What gives with dealers on tractor house?

[LD1]

There is no way that I believe " a mfg pays less for warranty work than it costs"

Dealers Are NOT loosing money doing warranty stuff. They just might not be making the profit margin of non warranty stuff. But they ARE making money I don't care what anyone says.

 

[jenkinsph]

There is no way that I believe " a mfg pays less for warranty work than it costs"

Dealers Are NOT loosing money doing warranty stuff. They just might not be making the profit margin of non warranty stuff. But they ARE making money I don't care what anyone says.

I agree ^^^ and would add that warranty work helps provide jobs to help sustain the shops overall functioning. These shops require a flow of work to amortize the tools and equipment cost to survive. Let alone keep the lights on.

 

[MessickFarmEqu]

While dealer determined service rates are individually set . . Dealers do not lose money on warranty work . . But they may or may not make as much as their own service rates. It all depends on the efficiency and quality of the servicing person.

Many dealers do view warranty as money loosing, recall campaigns are the same. It can be a profit center but it takes a lot of work and skill to make it that. Its not uncommon for the dealer to be left hanging when warranty issues require lots of diagnostic work. There are absolutely some jobs where the dealer looses significant money. Road time is a big issue as well, customers don't expect to pay for it and dealers are not reimbursed for it. Many eat portions of it for customer service reasons. It all varies by the shop, there is a fair portion of dealers out there who are loosing money on warranty but not all would be.

 

[AxleHub]

Many dealers do view warranty as money loosing, recall campaigns are the same. It can be a profit center but it takes a lot of work and skill to make it that. Its not uncommon for the dealer to be left hanging when warranty issues require lots of diagnostic work. There are absolutely some jobs where the dealer looses significant money. Road time is a big issue as well, customers don't expect to pay for it and dealers are not reimbursed for it. Many eat portions of it for customer service reasons. It all varies by the shop, there is a fair portion of dealers out there who are loosing money on warranty but not all would be.

Greetings Messicks,

I trust you know what you are talking about . . so I'd like to explore that ability a bit.

I've seen some car dealers lose substantial money on oil changes because the wuality of the service person doing them was poor poor poor.

So what I'm wondering is . . do you see the warranty isdue on profitability being brand based, or service personnel skill based or something else?

It seems to me I would not expect any dealer to come and pickup my scut or smaller cut unless they were at fault. And I assume some diagnostic time is factored into warranty rates . . though maybe not as much as desired. But I would think warranty work makes for some good training oppirtunities in improving younger service people because it doesn't bloat a customer's normal bill.

Of course I'd also "guess" that certain brands have greater warranty claims or certain models of good brands (as an example the GR 2020 and 2120 kubota lawn mowers of the 2008 thru 2012 period).

Also . . Is warranty compensation indexed to location or region dur to differences in average wage or big city versus rural etc.?

 

[PILOON]

Cash is not always your best price deal as the finance company usually pays out a commission to the seller.
That would be mostly in the case of third party financing (like banks or credit unions).

(I once was in sales of heavy equipment and when getting 3rd party finance quotes the first question was what % did we need.)

Just have a look at a typical dealership:
Size and cost of buildings. (mortgage ??)
Personnel all who earn %50-$80,000/yr
Cost of financing inventory
Cost of shipping and handling inventory. (trucks, trailers etc)
Investment in specialized tooling
Training of personnel, (factory training and often annual requirement)
Insurance and utilities

Now, do you really think a dealer can offer that old cost + $100. deal???
But then some folks still believe in Santa Clause.

 

[PILOON]

Cash is not always your best price deal as the finance company usually pays out a commission to the seller.
That would be mostly in the case of third party financing (like banks or credit unions).

(I once was in sales of heavy equipment and when getting 3rd party finance quotes the first question was what % did we need.)

Just have a look at a typical dealership:
Size and cost of buildings. (mortgage ??)
Personnel all who earn %50-$80,000/yr
Cost of financing inventory
Cost of shipping and handling inventory. (trucks, trailers etc)
Investment in specialized tooling
Training of personnel, (factory training and often annual requirement)
Insurance and utilities

Now, do you really think a dealer can offer that old cost + $100. deal???
But then some folks still believe in Santa Clause.

 

[jenkinsph]

Cash is not always your best price deal as the finance company usually pays out a commission to the seller.
That would be mostly in the case of third party financing (like banks or credit unions).

(I once was in sales of heavy equipment and when getting 3rd party finance quotes the first question was what % did we need.)

Just have a look at a typical dealership:
Size and cost of buildings. (mortgage ??)
Personnel all who earn %50-$80,000/yr
Cost of financing inventory
Cost of shipping and handling inventory. (trucks, trailers etc)
Investment in specialized tooling
Training of personnel, (factory training and often annual requirement)
Insurance and utilities

Now, do you really think a dealer can offer that old cost + $100. deal???
But then some folks still believe in Santa Clause.

The world is full of people who have never been in business and don't understand day to day operating costs. These same people expect to get a tractor at a low cost yet are highly expectant that the dealer will hold their hand at the dealers expense. I have seen good times and bad times as an employer and have found that most good employees that work well rarely understand operating costs for a business.

On the other hand there are employers that expect the best from their employees but are not willing to pay them enough to make a living. It is unreasonable to expect employees' to give their best effort when they have to worry about buying shoes for their kids. It is a two way street.

 

[jenkinsph]

Cash is not always your best price deal as the finance company usually pays out a commission to the seller.
That would be mostly in the case of third party financing (like banks or credit unions).

(I once was in sales of heavy equipment and when getting 3rd party finance quotes the first question was what % did we need.)

Just have a look at a typical dealership:
Size and cost of buildings. (mortgage ??)
Personnel all who earn %50-$80,000/yr
Cost of financing inventory
Cost of shipping and handling inventory. (trucks, trailers etc)
Investment in specialized tooling
Training of personnel, (factory training and often annual requirement)
Insurance and utilities

Now, do you really think a dealer can offer that old cost + $100. deal???
But then some folks still believe in Santa Clause.

The world is full of people who have never been in business and don't understand day to day operating costs. These same people expect to get a tractor at a low cost yet are highly expectant that the dealer will hold their hand at the dealers expense. I have seen good times and bad times as an employer and have found that most good employees that work well rarely understand operating costs for a business.

On the other hand there are employers that expect the best from their employees but are not willing to pay them enough to make a living. It is unreasonable to expect employees' to give their best effort when they have to worry about buying shoes for their kids. It is a two way street.

 

[davesl708]

For me it does not matter what the dealer makes on the sale. The facts I know are the dealer has "cost of sales" to cover. The manufacturer has already factored estimated warranty cost into the price.

I look at a machine and decide what it is worth to me to own. If it is different than what the salesperson wants we discuss and try to reach an agreement.
If we don't I go look elsewhere. If the dealer was able to get the machine for $1 and sells it to me for what I want to pay then it is a win win situation.
We both go home happy.

 

[MessickFarmEqu]

Greetings Messicks,

I trust you know what you are talking about . . so I'd like to explore that ability a bit.

I've seen some car dealers lose substantial money on oil changes because the wuality of the service person doing them was poor poor poor.

So what I'm wondering is . . do you see the warranty isdue on profitability being brand based, or service personnel skill based or something else?

It seems to me I would not expect any dealer to come and pickup my scut or smaller cut unless they were at fault. And I assume some diagnostic time is factored into warranty rates . . though maybe not as much as desired. But I would think warranty work makes for some good training opportunities in improving younger service people because it doesn't bloat a customer's normal bill.

Of course I'd also "guess" that certain brands have greater warranty claims or certain models of good brands (as an example the GR 2020 and 2120 kubota lawn mowers of the 2008 thru 2012 period).

Also . . Is warranty compensation indexed to location or region dur to differences in average wage or big city versus rural etc.?

warranty is not indexed, although they legally have to pay your shop labor rate. The sticker is thats based on their flat rate charts which even the most experienced tech can rarely hit. I don't know that one vendor is worse than another, they are all bad. The most frustrating parts are when they ask for more diagnostic work when you know what the problem is, because that time falls off the flat-rate chart and is often not really paid back.