Should Manufacturers Reimburse Dealers for Product Recall Repairs?

8/12/2014 5:06:00 PM
GM has recalled almost 25 million (yes, million) cars in the U.S. as of June 30 this year. It has resulted in a $1.2 billion hit to their bottom line. Where does that hit come from? From reimbursing dealers for the necessary repairs, among other charges.

A few months ago, a client of ours received a package in the mail of replacement parts for their motorized screen. Why the package went to them and not to us, I’ll never figure out. But nevertheless, the manufacturer had identified a possible defect and sent out packages of parts. So the customer understandably called us. We then called the manufacturer to get the details. Turns out the screen swayed a little more than they wanted, and they replaced a part in the pulley mechanism. We were told that people inside the company with no screen installation experience were able to do the repair in less than two hours with two people, so we gamely went out to the client, instructions in hand, to do the repair. Upon getting there and inspecting the parts, the instructions, and the mechanism, we knew there was no way an untrained team of two could knock this out in two hours. In fact, it took our team of three people almost four hours to do the full repair, reset the height of the drop, and re-zoom and aim the projector.

The manufacturer never offered to reimburse us for the repair, and I felt it would not be appropriate or good business to bill the customer. So who’s stuck holding the bill for three guys for a full day’s work? Me, the owner. So not only did I lose the money when I paid my guys, I also have an opportunity cost as I wasn’t able to do other work that day with this team.

I called the manufacturer to comment on this and was offered a discount on a future purchase, but that’s beside the point; I shouldn’t have to. If they made a mistake in their product design and development, then they should be on the hook for the repair. Just as a car manufacturer makes good on the labor costs a dealer incurs for a repair. Why should our industry be any different? Manufacturers seem to think their responsibility ends at the product, and not at the customer’s door.

What do you all think? Should manufacturers reimburse dealers for time spent on repairs to products that are defective out of the gate? Should it be limited to defects that affect the entire product line, or to the occasional lemon product as well? How many times have you had to go back to a client’s home to replace something that was DOA? Should the dealer be fully responsible for that labor cost? My opinion is that manufacturers should absolutely reimburse us if a product has a design defect (the car recall example). I’m on the fence about DOA products. Of course I would like to be reimbursed, I’m just questioning whether or not the business case is there. What are your thoughts on the subject? Where should the line be drawn? Or is it already drawn in the right place?
+Todd Anthony Puma is president of The Source Home Theater Installation, Powered by Fregosa Design, in New York City.


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