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When warranties spoil the aftersales experience

Solutions instead of products is the smarter way to bring value out of product use
Tuesday, July 2, 2019 - 06:00
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An oil-soaked alternator is not a manufacturer’s vision of a defective auto part. One insider working for an alternator manufacturer said that of the $102 million paid out to their customers for defective warranty claims, half of those disqualified as product failure. But out of goodwill, they honored their customers.

 

Rightfully so, top management view that cost of doing business as a tax, which is hard to predict no matter how much money is set aside. In their 2018 financial reports, Advance Auto Parts processed $47 million in warranties whereas the parts maker, Standard Motor Products, reserved $21 million, but expensed four times more. As purchases stand with a retailer, a shopper can buy product with 30-day expiration to a limited lifetime promise that can lead to a “we’ll take it back anyway” policy. An enforceable standard is badly needed to stop alleged defects. Without a practice that guides the consumer during the purchase journey, everyone supplying parts will ultimately pay the price — in millions.

 

Professional installers and large fleets are unlikely to game their parts house suppliers, but sometimes abuse happens. In a conversation with Kathleen Jarosik who runs Xpertech Auto Repair located near Sarasota, Fla., she recalled a commercial repairer who knowingly submitted a claim for an item that naturally wore from hard driving. For Jarosik’s four-person squad, taking risks and putting the parts store at odds with their supplier is not worth souring the relationship in the long run. She prefers to weigh the cost of the return against the value of the repair job.

 

Anecdotal evidence suggests that the DIYer bears responsibility. They can set themselves up for complications, speculated Jarosik. They may underestimate the knottiness of vehicle systems and neglect the unintended consequences when someone overlooks the related secondary system. Remarkably in this era of online research where customers can learn much about automotive anatomy, Jarosik feels that YouTube videos can oversimplify repair procedures. As a result, DIYers have approached Xpertech to finish their botch jobs.

Xperttech's supplier is always happy to take back returns and pass it up the supply chain. With no resolution in sight,  the customer is assured that "we" will take care of him even though the part was perfectly functional.

 

Even though Jarosik has empathy for DIYers trying to save money on expensive overhauls, suppliers and parts stores should draw the line. The auto care industry should establish a warranty standard for all parts categories modeled off the vehicle dealership network. And some manufacturers are doing their best to cope. Motorcar Parts of America launched their own ASE-supported troubleshooting campaign called Call Before You Return. Every newly sold unit comes attached with a red notice on how to prevent pitfalls and avert false defects. Their tech support advisors are on call to help diagnose more problematic installations.

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If a car buyer pours thousands of dollars in a new vehicle whose warranty contract defines strict time limits, no dealership would be handing out free product beyond the expiration date. This standard should apply here, too, in which the retailer offers a fixed-period guarantee with the option to upgrade. The benefits would be immediate. Rather than swapping out an old unit for a new one, the parts store could make a sale sooner, and eliminate the handling costs upstream by the manufacturer. A former senior-level manager who served Bosch for two decades asserted that a proposed 36-month warranty period is too liberal. During his time of overseeing the manufacturing and marketing activities, the data revealed that the customers were submitting claims within six to 12 months.

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