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A Mechanic's Life - Tales From Under the Hood

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Comments

  • busirisbusiris Posts: 3,490
    Locate and read the article I described in TIME magazine, and the term "fraudulent" will come to mind frequently...
  • steverstever YooperlandPosts: 39,959
    edited April 2013
    getting it to market to sell, rather than repairing a significantly lesser number of units that experience failure later in life

    Well, warranty claims are a huge expense; I've seen reports that Ford does a design/build anticipating a 10 year lifespan for parts in order not to incur big warranty expenses (I guess they build for 10 for parts they guarantee for 5/60?). Even if GM only has a 2% warranty claims rate, we're still talking hundreds of millions of dollars and a reserve fund of billions. That's a lot of money "tied up" on the balance sheets. (warrantyweek.com)

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  • busirisbusiris Posts: 3,490
    edited April 2013
    And those "reserve" costs are included in the price of the product.

    Insurance companies aren't the only companies that employ actuaries. Automakers generally have a pretty good handle on what projected warranty costs will be.

    In the pre-paid card business, there's a term called "breakage", and its the term used for the amount of minutes, dollars, etc. that will never get used, due to card loss, user ambivalence, and other things.

    Breakage goes directly to the profit line, and the unwritten goal is to get card owners to incur as much breakage as possible, by not using the card.

    The theory is the same in warranty repair. Establish an amount reasonably expected to be incurred (calculated based upon actuarial-type criteria), and factor that into the selling price.

    Of course, boo-boos do arise, such as BMW and its high pressure fuel pump fiasco, and I'm betting in that case the guestimated frequency and costs of repairs far exceeded the budgeted amount. That's just 1 example.

    The real question comes into play when the manufacturing management starts playing funny with the reserve numbers, inflating expected profits by underestimating the true warranty repair costs.

    That's a big reason manufacturers sometimes do all they can to avoid recalls, not so much that it damages the brand image, but it whacks the allotted warranty repair costs estimates.
  • steverstever YooperlandPosts: 39,959
    edited April 2013
    BMW in general spends a lot more money on warranty repairs than most per that warranty site. VW is way up there too. The car company with the lowest reserves and charges is Honda. They also enjoy about the best reputation for reliability.

    Their cars aren't any cheaper. :shades:

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  • thecardoc3thecardoc3 Posts: 1,521
    edited April 2013
    The dealers are under contract to accept what the manufacturer pays for a given repair. In the event of a recall or an extended warraty consideration it is quite common to see the labor times slashed. The dealer in turn only pays the tech the reduced time and then expects the tech to upsell maintenance to "make up the time" and his/her paycheck.

    This goes all the way back around to NBC's sting. It wasn't right for the dealer techs to oversell the maintenance, and they got burned for that. Meanwhile NBC turned around and let the dealerships off the hook by blaming the techs and the writers. It's sad how the ones really at fault get away with what they have been doing to simply start the whole mess anew with another group of people.
  • busirisbusiris Posts: 3,490
    edited April 2013
    Their cars aren't any cheaper.

    But perhaps their cars are more profitable per unit.

    http://www.industryweek.com/blog/supplier-relationships-key-hondas-healthy-profi- t-margins
  • steverstever YooperlandPosts: 39,959
    edited April 2013
    Sure, and I think one factor is because their warranty costs are lower, due to their quality standards with suppliers, etc.

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  • andre1969andre1969 Posts: 21,847
    Competition could, in essence, mandate "engineered reliability", and it has, up to a point.... Just not 10years/100K miles (yet),

    They're definitely on their way. My buddy's 2006 Xterra has about 104,000 miles on it now, and has been pretty reliable. It had two tire pressure sensors fail, and needed work on the HVAC controls twice, and just recently the CD player quit ejecting. Otherwise, it's just been maintenance. However, he always takes it to the dealer for those 30K things, and I don't think they're particularly cheap.

    I don't think my uncle's 2003 Corolla gave him any major fits in the first 100K miles, either, although the catalytic converter started to fail soon after.

    Even my old 2000 Intrepid wasn't too bad for the first 100K miles. It had a power lock actuator fail around 35K, needed a new thermostat housing around 51K, and around 90K some TSB performed to fix the oil pressure light, which started flickering at low rpm, even though oil pressure was actually fine.

    As for warranties on maintenance and wear and tear items, don't some manufacturers, like BMW, offer that already?
  • thecardoc3thecardoc3 Posts: 1,521
    Seems some yahoo got the credit card number for my teaching account. Fraud control noticed some questionable purchses, in California! They tried to notify us yesterday evening on our business phone.

    The POS got us for a little more than a grand so far. Now I'm wondering if that's the only card they grabbed. :mad:
  • xwesxxwesx Fairbanks, AlaskaPosts: 8,391
    Interesting recount, Doc. The amazing thing here is that the customer was satisfied with the data collected as being enough to effectively throw another part at it and hope that solved the issue.

    Out of curiosity, what did you quote him to finish out the work? Assuming I really wanted to keep that car, I would have been sorely tempted to just keep forging ahead with it so that my car was reliably fixed afterward. There's a point at which I recognize that I'm in over my head and I am willing to admit that no amount of hedging is going to change that fact. :sick:
  • xwesxxwesx Fairbanks, AlaskaPosts: 8,391
    Wonderful. Any chance that's an April Fool joke?! :sick:
  • xwesxxwesx Fairbanks, AlaskaPosts: 8,391
    There's a positive feedback loop associated with higher profit margins, if the company is willing to take advantage of reinvesting such windfalls back into the company in the areas that really count. The American manufacturers could have taken advantage of that for decades, but they preferred to piddle such potential away.
  • thecardoc3thecardoc3 Posts: 1,521
    Wonderful. Any chance that's an April Fool joke?!

    Nope. I don't have enough imagination to come up with something like that. :sick:
  • busirisbusiris Posts: 3,490
    Well, that certainly sux!

    At least, credit cards do provide you loss protection from unapproved charges. Just another hassle in everyday life.
  • thecardoc3thecardoc3 Posts: 1,521
    http://www.youtube.com/watch?annotation_id=annotation_958511&feature=iv&src_vid=- j7X73fGAwGM&v=j7X73fGAwGM#t=27m45s

    Watch it twice, first time from the 27 minute mark as linked, and then go back and watch the whole thing.

    If you have the time, some of the other videos that are associated will make for some good discussion too.
  • busirisbusiris Posts: 3,490
    Well, I had some time, so I watched it from beginning to end.

    The guy from Nissan was, by far, the most prepared, IMO.

    The 2 things that hit me from his talk....

    1-Service techs call our service "hotline" looking for a silver bullet.
    2-We don't make it easy for them. They have to have a code before getting through to a live body.

    Overall, there's a grand shortage of service techs (only 5% of GM trainees make it to the top), and no one seems to have any real idea how to effect change.

    It's a real problem, and from a manufacturer/authorized dealership relationship, manufacturers are going to have to find ways to make dealers want to employ more and better qualified technicians.... I didn't see much in the way of that discussed in the video.

    Definitely, a very complex issue...
  • thecardoc3thecardoc3 Posts: 1,521
    1-Service techs call our service "hot line" looking for a silver bullet.

    Isn't funny that the real reason for that is because they don't pay the techs enough time to take a disciplined approach? They want it too fast, and the result is that it teaches bad habits.

    2-We don't make it easy for them. They have to have a code before getting through to a live body.

    So then they punish the bad habits, and then turn around and wonder why they lose techs.

    It's a real problem, and from a manufacturer/authorized dealership relationship, manufacturers are going to have to find ways to make dealers want to employ more and better qualified technicians.... I didn't see much in the way of that discussed in the video

    Where are they going to find better techs? They have decades of failing to support the technicians work force to overcome. Even if we could attract the right prospects tomorrow, it takes twenty years to learn to be that full master technician, and that's not taking into account the changes that we don't even know are coming.
  • steverstever YooperlandPosts: 39,959
    edited April 2013
    Where are they going to find better techs?

    They aren't. The manufacturers are going to have to build more reliable cars and figure out some way to fix the dealer franchise system. It's broken.

    The independents? Dying breed, they'll be as rare as Mayberry Emmetts who can fix your toaster or window fan. When was the last time you saw one of those guys?

    The real problem is that self driving cars won't be able to drive themselves to the shop when they break down. :D

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  • thecardoc3thecardoc3 Posts: 1,521
    Now when everybody and their uncle takes pot shots at techs, whether deserved or not, just imagine what that does when it comes to trying to attract talent.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,404
    That never discouraged people from becoming lawyers! :P

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