A warranty labor rate increase at a car dealership refers to an increase in the hourly rate that the dealership charges for labor on repairs covered under the manufacturer's warranty. This increase can occur when the manufacturer changes the rate they reimburse the dealership for labor on warranty repairs. The dealership may then pass the increase on to the customer by raising the warranty labor rate. This increase may also be caused by a change in the cost of living, inflation, increased cost of training and certifications for technicians or simply a way for the dealership to increase its revenue.

Why Should a Dealer Ask for Warranty Labor Rate Increase?

There can be a variety of reasons why a car dealership may ask for a warranty labor rate increase from the manufacturer. Some of the main reasons include:

  • Rising Costs: The cost of living and inflation can lead to increased costs for the dealership, such as higher wages for technicians and higher costs for parts and equipment
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  • Cost of Training: As technology and vehicles become more complex, the cost of training technicians to work on these vehicles can also increase.
  • Increased Revenues: Dealership may want to increase their revenue by charging more for warranty labor.
  • Reduced Reimbursement: Manufacturer may have reduced the reimbursement rate for warranty labor which may not cover the cost for the dealership.

It's important to note that the final decision of warranty labor rate increase depends on the agreement between the dealership and the manufacturer.

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