Thank you Metro Atlanta Automobile Dealers Association (MAADA) for the feature in the summer 2025 issue of On The Move.

In the article, we share some best practices for warranty reimbursement submissions and rate optimizations, in addition to how to avoid common pitfalls and how to turn warranty reimbursement into a profit center for your dealership.

Navigating Uncertain Market Conditions
The auto market remains volatile. Changing tariffs, production pauses and shifting consumer sentiment can make forecasting new‐vehicle sales difficult. The industry expects a summer slowdown, with analysts noting that buyers may even delay purchases, with continued tariff and market uncertainty.

In such an unpredictable environment, dealers must focus on what they can control. That means doubling down on fixed operations (service and parts) and, in particular, taking advantage of their warranty reimbursement.  Because these funds are legally owed for work already completed, sharpening your warranty process is a controllable way to bolster your bottom line when retail sales soften.

Why Warranty Reimbursement Matters

• Legal Entitlement: Nearly every state mandates that manufacturers reimburse dealers at retail rates for warranty parts and labor.
• Low Risk, High Certainty: Unlike new‐vehicle transactions, warranty work carries minimal market risk—you’ve already performed and documented the service.
• Overhead Coverage: Service‐department contributions often underwrite a large share of dealership fixed costs. Every additional warranty dollar captured flows straight to gross profit, helping to stabilize technician pay and staffing.

CASE IN POINT:

A mid-sized dealer group that completed these audits saw a 15% lift in labor reimbursement and a 16% gain in parts recovery—an 18% boost in total warranty gross profit. Yet the same review revealed they had missed an annual submission window the previous year, costing them over $200,000.