The Truth about Factory Maintenances

Would you fly on an airplane that had not been maintained?

Most vehicles on the road today are poorly maintained. Many people will do just the "basics", which usually means just doing an oil change. Many vehicles I see come in for service are typically over due for this basic service. You would think that if you spent $15,000 to $40,000 on a vehicle that you would do your best to maintain your vehicle. Why would you not keep up on the maintenance of your vehicle? Why would you not prepare for it?? Do you not depend on your vehicle to get to work or the store to buy food?? You plan for other expenses in your life, don't you??

I always ask people who do not take care of their vehicles this question. "Imagine that you were going to take a trip on a plane to visit your relatives. If the stewardess told you when you were getting on the plane that the plane had not been maintained properly for the past year, would you still get on it???” If you answered yes then I guess you probably do not care about the maintenance on your vehicle or your safety. If you answered no then why would you not maintain your vehicle properly?" I believe most people have false sense of security about the dependability of their vehicles.

It’s not a scam

If you look in your owner’s manual there is a section on maintenance. These are things that the manufacturer has determined need to be done in order to get the best service life and dependability out of your vehicle. They have this down to a science. It is not a scam like most people think (keep reading for the real scam). It is in the best interest of both the vehicle and you. I know there are skeptics and people that will disagree. That's fine, be skeptical. I have seen it first hand; remember I have seen approximately 105,000 customers vehicles over the years, give are take a few thousand but who is counting??

“Dealer Recommended Services”
If you have ever brought your vehicle in to the dealer for a scheduled maintenance a lot of you may think their prices are out of line. This is because dealerships typically do NOT do factory maintenances per the owner’s manual. Look at their maintenance package and compare it with your owner’s manual, you will see what I am talking about.

The majority of car dealerships do what they call "Dealer Recommended Services". These services will typically consist of things you do not need according to the manufacturer. Most of these things are over kill and are not needed. The problem I have with most dealerships is that they do not just offer a Factory Scheduled Service plan per the owners manual. They almost always have some extra stuff included that jacks up the price. If there is anyone from a dealership or from the factory reading this; THIS is one of the biggest reasons you are losing customers!! In all these years I still cannot believe they have not figured it out!

Manufacturers make vehicles that require less service
Let me explain why the dealerships do this. It's all about $$$. Over the years the manufacturers have made vehicles require less maintenance. Many vehicles have oil change intervals of 5,000 miles or more. Transmission services that are not due until 100,000 or even 150,000 miles, coolant that will last 5 years or 100,000 miles, sparkplugs that do not need to be changed until 100,000 miles. All these services 15 years ago were done at 30,000 miles, not anymore!

People do not want to do services on their vehicles and the manufacturers know this. So now the dealerships have had to come up with new ways to make money. In their mind the only way to make up for it is jack up prices and sell unneeded services!  They have been getting away with it for years because most people do not have a clue as to what service work their vehicle truly needs.

What does the manufacturer say about using additives?

The other issue with the dealer recommended services is that a lot of them use different types of chemical additives. Things like conditioners that they use when they flush your transmission or coolant, additives for the engine oil or fuel cleaners (fuel injection services and induction services fall in this category). 

Most manufacturers do not recommend using additives or fluids that do not comply with what was designed for your vehicle. Using these additives or using the wrong fluids may not only affect warranty coverage for any components affected by the service but could even cause your vehicle to have issues.

All of these additives are just more dealer profit. Chances are the service consultant and even the technician will get some type of spiff money (incentive to sell the product). These spiffs can add up to $100's in extra income, easy money as we would call it. So if you think they are looking out for your best interest, think again!

The manufacturer does not recommend flushes??

Many of these dealer recommended services will include things such as transmission flushes, fuel injection or induction services and throttle body cleans. These are just some of the things they may suggest. Is it in the owner’s manual?? If not then it probably does not need to be done and could even be detrimental to your vehicle. If the manufacturer wanted you to “flush” your transmission they would have recommended it in the owner’s manual.

The dealership knows your vehicle best, or do they?

The Dealership is supposed to represent the manufacturer and their product. The manufacturer even tells you to go to your local dealership for all your maintenance needs; they know your vehicle best. If so, why is there such a discrepancy between the two? When people would question us as to why we were doing more than the manufacturer recommended  we would always respond that "The manufacturers recommendations are bare minimum if you want your vehicle to last I would suggest considering following our recommendations to get the most out of your vehicle, we know your vehicle best". Most people never even question it!

Why are inspections so important?

When you eliminate all of the dealer add on services you will eliminate a lot of the cost of these services. Most services now become mostly inspections. Once again you ask why are inspections important?? Let's go back to my story about the airplane and its lack of maintenance. Most of the maintenances that are done on an airplane are inspections. They are trying to catch problems before they occur and become a major issue. Why is a car so much different? You drive your vehicle probably every day. You may even carry special cargo, like your kids. You depend on it to get to work so you can get a paycheck to pay your bills. You probably drive at speeds in excess of 55 mph on a daily basis. For most people, a car is one of the most important things in their lives. Why take the chance of having issues that could be taken care of before they become major issues?

Not everything can be caught during an inspection
You need to realize this also. Unfortunately there is no crystal ball but there are many things on a vehicle that can be looked at to determine if you will have an issue or maybe you already having an issue and don’t even know it yet.

Things like the condition of your brake pads, tread life of your tires, loose suspension components. The start of a oil or coolant leak that could get worse without your knowledge. Obviously there are a number of different issue’s that could cause you issues down the road at a inconvenient time.

If you are paying for an inspection, get a copy of the inspection sheet
One thing I recommend whenever you have a service done on a vehicle is to make sure that they fill out some type of vehicle inspection sheet. Many dealerships and other shops will have one that they use. Just in case I would bring a copy of one yourself. GM has a good multi point inspection sheet that you can download and make copies of (if I find others I will put links in the resource area and I am working on one myself).

If you are paying for a scheduled maintenance they better fill out an inspection sheet and it should include all the inspections that are noted in your owner’s manual. This is what you are paying for and it is your only proof that things where checked as promised. Make sure also that the technician that filled the sheet out signed it. This shows accountability. If he checks that your brakes are good and they start grinding the next day because they are metal to metal, he should be held accountable, you did pay good money to have that service done (Please do remember once again that not everything can be detected during an inspection, so if the air bag light comes on two days later chances are the technician would not have known that would happen).

Even if you are just getting an oil change, especially when you go to the dealership, have them fill out an inspection sheet. All dealerships should do at least a 20+ point inspection and should fill out an inspection sheet to show that the inspections where completed. Be aware that typically an oil change will only get basic visual inspections. So if you wanted the brakes checked closer than peeking throw the wheels, you better ask and there may be an extra charge (if they pull ALL the wheels to inspect them properly you should pay the tech for his time).

My quick rant about quick lube shops

A side note about quick lube places. I myself am not sure why anyone would go to one of these places. To start with it the majority of these guys are not technicians, if they were they would be working somewhere else.  They use cheap and inferior parts and unless you pay extra cheap oil. Most people probably only service their vehicle  2 to 4 times a year (probably just oil changes for most people) which means that these are the guys you are counting on to check your vehicle over?? Oh yeah and they do 15 minute oil changes to boot. It may be convenient at the time but is it worth your safety?? Do you really think you are saving money?? Did you realize that most quick lube places cost may actually cost more than bringing it to the dealership?? Doesn't your $15,000+ vehicle deserve a little bit more??? 

Should you use the Standard or Severe maintenance schedule?
As usual I am going to advise you to open up your owner’s manual and go to the back of the book and take a look at your maintenance schedule (some manufacturers put their maintenance schedules in a separate book). You will notice that most manufactures will have a standard and a severe schedule. Read through both of them so you understand what needs to be done to maintain your vehicle properly.

The majority of vehicles on the road should follow the severe schedule (if you have an extended warranty this is almost always a must, check with the extended warranty company!!). Even if you do not fall in at least one of the sever categories I highly suggest using the severe schedule. The standard schedule is bare minimum maintenance. You will extend the life of the vehicle by following the severe schedule; you should trust me on this one. Also if you have warranty issues down the road that could be affected by how you maintain your vehicle, you are less likely to have issues with coverage. If it is a matter of you not being able to afford the maintenance, then maybe you should take the bus...

The only time I do suggest using the standard schedule is if you do not plan on keeping your vehicle more than three or four years and none of the severe conditions apply to you. The only vehicles I have typically seen that can go by the standard schedule or people that put 20,000 miles or more on their vehicle ever year.

Ever wonder if the dealership personnel have read your owner’s manual?
So think about what I have said. Some of you may not agree and that is fine. Let me know what you think! I would love to hear. Unfortunately as we have discussed, some things need to change on the dealership level. If you just want them to do what’s in the book then let them know and have them quote you a price. If they are out of line (feel free to contact me with your estimates and I will give you some advice) go somewhere else. It is up to you. Explain to them your concerns and let them know what you know now. Remember knowledge is power. Let them know the jig is up and that you did actually read your owner’s manual, ask them if they have read it!! (Probably not….)

The Automotive Wise Guy

The Truth about Used Cars

Sharks are out to get your money
So you’re thinking about buying a used car?? We all know that buying a used car is a risky endeavor. It's easy to assume that the car dealerships will have the best quality vehicles out there compared to the smaller lots and private individuals. This is not always true!

I am going to give you a little insight as to what the truth really is from what I have seen over the years. Please realize that some of the things I am going to tell you may not apply to all the car dealerships out there, but it's a good rule of thumb. It is always better to be safe than sorry.

Always remember that buying a new or used vehicle is an "INVESTMENT" so do not invest your money poorly! There are a lot of sharks out there that do not care about you all they care about is your money!


Ever wonder how they get all those cars?
Automotive dealerships gets the majority of their vehicles from two primary sources; auctions and trade in's. The majority of these vehicles come from the auction. Auctions have many different types of vehicles to choose from, all of which are graded on condition. There are several different ways to grade a vehicle (go here for an idea of how it works) but let’s keep it simple.

The higher grade vehicles are considered "lot ready". This basically means the dealer has to do very minimal reconditioning for these vehicles. By reconditioning, I am talking about the initial safety inspection, possibly oil change, maybe fix a few rock chips and vehicle clean up (if they even do any of this). The lower grade vehicles may need more extensive repairs to make them “lot ready”.


What is a program vehicle?
Some of your high grade vehicles are program vehicles which usually have less the 10,000 miles on them. These vehicles typically where used as demo’s by the manufacturer so in most situations they have been well taken care of. One thing to be aware of is that dealers may miss represent some of these vehicles.

I have seen program vehicles that where actually rental cars! I have also heard of vehicles that where bought back by the manufacturer because they were lemons and resold at actions as program cars. So be wary. Always have a vehicle history report done and if possible ask to see a DCS report through the service department (I will explain, keep reading).


What is a fleet Vehicle?
Fleet vehicles make up a large portion of vehicles that may be purchased through an auction. Typically these vehicles will have less than 36,000 miles and be less than 3 years old.

Many of these vehicles where leased to large companies and were used in various ways. When a company leases a vehicle they typically are trying to save money. When it comes to maintenance they typically will do bare minimum and many of these vehicles may not have maintenances done at the proper intervals. Many fleet vehicles were also rental vehicles. Rental vehicles obviously have been driven by a number of different people and most probably have been mistreated.

I have seen were many these fleet vehicles have been in minor (sometimes even major) accidents and there was no mention on the history reports. I do not know how this happens but I can tell you I have seen it on several occasions. It is also not uncommon that these vehicles were not maintained properly. If you are considering one of these vehicles have it checked over good, do not assume anything. We all know what assume stands for don’t we??

Don’t be fooled by appearance
Lower grade vehicles will obviously need more reconditioning. Maybe tires, some body work, new windshield etc. etc. These expenses can add up quickly as you could imagine. The problem is like I said before, the more they spend on that vehicle the less they make. So the idea is to buy the vehicle for as little as possible and put as little money as possible into that vehicle.

The car dealerships take a risk with these lower grade vehicles by spending as little on repairs as possible. They typically will spend more on cosmetics and obvious issues that you can see then on actual repairs. Their thought is that the average person will typically over look a lot of issues if the overall appearance of the vehicle is good. It is amazing what a good detail job can do for any vehicle. So do not be fooled by the appearance of the vehicle, it is not the best way to judge a car.


Cutting corners saves money
True profit for a dealer can all come down to the reconditioning of a vehicle. Let's say the vehicle needs 4 tires; a mid-grade tire for the average vehicle ranges from $80 - $120 each, when you multiple this by four tires it adds up quickly. So of course the sales department will want the cheapest tires possible. Cheap tires can save the sales department from 40%-60% a tire, which gives more room for profit. I have seen were only 2 tires where needed because the other two tires where above their safety specifications. So once again they went the cheaper tires because matching them would cost too much, besides who looks that closely at the tires anyway? Trust me I have seen it many times.

When it comes to maintenance most dealerships feel that it can cost too much. So if it needs any basic maintenance above an oil change they will generally pass on doing them. Yes, the sales managers hate doing maintenance on used cars. It takes away from their profit and they figure once again that the average person will not figure it out until it’s too late.  (** I want to point out if the vehicle has a timing belt and it is due by mileage be very careful because chances are they would not replace it as part of reconditioning. If they say they did, get proof!)


A true story
I worked at a dealer once where they had us do a "dab a lube" on every vehicle that came in for service (pull fluids from the vehicle and compare them with new fluids to show how dirty your fluids are to help upsell extra service work – great selling tool by the way). I had a customer come in that, unknown to me, had just bought a vehicle the week before! They did not tell me of course and I had no idea. When we sat down and looked at the fluids they were really bad. I gave them my sales pitch and they just stared at me, like "WHAT???” I wasn't sure what to say at the moment and then the guy say's to me "We just bought this car last week?? The sales guy told us all the service work had been done?? What the hell!!!" Yeah he was pissed and I was speechless. I just told him that I thought he needed to go have a talk with a sales manager and that is exactly what he did. The sales manager actually came back to me later and ripped me a new one! He told me that I should have made something up?!? I am not sure what he was thinking but I was not going to cover up for the sales department’s lies. So do not let this happen to you because chances are it will be at least a few months later before you realize what these people had found out.

They told me they did a 500 point inspection…
One thing that dealerships will push on you is their safety inspections. They will probably have a sheet with hundreds of inspections on it that are all checked off good (look close to make sure that they are all checked off good!!).

To me these inspection sheets really do not mean a thing. For starters you have no idea who if anyone really checked that vehicle out. For all you know it was the quick lube guy that did it! That piece of paper is only as good as the person that looked that vehicle over (**I hate to say it but I have seen guys look at a vehicle for about as long as it took the oil to drain out and then just check everything as good - I have even seen places that do not use a sheet at all and if you ask for one they give you some BS story or better yet disappear for a while and make up a sheet, who will know the difference anyway??). So unless you know the person that looked the vehicle over, be leery of what that sheet says.

One last thing to look for is that whoever filled out the inspection sheet signed their name at the bottom. It is also a good idea to ask if you can speak to the technician that check the vehicle and ask him a few questions. This will put everyone on the spot and you may get a better feeling talking to the technician about the real condition the vehicle is in, plus you can see who looked it over and they can see you. I also suggest when you ask to talk to the technician that you do it when the salesperson is not there. Go directly to the service department and talk with a service consultant or better yet the service manager and ask them instead.


Don’t judge a book by its cover
Many vehicles that I saw come in for service you could tell right away how people took care of them just be how clean it was, inside especially. People that don’t care (you wouldn’t believe how many people do not care) typically have dirty vehicles on the inside, outside and under the hood. So when you are looking at cars on the lot, do not be fooled by how clean the vehicle looks.

All dealers have their vehicles professionally detailed. I have seen vehicles that were traded in that where very dirty. Clean interiors sell cars and these guys made these cars look incredible. They can even bring the shine back to the paint, even if it might only be temporary. Same goes with the engine compartment. Many people judge the condition of a car by how the engine looks. A good detailer will make that engine look new.

Many people over look things because they are impressed as to how clean a car looks. Don’t be fooled! Remember the old saying "Don't judge a book by its cover"! This holds true with cars to!


A couple of good tricks anyone can use
When it comes to doing maintenance, as we discussed earlier, 9 times out of 10 the dealership just will not do it. Maybe an oil change, they are pretty cheap and the sticker in the window gives the customer something to feel good about.

I always suggest checking all the fluids on a vehicle before you even test drive it. Make sure they are at the proper level and that they do not look to dirty. The older and higher mileage vehicles you need to pay particular attention to. These are the ones that they are less likely to put extra cash for maintenance services.

Take a close look at the battery, is there corrosion? Is the battery the original factory battery and the vehicle over 4 years or old? That battery more likely to fail the older it is. Check the air filter if you know how. If you don't, ask the salesman to do it. The air filter is a good way to judge if they really looked this vehicle over or not. Look at the tire tread and make sure the tires look like they have worn evenly and have good tread depth.

Step back from the vehicle and look at it from different angles and see if it looks straight and that there are no signs of major body damage. This can be spotted by paint on the body that doesn’t quite match from panel to panel. The paint may have runs or even dust or dirty that has dried into the paint. Run you hand along questionable areas, is it smooth or bumpy? Look for waves or ripples in and along the body of the vehicle or panels that don’t line up properly. Look at where the doors, hood and trunk lines up to the body of the vehicle, are they flush? These could all be signs of repaired body damage.


Get on your hands and knees
Yes, I suggest getting on your hands and knees and take a good look underneath the vehicle. Lots of engines may have skid plates so it may be hard to see anything but look anyway, you just might see a drip of oil or maybe even some damage that you would have no idea existed. If you want to make the sale person sweat a little then have a flash light with you.

Another good idea is to ask them to put it up on a rack in the shop so you can really look underneath it good. This may not always be possible at that moment; the shop may be busy and may have no racks available at that time but eventually if they want the sale and you show interest in the vehicle, they will get it up on a rack for you. Like I said do these things even if you’re not sure what you’re looking at. I highly suggest practicing at home with your own vehicle. If you do not know much about cars yourself or do not feel comfortable doing it yourself have someone help teach you or better yet have someone come along with you.


Aged vehicles lose money
Dealerships want to sell their vehicles as fast as possible because the longer they sit on the lot the more it will cost them and take from their profits. I call these vehicles “aged” (** A good tip to figuring out how long a vehicle has been on the lot is to check the oil change sticker in the windshield! The oil is usually changed in the first 3 days the dealership has that vehicle, use this to your advantage when you start to haggle price!!)

You need to be careful of these vehicles. Depending on the size of a dealership most vehicles will sell within 30 days. Anything that has been on the lot over 30 days needs to be looked over very good because it may have issues. Vehicles can also develop issues as they sit for long periods of time.

We call this “lot rot”. Tires get flat spots and dry rot, batteries lose their charge etc. (if you go out to test drive a vehicle and the battery is dead and you decide to buy it, I would make them put a good new battery in it, otherwise you will be putting one in later at your expense.)

Obviously the dealership doesn’t want you to know how long the vehicle has been sitting on the lot, because it may make it a hard sell. Be cautious because there could be a good reason it has not sold. Sometimes the dealership may be more willing to make a deal on one of these vehicles so they can unload the car. So make sure that they know, that you know, it’s aged.

It is like  an added insurance policy
Even if you do check it out yourself (and for those that do not want to get dirty) I highly recommend spending a little extra cash to have the vehicle checked by a reputable third party, once you have found the car that you want.

If you have a technician you trust make arrangements with the dealership so you can have him inspect it for you. Typically you will be charged from $50 - $100 to have this done. This is money well spent. If you do not have a shop you trust try a mobile inspection service (Try AIM (Automobile Inspection Service), or CarChex - or check around your area there will be some local companies). These services offer different inspection packages that will range from $120 and up.

The money you spend on this may seem to be just another added expense but remember what I said about it being an investment? Treat it like one Think of it as an added insurance policy.

The scoop on vehicle history reports
Two great resources at your disposal are vehicle history reports by either CarFax or AutoCheck® Both of these are great services but be aware that they are not fail safe. They are only as good as the information that they have been supplied with, so they may not have all the facts. Read their terms and conditions so that you know what I am telling you is true. I am not saying not to trust them but take them with a grain of salt.

I will give you a good example of a situation that came up for me one time. A customer had purchased a vehicle from another dealership, that same day. The customer brought the vehicle in because it was still under warranty and it had an electrical issue with the lights. So we get the vehicle in and my tech checks it out and finds that there were some wires that ran along the right side fender that had been pinched between some sheet metal. Looking closer we figured out this vehicle has extensive body work done on the whole right side of the vehicle and it was done half assed! This was definitely not a warranty issue. We talked with the customer and of course he thought we were lying because he had a history report from the other dealership and it did not show it had been in an accident. So we showed the customer and after seeing what we saw, he agreed with us. Of course there was no way to know who repaired it or when it had been repaired but it certainly was not on the report.
 
So if a vehicle is fixed but it was never reported to insurance or whomever, there is no way for it to show up on these reports. So once again, beware!! I do still suggest having a report run; it still has valuable information and there is a good chance that it has all the information you need to make an educated decision on the vehicle in question.


What is a DCS or Warranty report?
Most manufacturers have a warranty report; more commonly referred to as a DCS report (Dealer Communications Report), that they provide to the dealerships service department that does warranty repairs for them. These reports can have different information depending on the manufacturer.

At minimum the service department can input your vehicle identification number (VIN) and see what recalls are on the vehicle or have been done in the past, when the vehicle was originally sold (the in service date) and when the warranty expires or if it has a branded title (salvage title or some other of issue).

Some manufacturers will also provide previous warranty claims and may have in depth details as to the complaints and corrections that where done and even the dates and the location the repairs where preformed at. Typically these reports will even have the previous owner information as to if it were sold retail or to a fleet or rental company. All the manufacturers supply different information. Unfortunately there is no set standard as to what they will show.

Either way it is worth having this information checked so that you know as much as possible about the vehicle you are considering purchasing. You will need to see the service department directly to get this information. Most sales people will shy away from this particular task and may even tell you there is no way to get that information. If the vehicle you are considering is not warrantied thru this dealership you may need to make a call to another dealership that does. Also ask the service advisor if the vehicle has had any history with them. If it was a trade in they may know what type of repairs or services that vehicle has had done in the past at their store. Either way if the vehicle has had lots of warranty work or other repairs done that may raise some red flags.

That’s probably why it was traded in…
Preexisting conditions may not show up during any type of inspection or test drive. This is something that the dealership did not even know about and should not be blamed for. There are several different scenarios that can arise, some of these are; phantom or intermittent issues such as stalling, running rough, hard starts and strange electrical issues; like the radio cutting in and out or lights shutting off. These things may only happen now and again or during certain situations like driving the vehicles for 2 hours or more or maybe on a cold day when temperatures are below say 20 degrees.

These types of issues may be the reason the previous owner traded off this car in the first place. These can be frustrating issues and unfortunately there is no one to blame (except maybe the person that owned the vehicle before you). These are the types of issues that could be covered under an extended warranty if you choose to purchase one. If not you may be paying to have this vehicle fixed after owning it for a short period of time, this is one good reason to buy an extended warranty!

Remember the dealership is not obliged to fix anything for you unless they have a in house warranty that will cover that particular issue (a good dealership may step up and help you out depending on the issue and situation, but there are many that will not! Remember most used vehicles are sold "AS IS"). Remember the DCS report may have clues in it that can help weed out problem vehicles like this.

What exactly does “AS IS” mean to the customer?
When you purchase a used vehicle the majority of them are sold "AS IS". Pay close attention to the Buyer's Guide, which the Federal Trade Commission requires car dealerships to display in the window of every used car offered for sale on the dealerships lot.
The guide gives basic information about the car and includes a warranty section where one of two choices must be checked.

The first is “AS IS” — no warranty.”  If the vehicle is "AS IS" you need to realize as soon as you sign the paperwork and drive off the lot, it's you baby. The dealership does not have to do anything for you if you have any issues with the vehicle. (It’s not like buying a TV where if there is an issue you may have the option to return it). Because of this "AS IS" clause it is all that more important to protect yourself and take every effort to make sure you are purchasing a quality vehicle (Note that every state has different laws that may affect your right's, be sure you know your state laws!!)

If “Warranty” is checked that vehicle may have some type of in house warranty or it may still have some of its original manufacturer’s factory warranty still in effect. Read this over good so you know exactly which applies. If it has an in house warranty on it get a copy of it and read it over well before you sign it. Most of these types of warranties are limited as to what they will cover and typically will be itemized. Most of these in house warranties will just cover the powertrain and the will only be good for a short period of time. Make sure you fully understand exactly how these extra warranties work so if you do have an issue, there are no surprises.


To sum it all up
Protect yourself by educating yourself. Ask questions, lots of questions and LOOK the vehicle over that you are planning to purchase. Inspect the vehicle yourself or spend the extra cash to have it professionally inspected; it will be worth every penny in the long run. Always have a car history report run and check what the DCS report has to say. These reports can help weed out the lemons. Purchasing a used vehicle is a big investment and a big risk; protect yourself and your investment!

If you have any questions or anything to add please e-mail me or leave a comment below. I would love to hear any horror stories that you wish to share. People need to know! My hope is that one day there is no reason to go through all these steps. The only way that will happen is if people wake up and smell the coffee. Eventually the dealerships and manufacturers will get a clue and change their ways.


The Automotive Wise Guy

Understanding Flat Rate

So have you ever wondered how technicians get paid?

The majority of shops work on what is called the flat rate system. There are also a handful of shops that pay an hourly wage or even a salary. Hourly and salary shops are far and few between in the retail world but are become more popular.  The flat rate system dominates the industry because it has the potential to create the most profit for the service department.

A good technician can flag up to 20 hours in a day

The flat rate pay scale is widely accepted in the industry and has been around for over 50 years.  It is pretty straight forward in how it works, let’s take a look.

Most shops use a labor time guide to determine how many hours a particular job will pay. In this case let’s say our technician has a brake job to complete which will normally pay 2 hours to complete. Let’s say for some reason it takes him 3 hours to complete the job.  Too bad, he only gets paid the 2 hours labor, his loss.  On the other hand if he does the job in 45 minutes, he will still make 2 hours of labor time.

Theoretically a good technician could “flag” anywhere between 10-20 hours, per day! (Flag time is a term used to describe hours produced) Typically technicians will try to average between 10-12 hours per day. On the flip side if a technician only flags 3 hours in a 8 day he has basically worked 5 hours for free.

What are shops comebacks? 

The flat rate system obviously rewards a technician for his ability to hustle and complete jobs quickly. The theory is that the quicker and more skilled technicians will generate more income for the shop.

The problem that is inherent with this concept is that it can cause issues with the quality of a technicians work. Good technicians will develop short cuts or just hurry to complete the work as quickly as possible. This will increase the likely hood of making mistakes.

This can create shop comebacks that can be costly to both the dealership and the technician (a shop comeback is when a vehicle returns for same issue it was in for originally or has now developed a new issue that the technician created while working on the vehicle – like not plugging something in or forgetting to tighten something down).

 In these cases the technician will recheck and do the repairs at no labor charge (this is not always true, sometimes they end up making the customer pay, blaming it on another issue when truly it was either a miss diagnosis or maybe he broke something during the initial repair – this does happen!) If a shop tries to charge you when you bring a vehicle back as a comeback you need to be cautious. Ask a lot of questions and you may even want to think about a second opinion. Many of the comebacks that I have seen, that a customer had to pay for a repair in my opinion, where questionable.

Every job has a set price

The issue with flat rate is from the customer’s perspective. Many people that realize they are paying 2 hours labor for a job that took the technician 45 minutes to complete, tend to feel like they are being taken advantage of.  This is because they do not understand the concept of the flat rate system.

The best way for people to understand the concept is to look at it like this; each job has a set labor cost that is determined from a labor time guide. The technician gets paid an hourly rate as determined from the labor time guide whether or not he completes it in this set time.

Think of it as working off a menu. Everything has a set price - Have you ever had a plumber or HVAC person come out and charged you $250 labor to replace a part that took him 45 minutes to replace??  - Think about it.

How many hours does a shop expect from their technicians to be productive?

Hourly and salaried technicians get paid the same way no matter how fast or how long it takes them to complete a job. The shop still uses a labor time guide to determine the set price of the repair. Many people may believe that either one of these pay types would be better than flat rate because the technician does not have to “rush” to complete a job. This is not necessarily true.

Retail shops that use either of these pay scales will have different ways to keep their technicians productive. So do not believe that these guys are going to take 2 hours to do your brake job. Remember when I talked about how technicians on flat rate try to average at least 10 to 12 hours a day. The shop has those same expectations of their technicians to keep productive. This is the nature of the business.

Why would they pay a technician $5.00 to sell a battery?

There are many different incentives to encourage a technician to be productive. They may use a bonus that a technician can earn for reaching certain hours by the end of each pay period. So if I technician reaches 100 hours in 2 weeks he may get an extra $200 as an example.

They could pay increasing labor rates for reaching certain hours by the end of the pay period - Say their base pay is $20 per hour up to 90 hours flagged per pay period but if they produce between 90 and 100 hours they may make $22 per hour instead, this would go up incrementally as their hours increase.

I have also seen a shop that offered bonus money for selling specific types of work – They may pay a guy an extra $5.00 for every battery he sells or $10 for every shock he upsells (this tactic can breed dishonesty because people try and sell things you may not need) If the shop does not have monetary incentives they will have certain expectations that they expect a technician to reach.

I guarantee you that any technician that does not flag at least 40 hours a week consistently will not have a job for long.

 

Who does quality control?

As you can see from the customers view point it really makes no difference how a technician gets paid. It truly only affects the shop.  Shops that advertise that they do not use flat rate are using this as a gimmick, plain and simple. 

Ultimately what really matters is how a shop monitors their technicians work to minimize poor quality repairs or miss diagnosis and how they handle the situations when they do arise.

I am a big believer in quality control; my belief is that someone other than the technician should double check all of the work that goes thru a shop, no matter what pay scale they use. Now a day’s most shops rely on the technician to quality control themselves, which I think is a bad move for obvious reasons. In all the shops I have ever worked in that had a quality control person had less comebacks then the ones that did not.  Unfortunately for the customer, employing another person for this job takes away from profits and car dealerships are all about maximizing profits!!

The Automotive Wise Guy

***Next time you bring your vehicle in for service; ask who does their quality control***

Extended Warranties Exposed

Ever wonder if an extended warranty is worth buying?
There are definitely mixed opinions on this question. Hopefully I have some answers for you.  Most people who will tell you that extended warranties are not worth it have had a bad experience with them because they had issues with their coverage.

Most people have no idea what kind of coverage they really purchased. All most people remember 5 years later when they go to use the extended warranty is that the finance person that sold it to them said that “everything was covered bumper to bumper” - Wrong!!

The finance person knows that it is unlikely that you will ever read your contract until after you have an issue with the contract which could be 3 years later. Knowing this he may not give reliable information when he is selling you the contract.

If only those people knew a little about extended warranties beforehand…. ‘’


Don’t let the finance person scam you?
Remember take whatever the finance person tells you with a grain of salt! You should know that the finance person gets paid on a COMMISSION!! So naturally he will try and make as much additional profit on you as he can without loosing the deal.

Just remember that when they are selling you an extended warranty they are trying to make as much extra money on the deal as possible. That means telling you how great that crappy warranty is and charging you an over inflated price for it. Don't be scammed, read on.

What is the best type of extended warranty to get? 
First thing you need to know is that there are several different types of policies out there with different levels of coverage, deductibles etc. There are manufacturers extended warranties (sold through Honda, General motors, Ford etc..) and there are what I call aftermarket warranties (all the others).

My first preference would be the manufacturers extended warranties. This is by far your best choice especially if you plan on servicing your vehicle with the dealership – this is not a requirement by the way. You also do not need to worry about them going belly up because they are backed by the manufacturer.

If you want the added convenience of having repairs done at most any repair facility then think about the aftermarket policies. Typically they offer the flexibility to have repairs done at most national chain repair facilities (why would you do that?!?) and they may also let your local small garage do repairs (you better check with your local shop first and also check with the extended warranty company directly, do not take the finance persons word for it, trust me on this!).

A big issue with aftermarket is that many of these companies do go belly up and when they do some times people are left high and dry with no coverage at all (and I have seen this happen several times). So make sure any extended warranty policy you are considering has been around for a long time and is reputable. Check and see who the Administrator and the Underwriter is for the extended warranty and check there credentials. Also are they back by a insurance company if they do go under? (see the end of the article for a couple useful links)

One thing I highly advise is that if you know what dealerships you will be shopping at call them and find out who they do use as an extended warranty and see what info you can get on the company. Do your research, BEFORE you go to the dealership! Always be prepared!!


Beware! Watch for this clause
First make sure there are no limitations on where you can take your vehicle to have repairs done. This is important because some contracts specifically state that you have to bring your vehicle back to the selling dealership for repairs if you are within 50 miles of that dealership (mileage limits may vary).

This is important because if there is another dealer closer to your house that you want to service your vehicle there but they are within the mileage range of the selling dealership, you will need to go back to where you purchased the vehicle to have repairs done.



What do you mean “I have to pay up front?”
Second is how does the extended warranty pay for their claims?? This is important because all of the shops I have worked for will NOT wait to be paid. So if the extended warranty company does not pay for the repairs over the phone with a credit card, one of two things will happen

Either the shop will not deal with the extended warranty company at all or they may set up the claim but you will pay for the repairs and have to wait the 4 to 6 weeks to get reimbursed from the extended warranty company. Some aftermarket policies may reimburse you directly whether you like it or not.

Once again don't trust the finance person on this one. Read the contract or call the extended warranty company directly and ask!!

What is the BEST plan to purchase?
Third thing to consider is the level of coverage you want. I suggest taking their best plan which will typically be a full coverage policy. You will spend more money but there will be no questions as to what is covered and what is not. Be careful also because the finance person may only offer you one or two options typically the one that makes him the most money in commissions.

Just remember that full coverage does not mean bumper to bumper, there is no such plan. When the finance person is trying to sell the policy they like to use this term, so be cautious! Take a close look at the contract, there will be a list of items that are NOT covered. A full coverage policy will cover everything else that is not on that list and it will be stated as such. (Refer to the bottom of this page for a list of items typically not covered by any policy)

If it is not on the list it’s not covered
All the other extended warranty policies are itemized, which means that they have a list of covered components for that policy. Each component will be listed under separate headings such as: Power train - All internally lubricated components, pistons, pins & rings; rods & bearings; crankshaft & main bearings; etc. etc. Electrical - Starter motor, window motors; wiper motors etc. the list goes on.

So if the component that is broken on your vehicle is not listed on the policy, it is not covered! No exceptions, period. I have seen things listed on these contracts that do not even exist on today's vehicles! I suggest avoiding these type of warranties all together, you will be very upset the first time you have a concern and find out it's not listed under your plan (if only you had gotten the full coverage policy!!).

One thing to note is that when you are purchasing a used car sometimes depending on mileage you may not be able to purchase full coverage. In this case get the best policy possible and read through what is and is not covered. I always suggest considering an extended warranty contract when purchasing a used car (trust me on this), you never know how that vehicle was maintained before you purchased it and 99% of the time neither does the dealership. (Read The Truth about Used Cars)

Stay clear of “Mechanical Breakdown" warranties
Whether you get a full coverage policy or a it is itemized you need to make sure that you are covered for both wear and tear and mechanical breakdown. This is important because most failed parts fail because of wear and tear. So be sure that the contract you are looking to purchase specifically states that even if a part fails because of “Wear and Tear” that it is covered.


What do you mean, Deductible??
Fourth thing to look at is the deductible. Deductibles will typically range from $0 up to $250 per visit - be sure that it is per visit and not per repair!! Per visit means that if you have 6 issues that need to be repaired during that visit you will pay just one deductible. This is the only way to go; paying per item is a rip off, period!

I suggest not taking a deductible more than $100. Obviously it will cost more for the contract the lower the deductible. So you need to decide what deductible is worth it for you. Keep in mind the average cost to repair a vehicle can  range easily from $250 up to $500 (and trust me it can go much higher all depending on the issue with your vehicle - we will talk about this later).

Do you know what your extended warranty start date is?
Fifth thing to consider is the length of the contract. This will vary between new cars and used car policies. Typically new car coverage will go from 5 to 7 years (there are some policies that go up to 10 years) from the original owners purchase date (if you’re the second owner it still goes by when the original owner purchased the vehicle). Mileage can go up to 100,000 miles. So judge how long you typically keep a car for, as to how long you want your coverage.

Used car warranties will typical be from 12 months up to 4 years from the date you purchased the vehicle. Mileage will typically go up to 48,000 miles from the mileage that you purchased the vehicle at. Used car policies will vary greatly depending on how many miles the vehicle had when you purchased it. The more miles the vehicle has the less coverage you will be able to get (and the more expensive it will cost).

Did you know all the extras have limits?
All extended warranties have some extra types of coverage. Look these over good and make sure you know what you’re getting. Most will offer some type of towing provision. Most policies will only cover a portion of the tow bill, the average policy will cover $50 toward your tow bill (most tow bills will cost between $80 to $120). If it covers more than great, make sure you see it in print - once again don't trust the finance person!!

The next most common extra add on is rental coverage. This coverage can be deceiving, so be sure you know exactly how it works. For example; Some policies will only cover rental expense if the repairs take more than a certain amount of hours (typically 8 hours), they determine this by how many hours a repair pays not how long it takes the shop to complete the repairs. Most policies will not pay for parts delays. So if the part has to be ordered from out of state and it takes 3 days to get it, you will not be covered. Last thing to understand is that all extended warranties will only pay a set amount per day up to typically 5 days. The average per day they will pay is normally $30 (most rentals start at $30 and go up from there)

These extras may vary greatly from policy to policy. The three items I listed here are pretty standard with any extended warranty. Many extended warranties will have other types of added coverage so just be sure to read through the policy so you know exactly what you are getting and how these extra’s truly work.

Here is a list of items that are typically never covered by any extended warranty:

Sheet metal, body parts, panels, bumpers
Chassis frame, cross members
Hinges (door, rear hatch, etc.)
Trim, body and moldings
Paint, rust damage
Convertible and vinyl tops
Weather-strips
Carpet and upholstery
Exhaust component and catalytic converter
Tires
Glass
Lenses, sealed Beams, light Bulbs
Batteries
Brake drums and rotors
Shock absorbers,
Rubber bushings
Squeaks, rattles, wind noise and odors; adjustments
Rubber hoses; coolant hoses and vacuum hoses

Any maintenance items are not covered: Spark plugs, brakes, clutch lining, filters (air, oil, hepa etc.), fluid changes (transmission, engine, coolant etc.) that are part of normal service work, timing belt (may be covered if breaks prematurely), etc. Hopefully you get the picture. Read the contract for a complete list of items that pertain to that contract, it will be itemized. Remember this is a legal contract so it will be very specific!

Why are maintenance records important?
Remember to always keep all of your maintenance records! If you have any major type of failure that will cost big bucks, they will ask you for all the records that pertain to the failed component. So if your engine blows up they will want to see all of your oil change records. If you are missing any or you are always late changing oil, they may decline to do repairs. It is their right. I have had people argue about not being covered and they have no records of their oil changes. Why should the extended warranty pay?? They do not know that you maintained your vehicle properly, would you pay? So keep all your records and take care of all your services per your owner’s manual. I suggest following the severe maintenance schedule to be safe, it applies to 80% of all drivers out on the road today!! Follow the maintenance as close as possible. If you don't and you have issues you have only yourself to blame. For those of you who like to service you own vehicle, I would suggest not. But if you do then call the extended warranty and find out exactly what records they want. If you do not do what they say you will have issues, better safe than sorry.....

So how much should you pay for an extended warranty?
There is no easy answer for this. I can tell you that now a days most contracts will cost somewhere between $1000 to $2500 depending on the type of coverage and several other factors. I have seen at the dealership some contracts that were as high as $3000. Would I pay $3000 for an extended warranty, heck no? Figure that the dealer will typically double the price of the extended warranty contract from what their cost is. One thing to remember is that if you are looking at the manufacturer’s policy the dealership is typically limited to how much they can mark these up. So you will have less negotiating power.

When you are negotiating price I suggest starting your bid at half of their original quote and go from there. Chances are you will be able to meet them somewhere in the middle.  

If they do not budge much on the price you need to judge if it is worth the extra expense (plus the convenience of rolling the cost into your loan). One other thing to consider is if you are looking at the manufacturers extended warranty they typical are cheaper than the aftermarket warranties that they offer. This is because the dealer is only allowed to mark it up a certain percentage, this is the reason most dealerships will not even mention these warranties because they are limited to how much profit they can make (remember the finance person is making a commission off this sale!). If you ask them about it they must offer it to you (if they don't just walk out the door and get on the phone with the manufacturer, they might like to hear about it - doubtful that you will make it out the door though).

Here's another tip: When you're buying an extended warranty with a new car, dealers generally talk in terms of monthly payments, not the total cost for the warranty. In order to really know what you're paying, ask for an itemized cost of everything on the vehicle, including the total cost of the extended warranty.

Have some ammunition for the finance person
Before going to the dealership I suggest going online and checking with a couple extended warranty companies. This way  you can check out prices before you go buy a vehicle (it will help also if you have an idea of what kind of car your looking for). Print whatever info you can about their coverage and bring it with you. You can also call ahead of time to the dealership you are planning on visiting and asking them questions about the extended warranties that they sell. This way you have some ammunition for the finances person when you start talking about extended warranties. The finance person is prepared shouldn’t you be??

Extended warranty = Peace of mind
Ultimately extended warranties are basically insurance policies that are meant to protect you from unexpected repairs. Do you need one?? You never know for sure, but it is nice to have peace of mind for all of us that have a hard time parting with $500 to get our vehicle repaired because of an unexpected break down. If you buy a new car and plan on keeping it for several years it's a smart investment.

You never know how a used car was treated before you purchased it
Remember a large percentage of used cars are purchased by the dealer through auctions - Many of these vehicles were fleet vehicles which tend to get bare minimum maintenance by whomever the fleet company was – typically a rental car company. The point here is that there is really no way to know how a used vehicle was treated before you purchased it, so why take a chance?

(**Many used car warranties have a clause that coverage will not start until after the first month or 1000 miles, whichever comes first!! So I suggest asking what happens if you have an issue before the contract becomes effective and get it in writing!!)

Extended warranties is a binding legal contract
Remember to always read through the contract so you know what you are about to sign. Check through the five items we talked about earlier. It’s  good practice to check into some extended warranties companies online before you go to the dealership so you know what to expect and you can make good decisions and be prepared! It's not like you can go back after you buy the vehicle and back out of the deal.....We have a saying in the business that once you sign those papers you’re an owner!

If you have any questions about extended warranties or anything to add please feel free to e-mail me I have dealt with just about any situation you can think of!


The Automotive Wise Guy



List of financially stable Service Contract Underwriters
List of Extended Warranty Administrators – this list is from 2004 but is still a great resource




Manufacturer extended warranties

Acura, Audi, BMW, Buick/Cadillac/Chevrolet/GMC/Saab, Dodge/Chrysler/Jeep, Ford/Lincoln/Mercury, Honda, Hyundai, Isuzu, Jaguar, Land Rover, Lexus, Mazda, Mercedes-Benz, Mini, Nissan, Subaru, Toyota, Volkswagen, Volvo