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The Antidote to Wasting Money on Warranty Returns

carengines200One of my favorite bumper stickers is: “If you think education is expensive, try ignorance.” This message came to mind when I listened to a panel discussion at APPEX entitled “Repairing Warranty Return Rates”.  Bill Hanvey, vice president of programs and member services at the Automotive Aftermarket Suppliers Association (AASA), moderated, and on the panel were Brian Altenberger, director of North American Marketing & Global Strategic Marketing at Delphi Automotive; Mario Recchia, SVP of marketing at WORLDPAC, Inc.; and Mitch Schneider, owner of Schneider Automotive in Simi Valley, CA.  Aside from a great cast of experts on the stage, there were two things I really liked about this panel discussion: 1) It was about eliminating waste (translate: saving time and money) and 2) It took a holistic view of our entire industry – helping all of us to save time and money.

The unpleasant truth is that the aftermarket industry wastes billions of dollars each year on warranting parts that are neither broken nor defective. And these costs impact everyone along the supply chain, even consumers.

Here are few stats on what we’re losing:

·   $3.5 billion annually – the estimated amount of lost revenue (when calculated in retail dollars) across the entire aftermarket parts distribution chain due to warranty returns, or a 2.6% reduction in average annual sales, according to AASA’s annual Pulse survey (June 2013)

·   97.5% of this $3.5 billion is not due to poor product quality – meaning it is preventable

·   10-18% is the rate of warranty returns for many companies in the industry

·   $670+ million is the amount the industry would gain in bottom line revenue if we took just a ½ point off of warranty

·   Other costs not even calculated here include losses in time and labor, increased shipping costs, and the environmental costs associated with disposal of wasted parts

·   25% of industry respondents ranked reducing warranty costs a “10” on a scale of 1-10 as being very important to their business 

The causes are varied.

There are a variety of culprits in warranty returns, including:

·   New parts that were never installed

·   Parts that don’t resemble what came off the car

·   An original part that failed

·   Miscataloged items

·   Incorrectly installed skus

·   Errors in installation or other service provider failures

·   Products simply returned for no known reason

But they all stem from the same three problems (and this goes back to my bumper sticker):

  1. Lack of training
  2. Lack of training
  3. And lack of training

Sure, it’s obvious: experience and training are good. But in our industry, they’re still highly undervalued. Otherwise, we wouldn’t collectively be losing $3.5 billion each year.

When shops that become RepairPal Certified undergo the technical assessment by our team of ASE-certified techs, one of the first things our team looks for is whether the shop owner provides ongoing training for their techs and service advisors. The reason is simple – time and time again these shops prove to be more successful. They get higher customer satisfaction scores, they stay in business longer, and they make more money. Tony Molla, VP of communications for ASE, quotes similar results: ASE-certified technicians do it right the first time, dramatically decreasing the number of times a car owner needs to return to the shop because something was missed or the problem they originally came in for wasn’t corrected. Well-trained techs can accurately identify the problem and the right parts that need to be used. Across the board, insufficient training on the part of technicians, as well as those selling the parts, whether wholesales or at the retail counter, affects our collective bottom line. By the same token, manufacturers and suppliers who don’t provide quality manuals and clear instructions contribute to this gap in knowledge.

Whatever your job is, fully embracing the idea of being an expert at your craft and building your knowledge base can be both intellectually and financially rewarding. It’s human nature to be inquisitive, and as an industry, we need to cultivate our natural curiosity to know more. Education and professional training should not be viewed as finite periods of time in one’s career, but instead as an ongoing, lifelong pursuit.

In these days of YouTube, iPads, and social networking, we’ve never been in a better position to train people and share knowledge. What will you do today to push the envelope on how much you know – and save us all some money on the process?

I’ll end with another favorite saying by a guy we all know:

“Anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young.”

― Henry Ford


If you are interested in participating in AASA’s task force to address the issue of warranty returns, contact Bill Hanvey.


Kristen Stanton is the VP of business development and trade marketing at  RepairPal.


If you would like to learn about becoming a RepairPal Certified shop, simply fill out the short form in the upper right of this page, or you can call or email us directly.

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