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    • Extra News
May 27.2025
2 Minutes Read

Maximize Your Dealership’s Profit: Don’t Settle for CPI Warranty Labor Rates

Signing contract near toy car and keys for CPI warranty labor rate increases.

Why Settling for CPI Programs May Cost Your Dealership More

In today’s automotive landscape, many dealership principals and fixed ops directors are feeling the pinch of inflation. As costs rise, manufacturers often entice dealers with Consumer Price Index (CPI)-based programs promising automatic increases in warranty labor rates. It’s an appealing proposition, particularly at first glance. However, delving deeper uncovers a troubling reality: these programs often deliver inadequate increases that fail to match the escalating costs in labor and parts.

The Pitfalls of CPI Programs: Understanding the Long-Term Effects

The main issue with defaulting to CPI programs is the loss of control. Dealers who opt into these arrangements face constricted rate increases, typically between two and three percent annually. These modest adjustments can feel like a band-aid on a much larger financial wound, especially as technician wages and service overhead consistently trend upward. Furthermore, many CPI programs lock dealers into rigid contracts, often for three years, effectively waiving their right to pursue higher statutory rates that align closely with their actual customer-pay rates.

Unlocking Statutory Labor Rate Submissions

Rather than acquiescing to the limitations of CPI programs, dealerships have a more profitable alternative: statutory labor rate submissions. Leveraging the laws that govern warranty reimbursement allows dealerships to present increases based on genuine customer-pay rates. This strategy not only empowers dealers but also significantly boosts their profit margins.

By conducting annual evaluations of factory or statutory submissions, most dealers discover that they can secure reimbursements that are substantially more favorable than those offered by CPI programs. Typically, those who champion this approach achieve rates reflective of real market value, which adds up to considerable financial benefits over time.

Strategic Decision-Making: The Need for Proactive Evaluation

Dealership principals must adopt a proactive approach when it comes to warranty labor rates. This evaluation involves more than simply opting for the automatic route provided by manufacturers. Engaging in a thorough analysis of labor costs, market rates, and potential profit from statutory submissions can dramatically improve a dealership's bottom line.

Keeping abreast of state laws and leveraging their provisions ensures that dealers are not shortchanging their own businesses. By making empowered decisions about how to approach warranty labor rates, fixed ops directors can create a more financially sustainable shop environment.

Fostering an Informed Dealer Community

Sharing insights and actionable strategies among peers is vital. By collaborating and exchanging information regarding best practices in warranty management and labor rates, dealerships can foster a community that thrives on knowledge and best practices. This collective intelligence not only aids in overcoming immediate challenges but also paves the way for sustainable success in the automotive industry.

Ultimately, understanding the nuances of warranty labor reimbursement and advocating for a more profitable arrangement is a winning strategy for any dealership looking to navigate the complex landscape of automotive service.

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08.21.2026

Unlocking Buyer Hesitation: The Three Windows of Protection in Car Sales

Update Understanding Customer Hesitation in Car Buying For many dealership executives, understanding the psychological barriers that inhibit automotive sales can be a game changer. When a customer expresses that they need to think about a car purchase, it often signals more than just a desire for additional information. Instead, it reflects a complex interplay of past experiences, present concerns, and fears about the future. Past Protection: Guarding Against Negative Experiences One key reason buyers hesitate is due to past protection. A potential customer may recount experiences where promises made by a dealership led to disappointment, such as poor repair service or unfair trade valuations. For example, when a customer states, "The last dealership told me the same thing," they are reliving a previous experience, which can overshadow current options. This context is crucial for sales teams to understand. Instead of simply pushing the sale, ask, "What happened last time that you don’t want to repeat?" This question invites a valuable conversation about their concerns, allowing you to address specific hesitations directly. Present Protection: Immediate Life Pressures Customers also deal with what is termed present protection, where they feel overwhelmed by financial stressors. Phrases like, "I don’t want to get stretched right now," convey worries about payments and cash flow. Understanding that buyers want to maintain their current financial stability is essential. To delve deeper, try asking, "What part of this feels heavy today?" This opens the door to discussions about managing their financial expectations, particularly regarding used car financing rates and potential payment plans. Future Protection: Fears of Regret Looking toward the future, buyers can also fear making a long-term commitment. This future protection often manifests as apprehension over potential regrets linked to the vehicle. Questions such as, "What future are you trying to protect?" encourage customers to articulate their fears—be it worries about losing flexibility or facing unexpected costs. Highlighting advantageous terms or low interest rates on car loans can assuage their concerns and make the decision-making process smoother. Recognizing Diverse Customer Profiles It’s important to understand that not all customers enter a dealership with the same mindset. For instance, someone whose vehicle just ceased functioning may prioritize immediate solutions, while a first-time buyer may carry emotional baggage from previous experiences shared by friends or family. Therefore, recognizing a customer’s perspective can lead to more tailored conversations that resonate with their unique situation. Transforming Hesitation into Clarity By honing in on the specific protections a buyer holds—whether related to their past, present, or future—dealerships can foster deeper connections that facilitate informed decisions. Starting with better questions leads to clarity, allowing customers to feel understood and valued. Each interaction can pivot from mere salesmanship to genuine support that reflects their needs, ultimately leading to greater sales success. The ultimate takeaway for dealership principals, GMs, and fixed operations directors is that understanding the psychology behind 'I need to think about it' can create significant shifts in customer interactions. A focus on empathy and clarity transforms potential silent objections into dialogues that facilitate decision-making and, ultimately, triumph in car sales.

08.20.2026

Navigating the Shift: Why Auto Dealers Must Update Outdated Tech Platforms Now

Update Why Many Auto Dealers Are Sticking with Outdated Tech In an era where technology evolves rapidly, many auto dealers and lenders are still tethered to tech platforms that are decades behind. This technological lag is not due to complacency but rather a confluence of structural limitations and significant migration challenges. A recent industry survey revealed that 87% of auto dealers and lenders are in some form of migration, yet more than half plan to make the jump within the next year. It's evident that the question isn't whether to modernize, but how best to do so in a way that minimizes risks. The Burden of Legacy Systems Most legacy systems in auto lending are often monolithic, creating an environment where isolated updates become daunting, costly, and risky. In fact, the survey indicates that a substantial one-third of respondents allocate an overwhelming 80-100% of their platform resources on maintenance rather than innovation. This leaves little room for development, compliance readiness, or product expansion. Some dealers are still using outdated platforms such as IBM AS/400 systems paired with archaic programming languages like COBOL, which skews modern development efforts. Understanding the Delay: Cost and Risk Factors The migration delays faced by dealers and lenders stem from structural barriers rather than philosophical resistance to change. Cost constraints emerged as a significant hurdle for 28.6% of respondents, while 31.6% cited limited human resources. Notably, only a small percentage—5.3%—expressed confidence in their legacy systems. Transitioning to a new platform doesn’t just come with known shortcomings; it brings uncertainties about compliance processes and potential disruptions, which heightens migration anxiety. Embracing API-Based Architectures The future lies in API-based architectures which provide the flexibility and functionality required for modern lenders. These solutions allow for real-time updates and seamless integrations with third-party developers, ensuring that businesses stay relevant and competitive. With such a foundation, auto lenders can deploy central updates without facing common issues like version drift. This modernization approach addresses many of the current limitations while enabling the growth needed to comply with evolving industry standards. The Path Forward: Strategies for Modernization To successfully navigate modernization, auto dealers should consider forming dedicated teams focused on migration, thereby leveraging their insights to create effective transition plans. Not only do such teams pave the way for integration, but they also mitigate expertise dependency risks—particularly as key individuals approach retirement. By creating an environment where institutional knowledge is shared, dealerships can strengthen their operational foundation and ensure continuity. Conclusion: The Crucial Turn in Auto Lending Technology The stakes of modernizing auto lending systems are high. Delaying necessary upgrades only magnifies existing risks and ties institutions to outdated practices. In the current competitive landscape, adopting advanced technology is no longer an option but a necessity. As the industry shifts toward more flexible, comprehensive solutions, those who embrace change will not only endure but thrive.

08.20.2026

Outdated Tech Platforms in Auto Lending: What You Need to Know for Modernization

Update Outdated Tech Platforms: The Growing Challenge for Auto Dealers Today's auto dealers and lenders face a daunting challenge: many are still relying on outdated technology platforms that were designed decades ago. These legacy systems not only hinder operational efficiency but also pose compliance risks. With a significant portion of their resources—sometimes up to 100%—being funneled into maintenance rather than innovation, many are caught in a cycle that stifles growth. The Burden of Legacy Systems Legacy systems are more than just old technology; they are often labyrinthine and monolithic, making updates prohibitively expensive and risky. According to a recent survey, over 40% of auto lenders report that 60 to 80% of their platform resources go toward maintaining these old systems. Such an overwhelming focus on maintenance restricts their ability to innovate or adapt to the evolving market. Why Migration Is Key A 2026 survey revealed that 87% of dealers and lenders are actively planning or engaging in platform migration. While the urgency to modernize is clear, the primary barriers are structural rather than complacent: cost constraints hit 28.6% of respondents hard, while 31.6% pointed to limited resources as a significant hurdle. However, the majority understand that modernizing is no longer a choice—it’s a necessity. Addressing Transition Risks Head-On Transitioning to a modern system comes with its set of risks. Many dealers are concerned that their long-standing calculation logic might not translate seamlessly into new platforms. Additionally, expertise dependency could spell disaster; as seasoned professionals retire, they take invaluable institutional knowledge with them. Addressing these fears head-on is crucial in crafting a migration strategy that not only mitigates risks but also paves the way for future success. API-Based Architecture: The Future of Auto Lending To achieve real modernization, dealerships need to move toward API-first architectures. Such systems allow different components to communicate more effectively, enabling real-time updates and integration with third-party services. Not only does this reduce the worry about compliance or version drift, but it also lays a robust foundation for the innovative features modern auto lenders need—like effectively calculating used car financing rates using an intuitive used auto financing calculator. Moving Forward with Confidence As the auto lending landscape evolves, embracing modernization will allow dealers and lenders to not only keep pace with compliance demands but also leverage tools that can enhance customer experience and optimize operations. They will have better access to financing options, such as securing the best used car financing rates, which is key for any dealership's growth and sustainability. As you contemplate updating your processes, remember that understanding the value of your used vehicles and keeping an eye on current used car interest rates is vital to maximizing profitability. The transition isn't easy, but the rewards of modernizing your platform far outweigh the challenges. Take the leap and explore innovative financing options to better serve your customers.

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