Over the holidays, I was home visiting my parents. My Dad, a Chevrolet dealer, loves to talk shop with me and run new ideas past ‘his attorney’. During our recent conversation, we were discussing his new service director, Bob, and the challenges he faces as he transitions from Parts Manager to Service Director.
One of the biggest changes for Bob has been obtaining customer’s consent for repairs. This was followed closely by handling customers who do not want to pay for diagnostic time. Both of these issues seem to be a common among dealers, as I have handled a fair share of litigation from similar issues. To help reduce risk at my Dad’s dealership, I provided a few ideas to assist Bob in his transition. I thought providing similar ideas would be a great article to share with Dealer Magazine’s readers.
Most states have a requirement that if a repair cost exceeds a certain dollar threshold, the repair facility must obtain the customer’s consent to repair the vehicle. It seems so straightforward – get the customer’s consent to complete repair work. But, in practice it can be a nightmare. Ohio requires the service garage to provide an estimate for any repair in excess of $25. If the repair will exceed the estimate by more than 10% the service garage must obtain the customer’s consent. This requires Ohio Service Managers to obtain consent for the majority of repairs discovered during a diagnostic exam. To make matters more cumbersome, the Service Manager has to (a) contact the customer during the day and (b) obtain consent from a person with authority to do so.
Unless otherwise specified by statute, customers may consent to repair the vehicle either in writing or verbally. This allows the Service Manager to contact customers via telephone, e-mail, and text messaging. Instead of guessing the best way to reach a customer during the day, I recommend asking the customer when they drop off the vehicle which method they preferred. For after hours drop offs, provide an area on the drop slip where the customer can state their preferred contact method.
In all cases, be sure to make a record of the customer’s consent as it is extremely important in reducing the dealerships overall risk. If the consent is over the telephone, through voice calls or text messages, have the service manager note on the written estimate that the customer was called on X date, at Y time, at Z phone number, and gave consent for the repairs. If consent is obtained via e-mail, print the e-mail and place it in the customer’s file. If all files are kept electronically, follow the same steps to record consent.
Now, assuming you can contact the customer during the day, do you have the customer with the ability to authorize the repair? It is not always the person who drops the vehicle off. For instance, a kid may drop a vehicle off for a parent or a grandparent or an employee may drop a vehicle off for a business. It is important to ask the customer who to contact to authorize a repair. While this does not tend to be litigated as much, it is still extremely important. If you do not have consent from the vehicle’s owner it is difficult to retain the vehicle as collateral for payment.
Explaining the cost of diagnostic exams may be easier, but it does not guarantee consumers will pay. Bob has been running into trouble with customers who bring in their vehicle for an obscure problem that are difficult to duplicate. When that occurs, customers do not want to pay. The customer takes the position that the Service Department “didn’t do any work” and thus they are not obligated to pay. While I can relate to their argument, I am often required to pay my doctors to tell me nothing is wrong. The same idea applies to the diagnostic exam.
Another issue Bob is having relates to increase in recalls recently. Customers come into the service department with a recall notice and a litany of other concerns regarding the vehicle. The customers somehow believe that all the repair and diagnostic time should be covered under warranty; even if the recall notice is for an ignition switch, but the customer also demands the car pulling to the right is also a recall issue. While the repairs clearly are not related, nor covered by warranty, the customer still does not feel obligated to pay.
These situations necessitate that Service Directors clearly explain to customers the hourly labor rate (or flat rate) for every diagnostic exam. If every Service Director takes a few extra minutes to explain the costs associated with the service visit, it should significantly limit the number of customers who dispute their repair bill.