extensive hoops, providing significantly more data than state statutes necessitate. This tactic can delay the reimbursement process and create additional administrative burdens.

Exploiting Loopholes and Delaying Tactics

Some OEMs exploit loopholes within state statutes to prolong the process, delaying repayment periods and causing confusion among dealers.

Infamously Difficult OEMs

Specific OEMs, often notorious for their stringent practices, respond with detailed, multi-page objections to submissions. These responses typically highlight numerous repair orders deemed incorrect, further complicating the reimbursement process for dealers.

Market Rate Comparison Language and Lookback Periods

States with market rate comparison language in their statutes often face challenges, including lookback periods where OEMs can request additional data.

Irrelevant Pushbacks from OEMs

OEMs sometimes push back against submissions with objections irrelevant to the state in question, adding to the complexity and confusion if the dealer isn’t aware of their state’s statutory requirements.

Outsourcing to Unfamiliar Third Parties

We’ve seen a few of these OEMs outsourcing submissions to data mining centers located abroad. These centers often request data not required by state law and develop processes that defy statutory requirements.

Common Pitfalls with Warranty Submissions


Failure to Comply with Statutory Requirements

Dealers often struggle with the nuanced language of state statutes – especially when they own dealerships over numerous states. OEMs may request additional information not required by state law, leading to confusion. It’s crucial to remember that statutory submissions always supersede OEM factory requests.

Ambiguous Language and OEM Requests

Some states have ambiguous language regarding specific parts, namely tires, leading OEMs to request their inclusion in submissions. This can lower reimbursement rates due to the low markup on such items. Working with a warranty reimbursement vendor can help dealers prepare for these situations and maintain specific best practices in states where this could be an issue.

Claim Documentation Errors

Claim documentation errors are a significant pitfall. It is crucial that fixed ops employees are trained on best practices to ensure accurate and thorough documentation, thereby reducing the risk of rejected claims.

Recent Changes and Trends in OEM Warranty Policies


Arbitrary Rates and Automatic Denials

A recent trend among some OEMs involves assigning arbitrary rates that they automatically approve, while rejecting anything higher with various complaints.

Case Study: Illinois

Recently, a federal judge dismissed a case by VW, curbing their attempt to strike down an Illinois state law establishing that the state had asserted that the law was needed to ensure “fair and adequate compensation for Illinois dealers” and for dealers’ auto repair technicians.

Impact of Electric Vehicles

The rise of electric vehicles has brought skepticism about reducing parts-related claims. However, despite the rise in production, it has not become the boom that some had forecasted.  Just last month, Ford asked their dealers to curb efforts to make some previously requested service center improvements accommodating expected EV activity. Therefore, it would appear that even the OEMs are not anticipating such an EV influx.  Combustion engines remain in significant production, maintaining the demand for parts and warranty claims.

Technology and Vendor Practices

The vendor space seems to be increasingly driven by software solutions, but the small details often make the biggest difference. Dealers should seek vendors that combine technology with personalized service to ensure optimal reimbursement rates. A high-touch approach can significantly enhance the effectiveness of submissions.

Final Thoughts


Understanding how OEM warranty reimbursement practices differ from statutory requirements is crucial for dealerships to optimize their financial returns and remain compliant.

The warranty reimbursement landscape is constantly evolving, with OEMs and lawmakers playing significant roles. Dealers must stay informed and proactive to navigate this space effectively.

By partnering with expert vendors, dealers stay updated, ensure accurate submissions, and optimize their reimbursement rates. Expertise in this area can make a substantial difference in gross profits and compliance.



Article posted at AutoSuccess.


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