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GUEST COMMENTARY: How to better process warranty claims

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GUEST COMMENTARY: How to better process warranty claims

Chances are you have all kinds of solutions being sold to you or already integrated, all designed to streamline your marketing and operations to help you do more and sell more. Chances are also very high that none of these solutions touches the most overlooked — and outdated — area of a dealership’s operations: warranty processing.

Auto retail has undergone a significant makeover in recent years with everything getting digitized, yet in most dealerships warranty processing remains stuck in the paper-heavy, manual labor-intensive Dark Ages, as though there isn’t a better way, or worse, it’s not a priority. Think again.

What if I told you that warranty claims processing represents the biggest ROI opportunity for sales, service and staffing efficiency? There are the obvious and not-so-obvious costs weighing down claims processing, and the outlook for this area of operations will only increase in volume and complexity. The good news is there are easy steps to take now that will make your life easier and set your store up for the long game.

There isn’t a person out there today that isn’t feeling the effects of the worker shortage. Every industry and every business, every consumer and every employer, is feeling the pinch of the lack of labor. It’s impacting service standards, delivery of goods, quality of experience, and efficiencies in work flow. In a recent Cox Automotive study, a reported 72 percent of dealers are having trouble finding and recruiting qualified people. The staffing shortage is real, it stinks, and it doesn’t seem to be improving.

But there’s no point in dwelling in the negative and feeling hopeless. It’s more productive to focus on solutions that can solve problems today. Here’s the great news: When it comes to warranty processing, this might be one of the easier areas to upgrade in the entire dealership.

Let’s think about how warranties have been processed historically. Lots of paper. And faxes and snail mail. And remember microfiche? Not to mention all of the handwritten forms with some data entry performed by a human or two trained in claims processing. If those employees call in sick or go on vacation or leave the job, claims stack up. The process of processing takes weeks at best.

Let’s fast-forward to today. Now, warranties are processed with lots and lots of paper. One or two humans trained in claims processing doing the work, and if they don’t show up the job doesn’t get done. Humans fill out paperwork manually and enter data, leaving it prone to errors.

What is wrong with this picture? Essentially the warranty processing process hasn’t been modernized. Despite all of the digital makeovers happening throughout the auto retail experience, warranty processing has been overlooked. But with all of the technology in AI and automation today there is a better way to manage this now for instant gratification.

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If you are one of the dealers out there that is flooded with resumes from qualified claims processing experts looking for work, you can stop reading now. But for the other 99.999 percent, here’s why you need to care about this and apply a sense of urgency to getting on top of this issue.

In case the point wasn’t clear enough, there’s a labor shortage and believe me when I say there aren’t many people signing up these days to become trained in warranty claims processing. But the lack of career interest isn’t because the demand for the job is going away. In fact, quite the opposite.

Warranty claims are going to continue to rise — over 30 percent growth in warranties over the next five years according to WarrCloud projections — so it couldn’t be any clearer that dealerships are not prepared to handle the volume that is coming. In fact, many dealerships are one recall away from being overwhelmed. From 2010 to 2019, recalls increased 324 percent compared with the previous decade, according to NHTSA. What’s more, with the increase in EVs and AVs, and the complexity, scrutiny and newness inherent in their functionality, we can expect a rise in recalls in that category.

But imagine if your team could automate processing, get claims submitted faster and deliver payments quicker, increase the value of claims, and reduce the chances of an audit and chargeback risks. Would you be interested?

There is no reason claims processing shouldn’t be awarded the same level of automation attention as other areas of the dealership. Note that automation isn’t the same as outsourcing, and ideally you can do both for maximum efficiency. For example, there is outsourcing which just means you’ve transferred the same manual processing work to someone else who does it out of eyeshot. Sure, that helps to not see the chaos of paperwork but it might not be offering the kind of efficiency in time and costs you hope for.

Find a partner who is an expert in warranty processing and automation technology, and who can help you evolve warranty into a growth engine of service. Doing so will streamline your service department to reduce costs, submit claims faster, reduce audit and chargeback risks, and create a sustainable and scalable solution to claims processing so you can surf the tidal wave of claims with ease.

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Average US vehicle age hits record 12.6 years as high prices force people to keep them longer

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Average US vehicle age hits record 12.6 years as high prices force people to keep them longer

DETROIT (AP) — Cars, trucks and SUVs in the U.S. keep getting older, hitting a record average age of 12.6 years in 2024 as people hang on to their vehicles largely because new ones cost so much.

S&P Global Mobility, which tracks state vehicle registration data nationwide, said Wednesday that the average vehicle age grew about two months from last year’s record.

But the growth in average age is starting to slow as new vehicle sales start to recover from pandemic-related shortages of parts, including computer chips. The average increased by three months in 2023.

Still, with an average U.S. new-vehicle selling price of just over $45,000 last month, many can’t afford to buy new — even though prices are down more than $2,000 from the peak in December of 2022, according to J.D. Power.

“It’s prohibitively high for a lot of households now,” said Todd Campau, aftermarket leader for S&P Global Mobility. “So I think consumers are being painted into the corner of having to keep the vehicle on the road longer.”

Other factors include people waiting to see if they want to buy an electric vehicle or go with a gas-electric hybrid or a gasoline vehicle. Many, he said, are worried about the charging network being built up so they can travel without worrying about running out of battery power. Also, he said, vehicles are made better these days and simply are lasting a long time.

New vehicle sales in the U.S. are starting to return to pre-pandemic levels, with prices and interest rates the big influencing factors rather than illness and supply-chain problems, Compau said. He said he expects sales to hit around 16 million this year, up from 15.6 million last year and 13.9 million in 2022.

As more new vehicles are sold and replace aging vehicles in the nation’s fleet of 286 million passenger vehicles, the average age should stop growing and stabilize, Compau said. And unlike immediately after the pandemic, more lower-cost vehicles are being sold, which likely will bring down the average price, he said.

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People keeping vehicles longer is good news for the local auto repair shop. About 70% of vehicles on the road are 6 or more years old, he said, beyond manufacturer warranties.

Those who are able to keep their rides for multiple years usually get the oil changed regularly and follow manufacturer maintenance schedules, Campau noted.

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Tesla autopilot recalls: 2 million vehicles need to have their defective systems fixed

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Tesla autopilot recalls: 2 million vehicles need to have their defective systems fixed

DETROIT (AP) — Tesla is recalling nearly all vehicles sold in the U.S., more than 2 million, to update software and fix a defective system that’s supposed to ensure drivers are paying attention when using Autopilot.

Documents posted Wednesday by U.S. safety regulators say the update will increase warnings and alerts to drivers and even limit the areas where basic versions of Autopilot can operate.

The recall comes after a two-year investigation by the National Highway Traffic Safety Administration into a series of crashes that happened while the Autopilot partially automated driving system was in use. Some were deadly.

The agency says its investigation found Autopilot’s method of making sure that drivers are paying attention can be inadequate and can lead to “foreseeable misuse of the system.”

The added controls and alerts will “further encourage the driver to adhere to their continuous driving responsibility,” the documents said.

But safety experts said that, while the recall is a good step, it still makes the driver responsible and doesn’t fix the underlying problem that Tesla’s automated systems have with spotting and stopping for obstacles in their path.

The recall covers models Y, S, 3 and X produced between Oct. 5, 2012, and Dec. 7 of this year. The update was to be sent to certain affected vehicles on Tuesday, with the rest getting it later.

Shares of Tesla slid more than 3% in earlier trading Wednesday but recovered amid a broad stock market rally to end the day up 1%.

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The attempt to address the flaws in Autopilot seemed like a case of too little, too late to Dillon Angulo, who was seriously injured in 2019 crash involving a Tesla that was using the technology along a rural stretch of Florida highway where the software isn’t supposed to be deployed.

“This technology is not safe, we have to get it off the road,” said Angulo, who is suing Tesla as he recovers from injuries that included brain trauma and broken bones. “The government has to do something about it. We can’t be experimenting like this.”

Autopilot includes features called Autosteer and Traffic Aware Cruise Control, with Autosteer intended for use on limited access freeways when it’s not operating with a more sophisticated feature called Autosteer on City Streets.

The software update will limit where Autosteer can be used. “If the driver attempts to engage Autosteer when conditions are not met for engagement, the feature will alert the driver it is unavailable through visual and audible alerts, and Autosteer will not engage,” the recall documents said.

Depending on a Tesla’s hardware, the added controls include “increasing prominence” of visual alerts, simplifying how Autosteer is turned on and off, and additional checks on whether Autosteer is being used outside of controlled access roads and when approaching traffic control devices. A driver could be suspended from using Autosteer if they repeatedly fail “to demonstrate continuous and sustained driving responsibility,” the documents say.

According to recall documents, agency investigators met with Tesla starting in October to explain “tentative conclusions” about the fixing the monitoring system. Tesla did not concur with NHTSA’s analysis but agreed to the recall on Dec. 5 in an effort to resolve the investigation.

Auto safety advocates for years have been calling for stronger regulation of the driver monitoring system, which mainly detects whether a driver’s hands are on the steering wheel. They have called for cameras to make sure a driver is paying attention, which are used by other automakers with similar systems.

Philip Koopman, a professor of electrical and computer engineering at Carnegie Mellon University who studies autonomous vehicle safety, called the software update a compromise that doesn’t address a lack of night vision cameras to watch drivers’ eyes, as well as Teslas failing to spot and stop for obstacles.

“The compromise is disappointing because it does not fix the problem that the older cars do not have adequate hardware for driver monitoring,” Koopman said.

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Koopman and Michael Brooks, executive director of the nonprofit Center for Auto Safety, contend that crashing into emergency vehicles is a safety defect that isn’t addressed. “It’s not digging at the root of what the investigation is looking at,” Brooks said. “It’s not answering the question of why are Teslas on Autopilot not detecting and responding to emergency activity?”

Koopman said NHTSA apparently decided that the software change was the most it could get from the company, “and the benefits of doing this now outweigh the costs of spending another year wrangling with Tesla.”

In its statement Wednesday, NHTSA said the investigation remains open “as we monitor the efficacy of Tesla’s remedies and continue to work with the automaker to ensure the highest level of safety.”

Autopilot can steer, accelerate and brake automatically in its lane, but is a driver-assist system and cannot drive itself, despite its name. Independent tests have found that the monitoring system is easy to fool, so much that drivers have been caught while driving drunk or even sitting in the back seat.

In its defect report filed with the safety agency, Tesla said Autopilot’s controls “may not be sufficient to prevent driver misuse.”

A message was left early Wednesday seeking further comment from the Austin, Texas, company.

Tesla says on its website that Autopilot and a more sophisticated Full Self Driving system are meant to help drivers who have to be ready to intervene at all times. Full Self Driving is being tested by Tesla owners on public roads.

In a statement posted Monday on X, formerly Twitter, Tesla said safety is stronger when Autopilot is engaged.

NHTSA has dispatched investigators to 35 Tesla crashes since 2016 in which the agency suspects the vehicles were running on an automated system. At least 17 people have been killed.

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The investigations are part of a larger probe by the NHTSA into multiple instances of Teslas using Autopilot crashing into emergency vehicles. NHTSA has become more aggressive in pursuing safety problems with Teslas, including a recall of Full Self Driving software.

In May, Transportation Secretary Pete Buttigieg, whose department includes NHTSA, said Tesla shouldn’t be calling the system Autopilot because it can’t drive itself.

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AP Technology Writer Michael Liedtke contributed to this story.

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Ford to build $3.5B electric vehicle battery plant in Mich.

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Ford to build $3.5B electric vehicle battery plant in Mich.

Ford Motor Co. plans to build a $3.5 billion factory in Michigan that would employ at least 2,500 people to make lower-cost batteries for a variety of new and existing electric vehicles.

The plant, to be built on land being readied for industrial development about 100 miles (160 kilometers) west of Detroit, would start making batteries in 2026. It would crank out 35 gigawatt hours worth of batteries, enough to supply 400,000 vehicles per year, Ford said.

The factory near the city of Marshall would produce batteries with a lithium-iron-phosphate chemistry, which is cheaper than the current nickel-cobalt-manganese chemistry now used in many EV batteries.

Consumers could then choose between a battery with lower range and cost, or pay more for higher range and power. The company wouldn’t give any prices just yet.

“The whole intent here is to make EVs more affordable and accessible to customers,” said Marin Gjaja, chief marketing officer for Ford’s electric vehicles.

Ford says a wholly owned subsidiary would own the factory and employ the workers. But China’s Contemporary Amperex Technology Co. Limited, or CATL, which is known for its lithium-iron-phosphate expertise, would supply technology, some equipment and workers.

The announcement comes at a time when U.S.-China relations are strained, and the Biden administration is offering tax credits for businesses to create a U.S. supply chain for EV batteries. To get a full $7,500 per vehicle U.S. tax credit to customers, EV batteries won’t be able to have metals or components from China in them.

Ford is hoping that the structure of the deal will defuse criticism of spending tax incentive money on a joint-venture factory that would be part-owned by a Chinese company. Last month the state of Virginia dropped out of the race for the same Ford plant after Gov. Glenn Youngkin characterized the project as a “front” for the Chinese Communist Party that would raise national security concerns. At the time Virginia had not offered an incentive package to Ford.

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The company expects to take advantage of U.S. factory tax credits, and says that buyers initially would get at least $3,750 in tax credits because the vehicles are produced in North America. Gjaja said that over time they could get the full $7,500 credit depending on sourcing of battery minerals.

Lithium-iron-phosphate batteries would go into standard-range versions of Ford’s EVs. For instance, the lowest price Mustang Mach-E electric SUV would get an LFP battery and would be able to travel 247 miles per charge. The long range version of the Mach-E will have a nickel-cobalt-manganese chemistry that takes it to 310 miles per charge.

The plant was revealed Monday at a meeting of the Michigan Strategic Fund, which approved a large tax incentive package for the project near the junction of Interstates 94 and 69.

About $210 million came from Michigan’s Strategic Outreach and Attraction Reserve Fund, known as SOAR, set up to lure industry and jobs to the state. But the total size of the incentive package wasn’t clear.

The SOAR Fund has received nearly $1.8 billion from the state’s general fund since it was first created in December of 2021.

A tax-relief bill passed in the Michigan House last week could send up to $1.5 billion over three fiscal years to the SOAR Fund in addition to an $800 million one-time deposit that Gov. Gretchen Whitmer outlined in her budget proposal last week.

The tax-relief bill, which still needs state Senate approval, has been heavily criticized by Republicans for giving too little to taxpayers and too much to large corporations.

Last summer, Ford announced that CATL will make lithium-iron-phosphate battery packs for Mustang Mach-E electric SUVs in North America this year and for F-150 Lightning electric trucks early in 2024 “creating more capacity for high-demand products.” The batteries at first would come from China, then be switched to the Michigan plant in 2026, Ford said.

The company expects to be able to produce electric vehicles at a rate of 600,000 per year by late this year.

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Whitmer said the plant will bring “generational opportunities” for west Michigan families. It will “make sure that production lines aren’t stalled by global shocks or shipping delays,” she said.

Lithium-iron-phosphate batteries already are in use in consumer electronics and some competitors’ vehicles, but all the batteries are imported, said Lisa Drake, vice president of industrialization for Ford’s electric vehicles.

“This project is aimed at de-risking that by actually building out the capacity and capability to scale this technology in the United States,” with Ford controlling the manufacturing and the workforce.

Conrad Layson, senior analyst with AutoForecast Solutions, says the new battery factory could supply multiple Ford models. “As Ford increases the number of all-electric nameplates, the output from this factory could be used to make lower-cost versions of those future all-electric Ford vehicles,” he said.

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Associated Press Writer Corey Williams contributed to this report.

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