Warranty Labor Rates

[got3fords]

I was discussing the pros and cons (mostly cons from him) about having work done at the dealership. He said one reason it's not a good idea is because the mechanics only earn half the hourly rate for warranty work. My BS sensor immediately went wild. He proceeded to tell me about how Subaru went through a phase of more numerous engine issues for people who had warranty rebuild than those who did not have the warranty rebuild, because they were rushed to complete said rebuild.
I thought I would see if there is someone more knowledgeable on the subject here.

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[Rp930]

The truth lies somewhere in between. The rate is usually the same. The discrepancy comes in when the technician works on non warranty cars the dealership can charge whatever hours they want. When it’s warranty the manufacturer sets the time. The jobs can normally be done in the warranty time but there’s usually not a lot of “extra” time.

I would add, some dealers use a factor of warranty time for customer pay time, warranty x 1.25, 1.50, even 2.00.

 

[got3fords]

The truth lies somewhere in between. The rate is usually the same. The discrepancy comes in when the technician works on non warranty cars the dealership can charge whatever hours they want. When it’s warranty the manufacturer sets the time. The jobs can normally be done in the warranty time but there’s usually not a lot of “extra” time.

I would add, some dealers use a factor of warranty time for customer pay time, warranty x 1.25, 1.50, even 2.00.

Ah, that makes sense. But where does flat rate come into play in "the dealership can charge whatever hours they want."

 

[Rp930]

Ah, that makes sense. But where does flat rate come into play in "the dealership can charge whatever hours they want."

For customer pay they can set the flat rate hours to whatever they want or the market will bare. It can, at least, help to make sure everyone pays the same for a specific job. Technicians make the same for the job regardless of how many hours it takes them.

 

[Ninong]

Typically, factory warranty pays less than flat rate would for the same job. Having worked for flat rate, most good techs can make or beat flat rate if a job goes smoothly. SO given a choice, a tech would prefer to work a water p ump under flat rate than the same part under warranty.

 

[Rp930]

It’s part of working at a dealer. Hopefully there is a good balance of work. Usually pays more to be at a dealer and there is a generally an endless supply of work.

 

[got3fords]

Technicians make the same for the job regardless of how many hours it takes them.

This! This is what made my BS meter go nuts. My coworker said the mechanic makes half the money on warranty work, and thus was rushed into completing poor work.

 

[Rp930]

This! This is what made my BS meter go nuts. My coworker said the mechanic makes half the money on warranty work, and thus was rushed into completing poor work.

Generally the factory times are adequate to do the work or no one would work there. Some technicians like to spend more time complaining than working.

 

[ChiefQM]

Back in the 70s I was a service writer for Chevrolet and there was definitely a warranty rate that Chevrolet would pay - to a point - that was lower than the shop rate ($17 an hour!!). But we had a factory rep to whom we could appeal to get more money for warranty work that required more time to fix. The service writer I dealt with at my selling dealer told me flat out that Ford was not going to pay for troubleshooting the issue I had with bucking at low speeds, meaning the dealer would be eating the cost of that work, and that wasn't happening.

 

[airline tech]

This! This is what made my BS meter go nuts. My coworker said the mechanic makes half the money on warranty work, and thus was rushed into completing poor work.

I cannot comment on Warranty Work and pay, except for the Dealer has to get it approved from Ford to do the work and it will have a set amount that they will reimburse the Dealer for the Labor.
What that amount is (?) as compared to a non-warranty work

Now it is my understanding from over 30 years ago as I never worked for a Flat Rate Shop (Dealer)
That the dealer uses a Shop Labor Guide - For Example. Water Pump R&R
2.5 Hours - This is a basic on what the customer is charged (shop rate x 2.5 Hours) plus parts, fluids etc such as shop towels (supplies)

So, if the Tech runs into an issue and runs over that 2.5 Hours, He is losing money, and the dealership is also losing money (as the vehicle) is tying up a bay.
now if he finishes the job in 1.5 hours, he made the dealership money as they are making the profit of the difference and the Tech benefits from the extra money (labor hours) as well.
Plus, he can move on to the next (vehicle)
It's all about staying on the Positive Side of the Labor Hours (Time-Management)
This is where a GOOD Tech can make good money, if he is proficient.

I never worked for a dealer but wanted to back in the day. But chose to switch careers instead. So, I believe it is still the same process (Flat-Rate) Pay or at least similar.

 

[Fitzmotor]

I know Ford has reduced all the warranty times on the repairs, in the early 2000's they hacked back the times so bad, we were constantly doing what they call a "labor time study", it was a way to get Ford to raise the times.
We would do the repair, document the time and send it to Ford, sometimes they would just raise it, other times they would send out a rep to observe the repair, then they usually raised it.

Some of the worst ones were the 4x4 diesel transmission overhauls, they were like 16-18 hours, Ford chopped them to 9-12 hours, engine R&R on Taurus, Contour and others went from 9-12 to 6-9 hours, it was ugly, some guys quit, they could never make the repair in the given time.

So back then, we would never do a customer pay job for warranty times, we mostly quoted Chilton times on customer pay jobs.

But hey...... you want to hear a good one about customer pay rates, I don't know if they still do it, but Autonation stores use the curve, the Bureau of Automotive Repair here in Calif tried to shut them down on it.
The first 0.2-0.9 of an hour would be 60$ labor rate, then 1.0-3.5 hours would be 90$, then 3.6-6.0 would be 120$ an hour, it kept going up to about .12.0 hours, then it would drop back down, by about 18 hours it was back down to 60$
So the service advisors were told to only quote the job as a whole, parts and labor, do not break it down, if a customer asks, tell them "it's a set price, it's for the job as a whole"

Same thing at the parts counter, anything below a 2-3$ had a 300% markup, anything 3-7$ had a 200% markup, it eventually gets down to list price as the price goes up.

 

[dtech]

Hyundai got singed when they had to recall a couple hundred thousand Theta II engines they had already replaced, IIRC they allowed reuse of the high pressure fuel pump line in the interest of saving tim and a number of vehicles caught fire so they NHTSA made them recall all the engines to inspect and replace the line if necessary. Hyundai and KIA lead all mfgs in incidents of vehicle fires.

 

[GMtech]

I was discussing the pros and cons (mostly cons from him) about having work done at the dealership. He said one reason it's not a good idea is because the mechanics only earn half the hourly rate for warranty work. My BS sensor immediately went wild. He proceeded to tell me about how Subaru went through a phase of more numerous engine issues for people who had warranty rebuild than those who did not have the warranty rebuild, because they were rushed to complete said rebuild.
I thought I would see if there is someone more knowledgeable on the subject here.

 

[GMtech]

I worked at a GM dealerships for 34 years, Factory flat rate is a rate calculated by the factory on how much time what it takes to complete a job. This is calculated in tenths of an hour, for each job line on the repair order, you punch in at the time clock for that one job line, if you have let's say 5 job lines (5 different customer complaints), then you will have to punch in and out at least 5 times on a timecard and attach the top piece that has adhesive on it to the back of the hard copy (repair order). You have to write a story of what was done on each repair to get paid for that job. Factory flat rate usually pays 1/2 of what customer pay hourly rate, meaning if a warranty transmission job pays 8 hours, customer pay would be 16 hours, that is why many transmission repairs are replacements vs repair on a customer pay. Factory flat rate I was told by General Motors was timed by using only hand tools, so you would think a technician should be able to make or beat the factory times. This is not true! Seems every year the factory flat rate times decreases, making it harder to make time. I was lucky that the first 30 years of working as a GM technician, I was paid hourly, the last two years (after the 2008 crash), I was forced to work flat rate due to many GM dealerships closing. I was the highest hourly paid in the shop because I did transmission work, but took home one of smaller pay checks, why? because you lose at least 2 hours per transmission job. On every job, you need to test drive the vehicle to confirm the customer's complaint, many times the complaint is intermittent, so more time is needed to drive the vehicle to confirm the complaint, the factory gives you only .3 for a road test (18 minuets), it often takes much longer. You also must drive the vehicle after the repair in which you are paid another .3, again you need to do longer drives to make sure the transmission is properly shifting. And, for some reason the vehicle comes back (come back), you will not be getting paid for the second repair! Some technicians do well on the Factory warrantees, usually the electrical and drivability techs, but they also get customer pay along with the warrantee work, most transmission work is either factory warrantee or extended warrantee which pays the same. The last two months I worked at the dealership; I did 100 percent warrantee which means, a very small paycheck, it just was not worth it beating myself up at the age of 56 anymore. Oh, and another false statement people think, the techs buy their own tools, they are not supplied by the dealer, I had 60k tied up in tools, mainly so you could beat factory flat rate.

 

[airline tech]

I worked at a GM dealerships for 34 years, Factory flat rate is a rate calculated by the factory on how much time what it takes to complete a job. This is calculated in tenths of an hour, for each job line on the repair order, you punch in at the time clock for that one job line, if you have let's say 5 job lines (5 different customer complaints), then you will have to punch in and out at least 5 times on a timecard and attach the top piece that has adhesive on it to the back of the hard copy (repair order). You have to write a story of what was done on each repair to get paid for that job. Factory flat rate usually pays 1/2 of what customer pay hourly rate, meaning if a warranty transmission job pays 8 hours, customer pay would be 16 hours, that is why many transmission repairs are replacements vs repair on a customer pay. Factory flat rate I was told by General Motors was timed by using only hand tools, so you would think a technician should be able to make or beat the factory times. This is not true! Seems every year the factory flat rate times decreases, making it harder to make time. I was lucky that the first 30 years of working as a GM technician, I was paid hourly, the last two years (after the 2008 crash), I was forced to work flat rate due to many GM dealerships closing. I was the highest hourly paid in the shop because I did transmission work, but took home one of smaller pay checks, why? because you lose at least 2 hours per transmission job. On every job, you need to test drive the vehicle to confirm the customer's complaint, many times the complaint is intermittent, so more time is needed to drive the vehicle to confirm the complaint, the factory gives you only .3 for a road test (18 minuets), it often takes much longer. You also must drive the vehicle after the repair in which you are paid another .3, again you need to do longer drives to make sure the transmission is properly shifting. And, for some reason the vehicle comes back (come back), you will not be getting paid for the second repair! Some technicians do well on the Factory warrantees, usually the electrical and drivability techs, but they also get customer pay along with the warrantee work, most transmission work is either factory warrantee or extended warrantee which pays the same. The last two months I worked at the dealership; I did 100 percent warrantee which means, a very small paycheck, it just was not worth it beating myself up at the age of 56 anymore. Oh, and another false statement people think, the techs buy their own tools, they are not supplied by the dealer, I had 60k tied up in tools, mainly so you could beat factory flat rate.

Interesting - Thanks

To clarify some here - Techs Buy their own tools - he is taking about personal hand tools.
There are still (some) job specific tools that come in kits, that the dealership provides, but for the most part - a Tech starting out, normally follows the (3x) rule - if you have to borrow a tool from a co-worker 3x, it's time to get on the Snap-On truck and make the investment for your own tool.
The Snap-On truck makes weekly visits to the shops, most Techs make a weekly payment for the tools they purchase, as we are not talking low prices - Snap-On tools are the best quality (at least they once were) and you have to pay the piper for them.
So yes, a major ($) investment in tools is part of the job, then you factor in (work tools & home tools) drives the investment up.

I have it a little easier as - Aviation for the most part is still SAE, with the exception of the occasional hex key set screws are metric - so my home set has cheap (craftsman) socket sets to cover the SAE sizes if needed.

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