Index Rate Option
Outline of the process used to establish a dealer’s warranty rates under the Retail Rate Option.
This process is consistent with the following principles:
- Enables dealers to apply for an updated warranty labor rate that is based on each dealership’s effective retail labor rate.
- Complies with state laws with respect to warranty labor reimbursement.
Qualifications
Any U.S. Ford or Lincoln dealership that can clearly demonstrate a consistent retail pricing policy and an effective labor rate or parts mark up evidenced by repair orders (RO's) indicating labor hours and dollar amounts charged to non-warranty customers.
Retail Repair Order Analysis
Repair orders must be in sequential order and customer paid on Ford, Mercury and Lincoln vehicles, excluding only the repair types indicated below.
The applicable repair orders must not exclude any valid retail repair types or dealer discounts and must demonstrate consistent retail labor pricing practices.
All repair types not shown in the exclusions list below must be included in the analysis.
NOTE: The RO analysis will be considered invalid and required to be redone if these guidelines are not followed.
Exclusions
The following types of non-warranty, customer-paid service repairs are to be excluded from the analysis.
- Lubrication, oil and filter changes (LOF)
- State inspections
- Routine maintenance item inspection, or periodic replacement
- Tire replacement and/or balancing (except for the purpose of servicing TPMS sensors or wheels)
- Suspension alignments when there is no associated repair on the RO.
- Wiper blade installation
- Ford/Lincoln priced nationally advertised service programs
- Internal and dealership employee service repair orders
- Body Shop (sheet metal and paint) repair orders
- Outside labor service repair orders
- Repairs covered by an extended service contract or insurance company
- Repair procedures not approved by Ford Motor Company (tire plugs, injector cleaning, flushes, etc…)
Request your
private analysis.
How Warranty Labor Rates Work?
- Manufacturer Sets the Rate: Manufacturers usually set a standard labor rate for warranty work, which is often lower than what a dealership charges for non-warranty services.
- Dealerships Aim for Higher Rates: Dealerships try to get reimbursed at their retail labor rate, which is higher than the manufacturer’s standard rate, to increase their profits.
- State Laws and Fair Compensation: Many states have laws that require manufacturers to pay dealerships fairly for warranty repairs. These laws allow dealerships to submit proof to justify higher compensation at their retail rate.
- Submission Process: Dealerships can submit repair orders or other evidence to manufacturers to request an adjustment to the reimbursement rate.
- Impact on Profitability: Receiving a higher warranty labor rate helps cover the actual costs of providing service and increases a dealership’s overall profit.
Can I Collect The Same Labor Rate And Parts Mark Up For Warranty Repairs As I Do For Customer Pay Repairs?
Yes. It’s the law in nearly every state, yet many dealers have not taken advantage of the potential windfall that a warranty uplift can bring.
Is It Available In My State?
Yes. Check out our interactive state map. Read your state’s law regarding warranty rates.
Will The Factory Audit Me If I Apply?
This is a common misconception and often paralyzes dealers with fear. The truth is most state laws are specifically written to protect dealers from punitive audits by the factory. In our 25 + years of experience, we have never had a client audited due to a rate increase.
Why Hire A Consultant? Can’t I Do It Myself?
Remember, the factory has a team of legal experts dedicated to stopping dealers from receiving higher rates. Ask yourself these important questions before attempting it on your own:
- Do I have the experience required to be successful?
- Do I have the time to do it myself?
- Do I have intimate knowledge of the law?
- Do I have the tools to get every dollar available to me?
What Is The Cost? Do You Take A Percentage Of The Increase?
We charge a low, flat fee and never take a cut of your increase.
How Long Does It Take To Get An Increase?
45 – 60 days on average from start to finish. Most states allow the factory 30 days to review your claim.