Should Manufacturers Reimburse Dealers for Product Recall Repairs?

Aug 12

Written by: Todd Anthony Puma
8/12/2014 1:06 PM  RssIcon

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.

9 comment(s) so far...


Re: Should Manufacturers Reimburse Dealers for Product Recall Repairs?

I think a big issue is getting the manufacturer to even admit it is a general defect and not just say "we've never heard of that problem before". You either have to experience it multiple times yourself, or get real feedback from some other source, to determine the true story. And often when you find out it is too far out in time to get recompense.

By ric on   8/12/2014 3:56 PM

Re: Should Manufacturers Reimburse Dealers for Product Recall Repairs?

I see this from the view of someone frequently (i.e., thousands of times over the last 25 years) called in as a third-party expert to help installers solve problems that manufacturers tend to deny the existence of. I deal with signal interfaces, chasing hum and buzz problems mostly. Based on my experience, most equipment makers are very adept at deflecting blame (taking advantage of the general ignorance about grounding and interfacing issues) when, in fact, it's their designs that are blatantly at fault. I don't want to paint myself as a "hero" of some sort, but I've "saved the bacon" of hundreds of installers and rarely do I get as much as a "thank you" from the manufacturer of such "not ready for prime time" products. It's a big problem, but because their defects don't get revealed on every install, most go straight into denial ... and let the installer deal with it! IMHO, it's no way to do business

By Bill Whitlock on   8/13/2014 12:52 PM

Hell Yes!

One could always send a letter to the manufacturer and the rep and suggest that repaired unit was the last one of their products that you will sell to your clients unless the recapitulate on their decision to not pay you for your time because of their defect. Include a bill, if they do not pay, write the bill off in your taxes and the vendor from your supplier list. Problem solved.

Next Vendor...

I am a mean sob when I want to be! lol

By TimmyS on   8/13/2014 1:49 PM

Re: Should Manufacturers Reimburse Dealers for Product Recall Repairs?

Absofrikinloutely the manufacturers should reimburse the dealer/integrator to go out and replace their defective product period.

By D.Soileau on   8/15/2014 2:26 PM

Re: Should Manufacturers Reimburse Dealers for Product Recall Repairs?

If it encourages manufacturers to stop shipping half-baked POS products, certainly. Of course, having done too many trouble shooting calls to count over the last 15 years, I can say there've been more than enough times when it was installer error. The brands know this, too, so I kind of understand their resistance. Generally speaking, honesty is not a strong suit of this industry. I think that is the bigger problem we need to resolve. Bottom line: Dealers should rightfully expect properly executed products, and the brands should rightfully expect properly executed installations. So how do we get there?

By AMC on   8/15/2014 6:39 PM

Re: Should Manufacturers Reimburse Dealers for Product Recall Repairs?

I have been in audio all my life. I am 55 years old now.
The industry has always rode on the back of the dealer .
They justified it because of the profits we used to make.
It is will past the time that the Manufacturer sent you parts or even a new unit with out covering labor and at the very least freight back to them for there defect. Margins are far to small to burden the Dealer with this any longer.

By Monte Wood on   8/18/2014 10:25 AM

Re: Should Manufacturers Reimburse Dealers for Product Recall Repairs?

Great article and a serious topic. All the warranty claims in the world don't take into the account the lost time and revenue for the dealer. Everybody speaks about "partners" but its time manufacturers put their money where their mouths are. The DaVinci Group announced a program for our dealers called WarrantyPLUS. For any service call with any of our products we credit funds to our dealers. Time is money and we felt it was simply the right thing to do for our business partners. We also felt this helps our dealers separate themselves from the online and box house mentality out there. It's all viable if the manufacturer really wanted to.

By Daniel Kippycash on   8/22/2014 12:39 AM

Re: Should Manufacturers Reimburse Dealers for Product Recall Repairs?

They should absolutely take care of the dealers who sell their equipment. There are no such things as warranty claims anymore. If something breaks under warranty, we want to be reimbursed when shipping their defective equipment back to the manufacturer. If they cannot or will not do that, that is the last piece of that brand we sell period. It's really quite simple.

By Steve on   8/22/2014 12:09 PM

Re: Should Manufacturers Reimburse Dealers for Product Recall Repairs?

Slippery slope. Everyone wants to charge back the manufacturer when the products are faulty. You can't compare the CI world to a car manufacturer. Car manufacturers create the whole car. When your DSP doesn't work right it's not connected to parts from the DSP company only and installed and configured by them as well. Be careful when demanding they pay for their mistakes, they could turn around and charge you for your mistakes. I don't think we want to play that all new game. "Who can we point the finger at?" Just my $0.02.

By Bubba Watson on   8/22/2014 12:26 PM

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