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Under any flat-rate pay system, the technician’s entire focus is on getting the repair completed faster than the assigned time.
The manufacturer’s assignment of these times is a serious bone of contention for dealerships and technicians alike.
The manufacturer wants the flat rates to be as low as possible. This is particularly true where there is a potential recall. Ford, for example, has lowered flat rates when it needed to improve its bottom line.3
The manipulation of these times represents extraordinary sums of money. Needless to say, the benefit is to the manufacturer, not the dealer or the consumer. |
A Recall Example
Recall #99M06 affected 566,979 Ford Contours.
• The labor time before the recall was 0.9 hours.
• The reduced time set by Ford was 0.4 hours.
• This totals 0.5 hours that Ford removed from the time previously allowed for the recall repair.
• Average shop rate is $60.00/hour.
566,979 vehicles multiplied by 0.5 hours equals 283,489 hours saved.
• The recall savings to the manufacturer was $60.00 multiplied by 283,489, or $17,009,340.00.
• With one stroke of Ford’s pen, every dealer involved in these recall repairs lost its portion of $17,009,340.00.
The flat-rate pay system may seem unfair to dealers and their technicians, but that’s nothing compared to its effect on consumers.
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