Saturday, August 25, 2012

Even more on flat rate...

Interestingly, the hours side of the warranty reimbursement equation is, like the dollar side, also subject to review, in two important ways. One, a dealer may submit a suggestion for flat rate revision, which if accepted by the manufacturer ends up benefitting all dealers, not just the one submitting the suggestion. It must be made on substantive grounds proving the time allotment unrealistic. It is seldom approved, though I have seen it happen. Second, a dealer is also able to call the manufacturer and make the case for a one-time, just for them augmentation to the scheduled warranty hourly flat rate. This request is almost automatically granted by some manufacturers, less often by others. To sum up, a dealer has two kinds of flat rate. One is the warranty flat rate, the other is the retail flat rate, and the latter is typically twice the warranty rate. There are also two aspects to warranty reimbursement, the hours reimbursed and the money per hour reimbursed, which are multiplied together to arrive at the actual rembursement to a given dealer, via that dealer's parts account. The dealer's host manufacturer has complete control over the warranty time and dollar amounts, but virtually no control over the retail time and dollar amounts, and for that matter over most of what goes on in the dealership, depending on the manufacturer. In fact, OEM control is what we'll explore next.

More on dealer "flat rate".

Manufacturers encourage their dealers to regularly apply for increaes to their dollar rates -- Honda's and Kawasaki's timetables are every two years. Every two years their dealers submit requests for warranty reimbursement rate reevaluation. In response, the manufacturer looks at the dealer's level of technical training and expertise, the prevailing economics in their area, and most importantly, whether or not the dealer is able to demand this new dollar rate on the retail level, a consideration that will indicate the validity of the amount requested. Speaking of the retail labor rate, many states require that a sign be posted in the service dept with this dollar amount on it. Dealers in high income areas often post their rates by the half-hour instead of the hour, and more progressive dealers use a menu pricing system, like car dealer's, where all work is priced in a package deal system that is more customer-friendly.

Dealer "flat rate" explained

The amount of time an authorized dealer is reimbursed for performing warranty work for their host manufacturer is called flat rate. It's actually warranty flat rate, that is, it is designed to be used only for warranty service. A manufacturer first establishes a fixed amount if time all its dealers will be reimbursed, a time allotment that is contractual and thus is like medical insurance, it has very little connection with the amount of time something really takes. Typically this time allotment is roughly half of what a dealer would charge a retail customer. After determining the global time allotment, the manufacturer then works with each dealer individually to establish the money rate that this time allotment will be multiplied with to arrive at the actual money value of reimbursement. Dealers in lower economic areas will be awarded lower dollar rates of reimbursement, and higher ones higher. The time allotment is multiplied by the dollar allotment and the reimbursement value is typically applied to the dealer's outstanding parts account.

Wednesday, August 22, 2012

'Nother one...

Here is an interesting one. See how many different professions you can identify in the crowd. The nun and cop are good touches, I think. Click on the pix to enlarge it.

Vintage Kawasaki advertisements

Few of those coming up. This one, of a series even Kawasaki called of Norman Rockwell style, is probably my favorite of all of them. Enjoy!

Sunday, August 19, 2012

More OEM bloopers

Yamaha, in its industry leading online mechanics training, Yamaha Technical Academy (YTA) describes engine crankcases that separate left to right as "horizontal split," while the rest of the industry calls this vertical split, and those that separate up and down as "vertical split," while the rest of the industry refers to these as horizontal split. Yamaha also has a hard time keeping things simple in the electrical area, commonly referring for example to a permanant magnet alternator as a "magneto" alternator, terms reminiscent of ignition systems. Speaking of magnetos, all but one or two of the powersports industry's many OEMs fail to distinguish between energy transfer and magneto systems, referring to both as magneto. Energy transfer is a 3-coil rising field system most common on off-road motorcycles, magneto is a two-coil collapsing field system found mostly on stationary engines.

Just for starters...

I have made my living all my life in the powersports industry, and much of it on the inside, as it were. To start things off on our review of manufacturer's little-known foibles, Bombardier, the maker of (the world's largest selling) Sea-Doo personal watercraft, Ski-Doo snowmobiles and the new Can-Am Commander side-by-side, once put in a technical training PowerPoint "hp is the amount of work done by the engine," a fallacy as any first semester physics student knows. Hp is the *rate* at which work is done, not the amount. Honda once described in Euro tech training materials grounded ignition coils on their 1980s road bikes. This is erroneous. DC ignition coils do not need a ground, a fact I was pleased to demonstrate to my students every new training term when a votech instructor. Kawasaki made the same mistake ten years later.

Saturday, August 18, 2012

Manufacturers are not perfect

I get a lot of emails from folks wanting advice on this or that. And I don't mind. I was a technical instructor for many years and still like teaching though I seldom get near a classroom these days. So it's fun. What I have observed recently however is an overreliance on the part of many on the factory manual. Now don't misunderstand. The factory book is indisputably the best book. The others, Clymer (ugh), Haynes, Cyclepedia etc. do an okay job (except the Clymer) but generally cannot be trusted where critical specifications are concerned. This is a well documented fact. Clymer for one has perpetuated misinformation about vintage Honda models for some 30+ years! Understand, no one reveres the book as much as I. How could I not be a champion of the factory document after over 200 factory Honda training credit hours, fifteen years in metro Honda dealerships, and my employment in the OEM corporate world ever since? The book is sacred.
But there are some things folks do not understand about the book, for example that it is not error-free. Pop your head up in the middile of your garage floor that has become suddenly and thoroughly soaked with shock fluid because you followed the manual's procedure on Pro-Link shock refresh, and you will realize this (rather intensely, I might add) firsthand. No one will have to convince you.
More importantly, what few outside the inner workings of the industry appreciate is that factory manual procedures such as resistance tests of electrical components are to be taken with a very large grain of salt. There are many reasons for this, such as the use of engineering data in the place of real-world findings (why the electrical current and octane and valve clearance numbers are so far off), and the inevitable political manuevering within large corporations (giving us patently ridiculous instruction such as resitance tests of voltage regulators).
But the most insidious reason for manuals not being what they should be is this -- today's factory manuals are less tutorial documents than they are discovery documents. That's "discovery" in the legal sense. You see, starting at about the mid 1960s, manufacturers' books began to move away from being documents helpful to individuals, to documents helpful to corporations defending legal suits, until today that is their primary purpose -- to be literary bulwarks against the increasing tide of consumer irresponsibility. You thought manuals were for you. Hah! No way. They are CYA for the manufacturer, and have been for decades. Surely you have noticed that the factory service manual's close cousin, the factory owner's manual, has led the way in this literary nonsense until today it is a mere posting of eighteen ways to not swallow your key? Check it out. The service manual is not too far behind, demonstrating as it does less and less procedure (and that increasingly innane) and more and more policy. Policy that is defensible in court. That's its focus, and that is all the manual exists for now, if you discount the specs content, which as I say should not be taken lightly. Sad but true. The factory service manual, anyone's -- Yamaguchi to KMW -- is largely and increasingly a legal preemptive tool, and little else.
So the next time I or someone else with real-world experience comes along and recommends technique that, though demonstratably effective, does not line up with the factory manual, now you know why. Don't get defensive or write them off as odd (though I am that). Realize they just may be giving you the best advice you are going to get. Think about it.
In this blog I want to share insider insights and for the next few posts specifically I will explore some examples of when the manufacturer has not got it right.