Retail Warranty Reimbursement FAQs

Many dealers may have commonly asked questions regarding their options and opportunities for retail warranty reimbursement. Below is a summary of those questions as a reference for dealers.  

Q) What is retail warranty reimbursement?

State laws in approximately 47 states allow for your dealership to be reimbursed by their manufacturer at retail rates, equal to customer’s repair rate on warranty parts and labor. 

Q) Does my dealership qualify? 

Yes, all brands/manufacturers are eligible and should submit for retail reimbursement on both parts and labor.  

Q) What exactly does “retail” mean in terms of rates or profit? 

“Retail” rates on warranty reimbursement are rates equal to your customer pay rates. On parts, this can count as MSRP, but with a strong parts matrix, this rate can be 75-80 percent or more than cost. Typically, dealers are reimbursed at only 40 percent more than cost. For labor, you can achieve 95 percent or more of your effective labor rate.  

Q) How does this equate to dollars for my dealership?

An average dealership or single point store can realize $10,000 or more in profit each month on parts alone. With labor, monthly profit can be $20,000 or more per month. 

Q) Is there any concern regarding manufacturer retaliation? 

To date, we are not aware of instances of factory retaliation. Manufacturers are aware of the state laws and do not penalize dealers for exercising their rights under these statutes. 

Q) If I have already submitted, can I resubmit? 

Yes, most states allow for annual submissions on both parts and labor, some allow even more frequently. If you have implemented a new parts matrix or recently raised your retail posted labor rate, you most likely are ready for another warranty submission.  

For more information about retail reimbursement for your dealership, reach out to us at dealerships@dhg.com.

CONTRIBUTORS

Tyler Rauch
Senior Manager, Dealerships

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