AAPEX panel recommends forming preventable warranty task force

A panel of experts representing all levels of the distribution chain tackled the issue of reducing preventable warranty returns during the AAPEX Learning Forum on Nov. 5, and recommended an industry task force to reduce the wasteful practice in the aftermarket.

In a survey of its full-service suppliers, AASA found that warranty in the aftermarket accounts for nearly $3.5 billion in lost revenue to those suppliers.

Those survey participants also said that of the $3.5 billion, only 2.5 percent is directly attributable to product failure. To look at this statistic in another way, 97.5 percent of all warranty credit is preventable.

Bill Hanvey, AASA vice president of programs and member services, moderated the panel discussion and set the stage by challenging the sentiment that warranty is the “cost of business.” He quoted the words of Thomas Paine in Common Sense: “a long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom.”

Just because warranty is a common practice does not mean that it is right, Hanvey noted; there are cost savings to be realized by all channel partners. Hanvey also pointed out some examples of how other industries are controlling warranty such as the sale of extended warranties in the electronics industry and the practice of qualifying individuals who purchase complicated repair items to ensure they have the expertise and the tools to complete the job without generating preventable warranty returns.

Mitch Schneider, owner of Schneider Automotive in Simi, Calif. represented the service provider segment of the industry on the panel. He emphasized the importance of training at the shop level and noted that he mandates that his employees attend a set quota of training hours in order to reduce the amount of wasted labor on the dreaded “comeback.” Schneider also emphasized that the shop loses billable technician labor and bay time when a job comes back; in addition comebacks create customer ill-will towards the shop.

Speaking for the channel partner or distributor side of the channel was Mario Recchia, senior vice president of WORLDPAC. He reiterated the need for training and said that WORLDPAC has reduced preventable warranty by incenting service providers to attend training sessions. Recchia also said that analyzing warranty data is critical to identifying those accounts or product categories that have high warranty rates. Using the data to develop an action plan can reduce those numbers, ultimately resulting in more satisfied consumers.

Brian Altenberger, director of fuel delivery systems for Delphi Automotive, spoke of Delphi’s efforts to reduce warranty. He promoted collaboration between service provider, distributor, and manufacturer as a critical element. He added that suppliers provide application-specific instructions including videos and other tools to ease installation at a tremendous expense; if these tools are not used effectively, the result is more preventable warranty returns. Like Schneider, Altenberger also reiterated that the supplier loses twice in the warranty process: incurring training expense that could have prevented a return, and paying credit on a part that might not have even been paid for yet.

The panel concluded that a preventable warranty task force should be created. Its first task should be focusing on specific product categories that have high returns.

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